Warsaw refuses to pay in rubles for Russian gas, Italy and Belgium denounce breach of contract
Polish gas group PGNiG announced on Thursday that it refused to pay in rubles for its purchases of Russian gas as demanded by Moscow, while Italy and Belgium, following Berlin, told Brussels of a breach of contracts .
Germany and Austria have already rejected this request made on Wednesday by Russian President Vladimir Putin.
Poland, dependent on Russian hydrocarbons, followed suit. “We don’t really see such a possibility,” said PGNiG group president Pawel Majewski.
“The contract, I cannot reveal the details, fixes the mode of payment. It is not intended that a party can modify it at will. We will fulfill this contract in accordance with our commitments”, he declared, quoted by the PAP agency.
The current contract, known as the “Yamal contract”, expires at the end of the year. Poland expects to soon free itself from its dependence on Russian gas thanks to the Baltic Pipe gas pipeline which will supply it with Norwegian gas and its gas terminal at the port of Swinoujscie which will receive liquefied natural gas transported by ship.
Gathered Thursday at a summit in Brussels, several leaders of the Twenty-Seven have castigated the requirement of Moscow.
“I don’t think people in Europe still remember what a ruble looks like. No one will pay in roubles,” Slovenian Prime Minister Janez Jansa told reporters.
“If we change the elements of a contract, then everything is negotiated, then the price is also renegotiated! […] I don’t think it’s (for Russia) a degraded way (the sanctions) but, if they want to change the terms of the contract, then a lot of elements could be mentioned, ”said his Belgian counterpart Alexander De Croo.
“We imply that this is a clear violation of existing contracts,” added the Italian head of government Mario Draghi, without detailing how his country, which is extremely dependent on Russian hydrocarbons, will react.
Berlin had denounced on Wednesday “a breach of contract”, ensuring that Germany would “discuss with its European partners how to respond to this request”.
“There are fixed contracts everywhere, in which the currency of payment is most of the time the euro and the dollar. This is the starting point” for our discussions, Chancellor Olaf Scholz confirmed on Thursday.
Russia now accounts for 45% of European gas imports. Some 55% of German purchases come from Russia, as well as the bulk of supplies from Finland, Hungary and the Czech Republic.
For the moment, Russian hydrocarbons have been largely spared heavy Western sanctions against Moscow, which instead have isolated Russia almost completely from the global financial system and crippled the assets of the Russian Central Bank, causing a collapse of the ruble.
The Russian central bank, although cut off from much of its foreign reserves which it occasionally sells to prop up the rouble, has implemented severe capital controls which have somewhat stabilized the currency.