Germany Vows to Continue Euro Gas Payments After Allies Cut Off

 

Germany Vows to Continue Euro Gas Payments After Allies Cut Off

 

Gazprom will keep gas supplies to Poland and Bulgaria turned off until they agree to pay for the fuel in rubles.

 

By Birgit Jennen

27 April 2022, 11:19 CEST Updated on27 April 2022, 14:02 CEST

https://www.bloomberg.com/news/articles/2022-04-27/germany-says-it-s-meeting-now-with-eu-partners-on-gas-supplies

 

Germany said its companies will continue to pay for Russian gas in euros or dollars, hours after European Union partners Poland and Bulgaria were cut off by Gazprom PJSC for refusing to pay in rubles as President Vladimir Putin has demanded.

 

Responding to the dramatic escalation, which sent gas prices soaring, Economy Minister Robert Habeck said Germany’s gas supply situation is “stable” and “we are doing everything we can to keep it that way.”

 

“The private legal contracts apply” for Russian gas, Habeck said in an emailed statement. Germany is following European Union guidance published last week, which means German companies will continue to pay in euros and dollars, his ministry said.

 

Putin’s demand stipulates that European gas buyers open two accounts, one in a foreign currency and one in rubles. Gazprombank JSC would then be responsible for converting the foreign currency into the Russian one and transferring the money to Gazprom.

 

Germany’s economy ministry said that once companies make euro or dollar payments for gas into so-called K accounts, the “contractually owed service has been fulfilled.”

 

After Gazprom halted gas supplies to Poland and Bulgaria, the question now is which countries will be hit next. The speaker of Russia’s Duma parliament said other “unfriendly” states should also be cut off. Germany has reduced its reliance on Russian gas to around 40% of total supplies since Russia invaded Ukraine, from about half.

 

European Commission President Ursula von der Leyen said earlier the EU’s gas coordination group is meeting to chart a joint response to Russia’s “unjustified and unacceptable” decision to use gas supplies as “blackmail.”

 

“Member states have put in place contingency plans for just such a scenario and we worked with them in coordination and solidarity,” she said in a statement. “We will also continue working with international partners to secure alternative flows.”