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ENERGY

Germany says Putin has agreed for gas payments to continue in euros

The German government said that Russian President Vladimir Putin has told Chancellor Olaf Scholz that Europe can continue paying for Russian gas in euros and not rubles as previously announced.

Chancellor Olaf Scholz (SPD) speaks at an event in Berlin on March 28th.
Chancellor Olaf Scholz (SPD) speaks at an event in Berlin on March 28th. Photo: picture alliance/dpa/dpa-Pool | Carsten Koall

German government spokesman Steffen Hebestreit said on Wednesday evening that Putin had told Scholz that payments from Europe next month “would continue to be in euros and transferred as usual to the Gazprom Bank which is not affected by sanctions”.

The bank would then convert the payments into rubles, Hebestreit quoted Putin as saying.

Hebestreit said in a statement that Putin had stressed in the telephone call with Scholz “which took place at his (Putin’s) request”, that “nothing would change for European contract partners” when the new system takes effect on April 1st.

“Chancellor Scholz did NOT agree to this procedure but asked for information in writing to better understand this procedure,” Hebestreit stressed.

“What the G7 agreed stands: energy deliveries will be exclusively paid for in euros or dollars as it states in the contracts,” he said.   

The Kremlin had earlier released its own readout of the conversation saying that Putin had told Scholz that Moscow’s demand that Europe switch to paying for gas in rubles should not “lead to worsening of contractual terms for European importer companies”.

Putin said last week that Moscow would begin only accepting rubles as payment for natural gas deliveries to “unfriendly” countries, including the
members of the European Union.

He said the payment method was needed because the Russian central bank’s currency reserves have been frozen by the EU.

Germany on Wednesday raised the alert level under its emergency gas plan over fears that Russia could cut off supplies if Western countries refused to make the payments in rubles.

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Austria announced that it was following suit.

Speaking on behalf of the G7 energy ministers, Germany’s Robert Habeck said Monday that Russia’s request was a “unilateral and clear breach of the existing agreements”.

Habeck said payments in rubles were “unacceptable” and called on energy companies not to comply with Putin’s demand.

The Kremlin said Wednesday that Russia would not immediately require its natural gas buyers to pay in rubles.

“Payments and deliveries are a time-consuming process,” Kremlin spokesman Dmitry Peskov told reporters.

“It’s not like… what will be delivered tomorrow, must be paid for by the evening.”

On Thursday, the Russian government, its central bank and energy giant Gazprom are expected to present Putin with a new gas payment system that will be conducted in rubles.

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ENERGY

Russia using energy ‘as weapon’, says Berlin

German Economy Minister Robert Habeck accused Russia on Thursday of using energy as "a weapon", after Moscow announced sanctions on Western energy firms and a key pipeline again saw lower gas deliveries to Europe.

Russia using energy 'as weapon', says Berlin

“It has to be said that the situation is coming to a head, in such a way that the use of energy as a weapon is now being realised in several areas,” Habeck told a press conference.

Ukrainian Foreign Minister Dmytro Kuleba, on a visit to the German capital, said Moscow had shown itself to be an unreliable supplier.

Kuleba urged Europe to end its heavy dependence on Russian gas that was helping to finance Moscow’s war machine.

“This energy oxygen for Russia must be turned off and that is especially important for Europe,” Kuleba said at a joint press conference with Habeck.

“Europe must get rid of this complete dependence on Russian gas, since Russia has shown… that it is not a reliable partner and Europe cannot afford that.”

Russia on Thursday said it would stop sending natural gas via the Polish section of the Yamal-Europe pipeline as part of retaliation for Western sanctions over its invasion of Ukraine.

The move comes a day after Russia issued a government decree imposing sanctions on 31 EU, US and Singaporean energy firms.

Most of the companies belong to the Gazprom Germania group of subsidiaries of Russian energy giant Gazprom.

The sanctions include a ban on transactions and the entry into Russian ports of vessels linked to the affected companies.

Meanwhile, operators on Thursday reported a drop in gas supplies from Russia via Ukraine for a second day, after Kyiv said it would suspend flows through a key eastern transit pipeline called Sokhranivka because the area wasno longer under Ukrainian control.

But Gazprom has denied there was a case for the Ukrainian side to declare “force majeure” and said it was impossible to reroute all the supplies through another Ukrainian pipeline.

‘Blackmail’ fears

Gazprom told the Interfax news agency that supplies transiting Ukraine on Thursday were at 50.6 million cubic metres in total, compared to 72 million cubic metres the day before.

Germany, which is hugely reliant on Russian energy, said it had been able to make up the shortfall through gas imports from Norway and the Netherlands.

The head of Germany’s Federal Network Agency, Klaus Mueller, also noted that Russia had been very “surgical” about its pick on which companies to sanction, selecting only storage and trading companies, and “not the operators”.

This “very well-planned, precise decree allows it to keep doing business with Germany, but not on old contract conditions”, rather under new conditions that other gas dealers would then have to conclude with Russia, said Mueller.

Europe’s biggest economy is racing to wean itself off Russian energy and has already almost completely phased out Russian coal.

But ditching Russian oil and gas will be more difficult.

With fears growing that Russia could abruptly turn off the energy taps, Habeck said Germany was focusing on building up gas reserves to prepare for winter.

“The gas storage facilities must be full by winter or else we will be in a situation where we can easily be blackmailed,” he warned.

READ ALSO: Russian gas transit halt in Ukraine hits key pipeline’s inflow in Germany

By Michelle FITZPATRICK

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