EU energy ministers hold crisis talks after Russian gas cuts

The European Union's energy ministers held emergency talks Monday to discuss Moscow's demand that European buyers pay in roubles for Russian gas. Or face being cut off.

Russia stopped gas supplies to Poland and Bulgaria last week after they failed to pay its demand in roubles.

These countries had already announced that they would stop using Russian gas in the coming year. They claim they are able to handle the stoppage. However, it has raised concerns about other EU countries including Germany, a gas-dependent economic powerhouse.

It also threatened to break the EU's unity against Russia, amid disagreements on the best course of action.

Many European companies face gas payment deadlines this month. EU states need to clarify if companies can continue buying fuel while not violating EU sanctions against Russia for its invasion of Ukraine.

Moscow stated that foreign gas buyers should deposit dollars or euros into a Gazprombank account, which will convert them into rubles.

The European Commission warned countries that Russia's scheme could violate EU sanctions. It also suggested that countries could make the sanctions-compliant payments if they declare the payment completed once it was made in euros and before it is converted into roubles.

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Brussels has begun to provide additional guidance after last week's requests from Bulgaria, Greece, Poland and Slovakia for clearer advice.

Russia said Friday that it had no problems with its decree. This decree considers the buyer's obligation fulfilled after hard currency is converted to roubles.

Although Poland and Bulgaria refused to cooperate with Moscow's scheme for payment, Germany has supported the Commission's solution to allow companies to pay. Hungary also said that buyers could engage with Russia's system.

Paying in roubles may help Russia's economy to evade the effects of sanctions. Fuel revenues can be used to help Russia finance its special military operation.

Since Russia invaded Ukraine on February 24, 2004, more than 45 billion euros (or $47.33 billion) have been paid by EU countries for oil and gas. This was according to the Centre for Research on Energy and Clean Air.

Russia supplies 40% of the EU's gas and 26% of its oil imports. This dependency means that Germany and other countries have so far refused to call for an abrupt halt in Russian fuel imports out of fear of economic harm.

Diplomats claim that the EU is moving towards a ban on Russian oil imports by the end of this year. This was after discussions between the Commission and EU members at the weekend, ahead of their meetings this week.

The sixth package of EU sanctions against Moscow will be discussed by Ambassadors at Wednesday's meeting. It is being prepared by the Commission.

Monday's ministers will discuss how to secure non-Russian gas supplies, and fill storage. This is as countries prepare for shocks in supply.

While dependence on Russian gas is different from country to country, analysts believe that a total cut-off immediately would send countries like Germany into recession and force them to take emergency measures, such as closing down factories.

Diplomats reported that Slovakia, Hungary, Italy, and Austria also expressed reservations about the possibility of an oil embargo.

Later this month, the Commission will announce plans to end Europe’s dependence on Russian fossil fuels. This includes expanding renewable energy and renovating buildings that consume less.

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