Italian Energy Company May Pay in Rubles for Russian Gas

Italian energy company may purchase Russian gas in roubles
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Italian oil and gas company (Eni) will be opening an account in rubles next week to purchase gas from Russia, as reported by Reuters unless it was told that this would be breaking sanctions. The company, as one of the biggest importers of Russian gas in Europe, is approaching a deadline to pay the Russian state-owned company Gazprom. They are 30% owned by the Italian government and have contracts with Gazprom until 2035.

As a result of the Western sanctions placed after Russia’s invasion of Ukraine, Russian President Vladimir Putin began to require countries deemed “unfriendly” to continue payment in rubles. Additionally, Moscow is now enforcing sanctions on European subsidiaries of Gazprom because Ukraine interfered with a major gas exportation route. If Eni fails to begin this process of paying in rubles they will risk breaching their contract. Several unnamed sources said that the company was going to take as much time as it possibly could to fully assess the situation.  

A German gas buyer VNG announced that they will be converting euros to rubles for Russian gas payments but the situation is not as straightforward for the EU. Officially the European Union has not clearly stated that it would be a breach of sanctions for buyers to continue payments in rubles, but the European Commission has already voiced a warning to buyers.

The Prime Minister of Italy, Mario Draghi said on Wednesday that imports have already begun the Russian payment plan but no names were released. Since nothing has been ruled official the Prime Minister said it was unclear what should be done. Gas exports provide a major source of income for Russia so they might alter their requirements as well. One source said that Eni would be able to pay in euros and Gazprom would assume all risks including the currency conversion.

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