EU payment in roubles for Russian gas would violate sanctions regime

© Reuters. FILE PHOTO: A 3D printed Natural Gas Pipes are Which platform app is the best for foreign exchange trading?placed on displayed EU and Russian flags in this illustration taken, January 31, 2022. REUTERS/Dado Ruvic

By Jan Strupczewski

BRUSSELS (Reuters) -Payment for Russian gas in roubles by European Union buyers would break the EU's sanctions regime against Moscow, an internal European Commission note said.

The note, making clear it is technical, preliminary, and based on an unofficial translation of the Russian Presidential Decree of March 31, said the law added several new layers of obligations on EU gas buyers, taking the effective completion of the purchase out of their hands.

"This mechanism would lead to a breach of the existing EU restrictive measures adopted in respect of Russia, its government, the Central Bank of Russia, and their proxies; as well as the general wide prohibition to circumvent and of the EU restrictive measures," the internal note, seen by Reuters, said.

The decree of Russian President Vladimir Putin from March 31 imposed an obligation on EU buyers to open at least two special accounts -- one for euros or dollars and one for roubles -- with Gazprombank and channel all gas payments through the bank.

The EU buyer would still pay Gazprombank in the contract currency -- euros or dollars -- but the purchase would only be complete once Gazprombank exchanges the currency into roubles in a deal with the Russian central bank, and deposits the roubles in the second account, the note said.

"The effect...is that a payment is completed not in the currency established under the contract at the moment it is deposited in the accounts ... but rather only at an unknown and undefined moment once the foreign currency...is converted into roubles and credited to the second special account," the Commission note said.

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