Russia Calls the EU Bluff, Cutting Off Poland and Bulgaria for Non-Payment of Natural Gas
April 27, 2022 (EIRNS)—Today was the deadline for Poland and Bulgaria to pay Russia energy giant, Gazprom, in rubles, for their natural gas. They have refused for the last four weeks to cooperate with Gazprom’s demand to be paid in rubles, and now, as promised, Gazprom cut off their service. There was some consternation in Europe, prompting assurances from various countries (e.g., Italy, Germany, Hungary) to the effect that they were still in line for getting their natural gas supplies. Meanwhile, this morning the price for May futures on the TTF trading hub (out of the Netherlands) sky-rocketed up to $1,374 per 1,000 cubic meters. That translates to almost $125/megawatt-hour for households.
The European Union has pressured countries to “Just Say ‘No’ ” to Russia, maintaining that the payment arrangements violate the agreed-upon sanctions against Russia. (Customers of Gazprom are required to set up two accounts at Gazprombank, whereby they use whatever currency they like to pay, instruct the bank to convert the funds into rubles to be deposited in their second account, and pay for their natural gas purchase from that ruble-denominated account.) However, Austria’s Chancellor Karl Nehammer threw a monkey wrench into that narrative.
Nehammer gave his press conference, stressing that, while Austria opposes Russia’s military mission in Ukraine, it has accepted the new ruble gas payment mechanism and will abide by it: “We, that is, OMV [Austria’s state energy company], accepted the terms of payment, as did the German government. They were found to be in line with the terms of the [EU] sanctions. For us, this was important.” Austria’s oil and gas company, OMV, has already opened an appropriate account with a Russian bank for transferring payments; and Nehammer noted that, during his recent trip to Moscow, Putin explained to him the new payment mechanism and assured him of further gas supplies in full. Basically, just because one thinks that it is proper to apply sanction pressures on Russia, it doesn’t mean that all rules are off and it is time to go crazy.
Nehammer’s position found some support from the Chief Commercial Officer of Germany’s Uniper energy company, Niek den Hollander, who stated that the ruble payment arrangement does not contradict sanctions, so such payment is possible. The CCO added that Uniper will continue a dialogue with the German government on the issue of paying for Russian gas in rubles, stating that their next payment should take place in late May. Both Austria and Germany may simply be taking advantage of the EU Commission’s “speaking with a forked tongue”—that is, it is said that the EU Commission has authorized the opening of the ruble accounts at Gazprombank while, simultaneously, condemning any payments in rubles. Such is life in the brave new “rules-based order,” where hypocrisy is the coin of the realm.
Contrary to the image of unanimity against Russia, Bloomberg reported that four European purchasers from Gazprom are already paying via the ruble arrangement, and ten others have already set up their two-account arrangement for when their next payment is due. (Italian coverage includes the historic ENI as one of the ten.) Bloomberg cites “a person close to Russian gas giant Gazprom PJSC” for this confidential news. There’s a certain measure involved here, indicating a significant representation of Europe has chosen not to drink the EU’s “Kool-Aid.”
Meanwhile, the ideologues in Poland evidently get to pay somewhat dearly for the privilege of insisting that their euros remain pure. Gascade, the German operator of the gas transmission network, reported that Poland ordered five times more “reverse” natural gas this morning from Germany than they did yesterday. That is, they get the same Russian natural gas—but they get to pay for it to be first sent westward to Germany, then re-sold to Poland, and then completing its round trip, back eastward to Poland.