Dhe new payment terms for Russian gas deliveries to Germany, which have been in effect since Friday, have driven up prices, but have not led to any delays or shortages so far. As the Federal Network Agency announced as part of the early warning stage of the “Gas Emergency Plan”, which was recently announced, the supply is still stable.
“The gas network operators do not report any special incidents. There are no impairments to gas deliveries to Germany,” says the current management report from the “Gas Crisis Team” of the Federal Ministry of Economics, headed by Secretary of State for Energy Patrick Graichen. The current storage levels are comparable to those at the same time last year and are significantly higher than, for example, 2018. Since March 18 of this year, more has been fed in than withdrawn.
However, the wholesale price on the European energy exchange EEX has risen by more than 7 percent to around 125 euros per megawatt hour since Thursday evening. Compared to the pre-crisis level, this means an increase of around 54 percent, the network agency said. The market was reacting to a decree by Russian President Vladimir Putin on Thursday, according to which gas buyers from “unfriendly countries” – meaning European countries, for example – should pay their bills in rubles in future. A complicated procedure with different accounts is used for this purpose, which also caused confusion on Friday.
Details within 10 days
In line with the EU and the seven leading industrialized nations (G7), the federal government rejects ruble payments. On Friday, she announced that she would examine the decree thoroughly and only then evaluate it. The presidential paper instructs Gazprombank, based in Luxembourg, to determine the precise procedures for the new transfer procedure within ten days. These details were then included in the Berlin assessment.
“Our stance is clear, and the economy and companies have made that clear: the private-law contracts are denominated in euros and dollars,” said a spokeswoman for the Federal Ministry of Economics. “Whatever is in the contract applies.” This also applies if buyers are willing to pay in rubles. The spokeswoman said she had no information about such attempts.
The decree provides for opening additional accounts with Gazprombank. This bank is not subject to western sanctions. On the question of whether the sanctioned central bank in Moscow would also be involved in the conversion of foreign currency into rubles, the spokeswoman said: “I read that differently, there is talk that Gazprombank should specify these things.” Previously there had been reports that the federal government could expropriate German subsidiaries of state-owned Russian energy companies. The spokeswoman didn’t want to comment on that, and she didn’t want to speculate whether something like this would even be legally possible in an emergency situation.
Rosneft investment under review
However, she recalled that the federal government was investigating against the mineral oil company Rosneft. This group is already the majority owner of the PCK refinery in Schwedt, which processes a quarter of Germany’s crude oil needs, and intends to acquire an additional 37.5 percent. The Federal Cartel Office approved this step shortly before the Russian invasion of Ukraine, but Berlin is skeptical.
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According to the spokeswoman on Friday, it is now a matter of checking “whether further acquisitions of shares pose a threat to public safety and order”. A government spokesman added to the punitive measures against Russia: “The federal government and its international partners are convinced that the sanctions package is extremely effective and fulfills its function.”
Putin saves face
Putin’s decree on Thursday contains 17 points. Point six clarifies that disgraced foreign gas buyers will need two accounts with Gazprombank in the future, one for foreign exchange and one in rubles. The subscriber pays euros or dollars to the former, as stipulated in the current contracts. But then, at the explicit “instruction of the foreign buyer”, the bank exchanges this money for rubles on the Moscow exchange Micex-RTS. The exchanged amount then goes to the foreigner’s ruble account and from there to a ruble account of the Russian gas seller.
German gas importers such as Uniper and RWE should learn more details about the changes from Moscow on Friday. However, they did not want to comment on this. The Kremlin announced that it had sent these explanations and once again made it clear that two accounts would be necessary in the future and that Gazprombank would take care of the exchange. So far, German customers have not kept their own accounts there, but have made their euro payments to a Gazprom account. According to reports, this happens monthly, although it is unclear whether payments under the new conditions had already been made on Friday.
From a technical point of view, not much will change for the companies. But in the industry it is suspected that Putin can use the new method to save face and claim to have enforced ruble payments. The question now is whether politicians in Berlin and Brussels will accept this or see the procedure as a way of circumventing the sanctions.
Meanwhile, Gazprom announced on Thursday that it had given up its German subsidiary Gazprom Germania. Among other things, it is the owner of the gas trader Wingas and the gas storage operator Astoria.