If Germany can, then why can’t it
The EU countries that refused to pay for Russian gas supplies in rubles are beginning to change their attitude towards our currency. According to Bulgarian Energy Minister Alexander Nikolov, if Germany and Italy decided to pay for energy resources through ruble accounts in Gazprombank, then it makes no sense for the other members of the union to balk at this issue. Sofia asked the European Commission to clarify the boundaries of Western sanctions against Moscow and explain the conditions under which the payment of raw materials in the banknotes of our country will not be subject to restrictions.
It is likely that in the near future, following the Bulgarians, other EU members, who had previously rejected such a demand from the Kremlin, will think about switching to ruble settlements with Russia.
It took less than a month for Bulgaria to realize the impossibility of quickly replacing Russian gas with supplies from other producers. According to Nikolov, the authorities of his country have thought about the haste of refusing to pay Gazprom in rubles and intend to discuss with the European Commission the legitimacy of paying for energy resources in the banknotes of our country. “The level of solidarity on this issue should be as high as possible. If there are exceptions, it is worth assessing the effect of their impact on the entire system, since the European Commission has previously said clearly that paying for gas in rubles is a violation of sanctions,” he said.
The Bulgarian minister is hinting at Germany, Italy and Austria, which recently opened accounts with Gazprombank, thus taking the first step towards fulfilling Moscow’s demand to switch to the ruble form of payment. Sofia stopped receiving Russian gas, which almost completely covered the country’s needs for this type of fuel, at the end of April, when one of the first announced that it did not intend to revise the terms of the agreement with Moscow and convert the funds intended for paying for raw materials into the ruble equivalent. Since then, to maintain the energy balance, the Bulgarians have to make do with the resources accumulated in underground storage facilities or buy hydrocarbons from their EU neighbors. Moreover, Sofia was forced to negotiate with American companies on the supply of liquefied fuel by tanker fleet.
Bulgaria’s request addressed to the European Commission to clearly explain whether it is possible to pay for gas in Russian currency or whether this will contradict the parameters of sanctions is fair and sounded most welcome, says Nikita Maslennikov, a leading expert at the Center for Political Technologies.
Naturally, the states that agreed with Moscow’s demand will have an advantage over their EU partners who have abandoned the new scheme. The latter will have to buy energy resources from alternative suppliers, whose prices are likely to be higher. Despite the assertions of Bulgarian officials that LNG supplied by American tankers is allegedly cheaper than Gazprom’s fuel, it is unlikely that in the future overseas suppliers will be as loyal to Sofia and will certainly raise prices. In this case, the conditions for competitiveness in the European fuel market will be violated, since the same Berlin and Rome will be able to import more Russian raw materials, and sell the surplus to countries that have rejected Moscow’s ultimatum and are faced with a shortage of hydrocarbons.
There is no doubt that the energy resources purchased in the USA will be more expensive than the Russian counterpart. The pricing of liquefied fuel in the European Union is tied to stock quotes. American deliveries, most likely, were calculated on the basis of April quotes, which outperformed the current level by about 20%.
Market participants name another trick that can reduce the interest of Bulgarian consumers in liquefied gas from the States. A few years ago, the Polish state corporation PGNiG also entered into a long-term agreement with Washington to buy LNG at prices “30% lower” than those of Gazprom. True, the US lucrative offer disguised the international trade formula Free on Board, according to which the contracted cost of “blue fuel” did not take into account the cost of its delivery across the Atlantic, regasification, transportation through intra-European pipelines, as well as tax payments. As a result, “cheap” American gas cost the Poles a pretty penny.
According to Vladislav Antonov, a financial analyst at BitRiver, as soon as the European Commission gives additional instructions for buying gas, other EU members, who until recently were not going to open ruble accounts, will change their attitude to the form of payment for raw materials following the Bulgarians. None of them wants to overpay for gas and thus willingly give a competitive advantage to the more accommodating members of the alliance. The Europeans have realized that they cannot do without Russian energy resources and are trying to find a compromise solution on how to buy it without violating their sanctions.
Meanwhile, as Kirill Melnikov, head of the Center for Energy Development, believes, even after consultations with the European Commission, the situation with the issue of “gas currency” may remain unclear. “Bulgaria runs the risk of not receiving clear instructions this time. Brussels is unlikely to go for a formal change in its position, however, it will not directly prohibit the ruble version of the calculation either, ”the expert believes.
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