Panicked EU prepares for Russia retaliation – new guidance revealed in leaked document

EU proposal for ban on Russian gas blocked by Orban says expert

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The EU executive will tell member states on Wednesday that a new set of measures will have to be implemented in order to prepare for a full cut out of energy supplies from Russia, in a panicked reaction to Vladimir Putin’s threats.

A leaked document obtained by EURACTIV and drafted by the EU Commission reads: “A different set of measures may become worth considering in the event of a sudden large scale or even full disruption of the supplies of Russian gas leading to unbearably high gas prices and inadequate supply of gas.”

The document proposes “a maximum regulated price for natural gas delivered to European consumers and companies (EU price cap)”.

But one unnamed EU official added in the text: “One major negative effect is that we lose the price as an important information for gas demand in times of crisis.

“Another very important negative effect is that the announcement of a gas price cap in times of emergency leads to lower storage injection today, which must be avoided by any means.”

Russia cut gas supply to Poland and Bulgaria last month for refusing to comply with its ruble payment demand. Several EU governments and large importers have sought more clarity from Brussels on whether they can keep buying gas, which heats homes, produces electricity and powers factories across Europe.

The Commission told countries last month that European companies may be able to pay for Russian gas but only if they followed certain conditions, after Russia demanded foreign buyers start paying for gas in rubles or risk losing their supply.

In updated guidance, shared with EU countries on Friday, the Commission confirmed its previous advice that EU sanctions do not prevent companies from opening an account at a designated bank, and companies can pay for Russian gas – so long as they do so in the currency agreed in their existing contracts and declare the transaction completed when that currency is paid.

Nearly all of the supply contracts EU companies have with Russian gas giant Gazprom are in euros or dollars.

Companies should make a “clear statement” saying that when they pay euros or dollars, they consider their obligations under existing contracts to be fulfilled, the guidance said.

It should be understood that “such payments in that currency discharge definitively the economic operator from the payment obligations under those contracts, without any further actions from their side as regards the payment,” it said.

By ending its obligations once it deposits euros or dollars, a company could avoid being involved in dealing with the Russian central bank, which is under sanctions, and which could have been involved in converting the euros to rubles.

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President Vladimir Putin’s decree had said a transaction would only be deemed complete after the foreign currency was converted to rubles.

“Our fundamental position remains unchanged. The payment process set out in the Russian Decree of 31 March would breach EU sanctions, but there are options available for EU companies to continue paying in euros or dollars in line with the agreed contracts,” a Commission spokesperson said.

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