Russia's Gazprom tries to reassure European clients that they can still buy gas supplies

Oil major says Moscow's order ensures the transparency of cash flows from foreign buyers and excludes the possibility of any 'third party' being involved in settlements

Gas installations at the Sofia Iztok thermal power plant in Bulgaria. The halt of Russian gas to Europe has left companies scrambling amid insecure deliveries and rising prices. Photo: AFP

Russia's Gazprom has written to its European clients seeking to reassure them that they can keep paying for gas without breaching sanctions, the latest indication that Moscow may be trying to find a way to keep supplies flowing.

European companies are scrambling to work out how they can keep buying Russian gas after Moscow demanded payment in roubles and the European Commission said such a move would breach sanctions.

Poland and Bulgaria have already been cut off and other countries’ payment deadlines fall later this month.

In a letter seen by Bloomberg, Gazprom told clients that a new order published by the Kremlin on May 4 "clarifies the procedure" set out in the initial decree on rouble payments.

It is not clear if the new order will be enough to assuage the concerns of the EU, which has said that setting up an account in roubles, and dealing with the central bank, would break sanctions. The EU had no comment on Saturday.

The new order says that the foreign currency received from buyers is to be exchanged to roubles through accounts with Russia’s National Clearing Centre.

Gazprom said in the letter that the order ensures transparency of the cash flows from the foreign buyers and excludes the possibility of any “third party” being involved in the settlements. The procedure as set out appears to exclude the central bank, which is under sanctions.

Gazprom did not immediately respond to a Bloomberg request for a comment sent on Saturday.

Russian President Vladimir Putin threw gas markets and policymakers into disarray when he called for gas to be paid for in roubles.

Poland and Bulgaria were first to be cut off for refusing to engage with the new terms, but several European companies continue to look for workarounds, seeking guidance from the European Commission on what is allowed.

The EU issued some guidelines on April 22 and has promised to respond to companies’ requests for more clarity.

Russia has called for companies to open two accounts — one in euros and one in roubles — and stipulated that the payment is not settled until the roubles arrive.

The EU has said this gives too much power to Moscow and breaches sanctions on the central bank. The EU suggests companies pay in euros, and seek confirmation from the Russian side that the transaction ends there.

In late April, Russia’s central bank issued its own clarification of Mr Putin’s original order. The Bank of Russia said that if foreign gas buyers paid into their foreign-currency accounts in good faith, gas would not be turned off even if Gazprombank fails to convert those funds into roubles, as long as the hold-up was not caused by sanctions.

Updated: May 07, 2022, 2:39 PM