eni rubli russia

Eni is preparing to pay for gas as Russia wants

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The Italian energy company Eni he said to have initiated the procedures to open two separate accounts with the Russian state bank Gazprombank, one in dolars and one in rubles, and thus comply with the conditions imposed by the Russian authorities to maintain gas supplies. Eni’s announcement came on Tuesday afternoon, after weeks of discussions in Italian and European politics on whether or not energy companies could buy Russian gas by paying through the two-account system, as requested by Russia.

According to Eni, the opening of two accounts would neither involve a breach of contracts nor a violation of the sanctions imposed by the European Union on Russia, but there is not much clarity on this point. Eni’s decision is part of a context in which, with many payments for gas now due, the European authorities seem willing to accept that the double account payment system is not to be considered a violation of the sanctions for the invasion of the ‘Ukraine.

Discussions on gas payments in rubles began when Russian President Vladimir Putin signed a decree in late March that obliged Gazprombank to convert all payments received for gas from “hostile” countries, ie all Western countries, into rubles. The decree was a way to circumvent the sanctions imposed on Russia after the invasion of Ukraine and try to revive the Russian economy, but above all a device that would allow Western countries to continue paying for Russian gas in dolars or dollars and at the same time for Russia to receive the equivalent in rubles.

From a technical point of view, this new payment system would allow European countries to continue paying dolars or dollars to Gazprombank and receiving gas in exchange, but only by opening a second account with the bank, where the institution would transfer the money by converting it into rubles, to then pass it on to your account: in this way, in fact, payments to Gazprom would result in rubles, even with initial payments in dolars or dollars.

It is a compromise solution that has however left many analysts doubting that it could lead to a breach of contracts. In fact, even if Gazprombank would take care of the conversion of payments into rubles, thus excluding a direct participation of foreign buyers in the operation, the Russian decree provides that the payment is considered finished only at the time of conversion into rubles and not before. In this sense, the buyer would be considered involved until the last step.

In fact, a “gray zone” was created in which European companies were left free to act as they saw fit, as Eni did on Tuesday and as they had done in recent days other European energy companies.

In announcing the opening of two accounts, Eni said that the decision was taken jointly with the Italian institutions, that it is compatible with the European sanctions against Russia and that it does not involve changes to the contracts. «The opening of the accounts takes place on a temporary basis and without prejudice to any of the contractual rights of the company, which provide for the fulfillment of the obligation to pay against the payment in dolars. This express reserve will also accompany the execution of the related payments “, reads the note from Eni which therefore argues that the payment will take place in dolars and that the conversion into rubles cannot be considered a violation of the contracts in force.

However, some doubts remain about the legitimacy of this type of operation, and it is not clear how the European authorities will behave in this regard. In recent weeks the European Commission had expressed an opinion on the payment in rubles, effectively approving the double account scheme, but it had been considered confused and insufficient from various countries. The Italian Prime Minister Mario Draghi, for example, had asked the European Commission to clarify this ambiguous point as soon as possible in view of the payment deadlines. For several countries, including Italy, the next payments for Russian gas imports will have to be made by the end of May.

The European Commission has not yet provided an official clarification, but on Tuesday through its spokesman Eric Mamer he said that by opening a ruble account, companies would violate the sanctions imposed on Russia. According to Mamer, under the current rules, energy companies could at most pay in dolars into an account with Gazprombank and that anything beyond opening that account should be considered a violation: according to Mamer’s words, therefore, the opening an account in rubles by Eni should not be a permitted operation. However, to date, the Commission has not published written rules preventing European companies from being subject to the two-account system.

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