Brussels, May 20 - Neftegaz.RU.Concerns surrounding how European countries can legally pay for Russian gas supplies without breaching sanctions are pushing prices higher, Rystad Energy analysed.
After mixed messages emerged from both sides earlier this week, the situation appears as clear as mud.
More clarity regarding payment mechanisms or a consensus between Russia and the EU is essential to calm market participants’ concerns.
As per EU guidance, companies will not violate sanctions if they declare transactions completed after paying in euros or dollars, but they are not allowed to open another ruble account with Russian banks.
Meanwhile, Russia claimed that opening a ruble account is a must and European companies need to complete any currency conversions.
However, some major European companies have already announced their payment plans.
Italy’s Eni has opened a ruble account with Gazprombank to ensure Russian gas supply, but on paper, that move seems to be a violation of EU sanctions.
Germany’s Uniper and France’s Engie have said they will pay in euros this month to Gazprom.
Finland’s Gasumis taking a different approach, and has said they will not pay in rubles, but acknowledged the potential for Russia to cut off its gas supply.
The Finnish company is aiming to get access to other gas sources from Estonia via the Baltic pipeline.
Overall, the reactions by the market have appeared restrained and await more responses from all parties.
Another upside factor pushing TTF higher is a new plan by the EU.
The commission aims to raise 20 billion euros by selling ETS certificates to fund an exit from Russian energy.
This could potentially drag down carbon prices in Europe and lead to cheaper costs of coal and other carbon-intensive fuels, although it is not in line with the energy transition goal in the long term.
Uncertainty surrounding Russian gas payments push prices higher
European gas markets are rising today on uncertainty surrounding how EU importers will pay for Russian gas supplies, while upward pressure on US prices looks likely in the short term