Italy Says It’s Open To Paying For Russian Gas In Rubles…Then Denies It

Italy Says It’s Open To Paying For Russian Gas In Rubles…Then Denies It

While the Germans and Austrians throw their support behind a Russian oil embargo, the Italians are once again breaking with their EU peers and pushing for more flexibility to continue purchasing Russian energy, even if it requires converting their euros to rubles, as President Vladimir Putin has demanded.

Politico reports that European energy companies should – provisionally, at least – be allowed to comply with Russian demands to pay for gas in rubles, according to remarks from Roberto Cingolani, the Italian minister in charge of the country’s energy security.

“I think it would be good for a few months, at least, to allow companies to go ahead and pay in rubles, while we understand the legal framework and implications,” he told POLITICO, adding that he wants “a speedy and very clear pronouncement from the European Commission” confirming that oil and gas companies can pay in rubles for the time being.

But roughly an hour after the original headlines hit the tape, other Italian officials decided that they didn’t want to risk the wrath of their European peers (as talk of disunity proliferated), so they quickly got the word out and clarified that Italy has no concrete plans to pay for Russian energy in rubles.

ITALY DENIES IT’S PLANNING TO PAY FOR GAS IN RUBLES: OFFICIAL

And as we noted earlier, Hungary has already exposed the hypocrisy of its European peers by exposing how they are already effectively bending to the demands of the Russian leader.

Meanwhile, Rome is bracing for a possible cutoff of Russian gas with measures to save energy, and even keep coal-fired plants operating longer.

During the original interview with Politico, Cingolani added that it could take months to understand legal implications of Russia’s request to receive rubles payments for gas. To be clear, the European Commission has warned companies not to open ruble-denominated accounts, warning that doing so could be considered a breach of sanctions levied against Russia for invading Ukraine. Its guidance says utilities can pay in euros (which would be considered final under existing contracts) and then Russia could convert the euros into rubles later.

This creates a serious Catch-22 for oil and gas companies, Cingolani explained:

“I believe oil and gas companies cannot risk paying and then being accused of having broken sanctions, but at the same time they cannot risk…not paying in rubles,” he said ahead of Monday’s crisis talks of EU energy ministers in Brussels. “These are long-term contracts, the costs would be extremely high.”

While Cingolani’s ministry is preparing contingency plans in the event that Italy is cut off from Russian energy supplies in a similar manner to Poland and Bulgaria, he has also proposed a workaround that might satisfy the Kremlin and the European Commission.

His proposed workaround is similar to the Commission’s. The EU energy company would regard the euro payment as the final transaction while Russia could instead consider the ruble payment after conversion. But he acknowledged such an approach might be “optimistic.”

“In this process there are gray areas, which could constitute a breach of sanctions. However you do it there is a problem.”

Italy is presently in a state of “pre-alert,” the lowest of three crisis levels envisaged in its national gas emergency plan, which he said meant “constant observation and monitoring.”

Tyler Durden
Mon, 05/02/2022 – 12:25

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