Wed. Oct 5th, 2022

ST HSIEH

May 13, 2022

Ukraine war casualties are spilling over from the battle grounds in Ukraine to Europe. Russia is taking counter sanctions against EU nations that so far have been sanctioning Russia. Some interesting observations:

  1. European Commission president Ursula von der Leyen called Putin’s policy a “clear breach of contract” and “an attempt to circumvent the sanctions.” It is interesting to note that EU unilaterally sanctioned Russia first with many harsh terms, so it is not clear how many contracts have been breached by EU.
  2. Putin sanctioned gas on EU in response to EU’s sanction. It is an even game! “20 European natural gas buyers open Gazprombank accounts to pay for Russian gas in rubles, report says.” These European natural gas buyers are circumventing (EU) sanctions, it is up to EU to enforce her sanctions!
  3. Kiev is also blocking Russian gas transit to EU nations. Gas supply to EU is getting blocked from both Russia and Kiev, very complicated. EU gas consumers are already paying high prices before the gas cutoff.

Should EU talk with Putin and Zellenskky directly on ending this war and spare the world with all these sanctions and anti-sanctions?

UPDATE 1-Kremlin says no supplies possible to entities on its gas sanctions list

Thu, May 12, 2022, 3:11 AM

May 12 (Reuters) – Russian sanctions imposed on state gas company Gazprom’s former German unit and other entities mean they cannot receive gas supplies from Russia, the Kremlin said on Thursday.

Sanctions are blocking, so there could be no any relations with these companies, nor they can take part in (gas) supplies,” Kremlin spokesperson Dmitry Peskov said. He declined to comment further.

Moscow has imposed sanctions on the owner of the Polish part of the Yamal pipeline that carries Russian gas to Europe, as well as Gazprom’s former German unit, whose subsidiaries help meet Europe’s gas consumption.

The entities on a list of affected firms on a Russian government website on Wednesday were largely based in countries that have imposed sanctions on Russia in response to its invasion of Ukraine, most of them members of the European Union.

Germany, Russia’s top client in Europe, said on Thursday that some subsidiaries of Gazprom Germania, the former Gazprom unit Germany transferred to its energy regulator in April, are receiving no gas because of sanctions.

On Thursday, daily requests for Russian gas deliveries to Slovakia via Ukraine have fallen in line with lower deliveries through Ukraine, where one route remains suspended.

20 European natural gas buyers open Gazprombank accounts to pay for Russian gas in rubles, report says

Grace Dean Thu, May 12, 2022, 5:10 AM

  • 20 European natural gas buyers have opened accounts in Gazprombank, a source told Bloomberg.
  • Vladimir Putin has demanded that foreign buyers pay rubles for supplies.
  • Russia halted gas supplies to Poland and Bulgaria in late April after they failed to pay in rubles.

Twenty European natural gas buyers have opened accounts with Gazprombank so they can pay in rubles, a person close to Kremlin-controlled energy giant Gazprom told Bloomberg.

A further 14 companies have requested the paperwork to set up accounts with Gazprombank, the anonymous source said in an article published on Thursday. It comes after Russia halted gas supplies to Poland and Bulgaria in late April for failing to pay in rubles.

Europe is heavily dependent on Russian energy, although President Vladimir Putin’s invasion of Ukraine has accelerated the EU’s efforts to reduce its reliance.

The West has imposed sweeping sanctions on Russia to destabilize its economy, cut off funding to its military, and put pressure on Putin to end the war.

In late March he said Russia would require “unfriendly” countries that had imposed sanctions on Moscow to pay for its gas in rubles.

European Commission president Ursula von der Leyen called Putin’s policy a “clear breach of contract” and “an attempt to circumvent the sanctions.”

Buyers have to set up two accounts with Gazprombank to facilitate the transaction: one in a foreign currency and another in rubles.

The EU has said opening a ruble account would breach sanctions, but the Gazprom source told Bloomberg that buyers only had to pay Gazprombank in foreign currency, which is then converted to rubles.

Four European natural gas buyers have already paid Russia in rubles for supplies, Bloomberg reported in late April. No more have since done so, the publication’s source said in Thursday’s story.

The EU gets about 40% of its natural gas from Russia, which has the world’s largest gas reserves.

Dutch natural gas futures rose jumped more than a fifth on Thursday above 112 euros ($117) a megawatt hour in the biggest one-day rise since early March.

The price is more than 300% higher than this time last year but far below record highs above 300 euros per megawatt hour immediately after the Russian invasion.

EU’s internal divisions laid bare with gas payments to Russia in rubles; bloc faces dual pressure from Moscow, Kiev

By GT Staff reportersPublished: May 13, 2022 04:58 PM Updated: May 13, 2022 04:54 PM

About 20 European natural gas buyers have reportedly opened accounts to pay for Russian gas in rubles, which analysts said mirrors a dilemma the bloc is stuck in after echoing the US hegemony call – forcing Brussels to adopt a double-faced approach under which the government cast itself tough yet enterprises take a calibrated way to still do business with Russia. 

As EU escalates sanctions against Russia with a sweeping oil ban plan, internal divisions in European countries as well as the Western group are further exposed, and now even Ukraine is doing a calculus, with a fresh move to take natural gas transferred via its territory as a bargain chip to ratchet up pressure on the West. 

A total of 20 European companies have opened accounts in Gazprombank JSC, preparing to pay in rubles for Russian gas. Another 14 buyers have asked for the paperwork needed to set them up, Bloomberg reported on Thursday.

The move comes after European buyers have been struggling for weeks to figure out how they can pay for Russian gas in rubles as Moscow demanded and not fall afoul of EU sanctions.

Trying to bypass the restrictions, European buyers have to set up two accounts with Gazprombank to facilitate the transaction: one in a foreign currency and another in rubles.

The EU enterprises’ move is in sharp contrast to EU officials who have said companies should keep paying in euros, and that opening a ruble bank account would violate sanctions imposed by the bloc.

Cui Hongjian, director of the Department of European Studies at the China Institute of International Studies, said the EU government and companies have reached a consensus on dealing with energy imports from Russia.

 “The EU government seeks to make itself look tough, sending out strong signals. But from the enterprises’ sphere, it’s a technique issue on how to avoid sanctions but still buy natural gas from Russia,” Cui told the Global Times on Friday.

The internal divisions among the EU also widened with a ban on Russian oil in its sixth round of sanctions against Moscow. 

With Russia’s counter-sanctions tools, the previous five rounds of EU sanctions against Russia have neither produced immediate harm on the latter’s economy nor achieved the designed effect. So the sixth round focuses on oil imports – one of the biggest trading categories between Russia and the EU, hoping this could inflict massive harm on Russia. 

However, to date, the EU sanctions plan has still drawn a backlash from a slew of EU countries. 

Hungary said it would still block sanctions on Russian oil. The country gets 85 percent of its natural gas and more than 60 percent of its oil from Russia.

In addition to internal conflicts, it is also facing  pressure from Russia and Ukraine, analysts said.

Ukraine said on Tuesday it would suspend the flow of gas through a transit point which it said delivers almost a third of the fuel piped from Russia to Europe through Ukraine, due to “force majeure,” Reuters reported.

“The EU is in a dilemma. On the one hand, it risks serious retaliation from Russia if the sanctions proposal is pushed ahead, and in an extreme case, Russia could cut off natural gas supplies that will have broader implications for the EU economy,” Cui said, adding that on the other hand, Ukraine is also using natural gas as a card to push Europe on further sanctions. 

“The arrow is fitted to the string. But how to shoot the arrow, and its impact is still an issue,” Cui said. 

Analysts warned that the EU, which relies on around 37 percent of oil imports from Russia, would also bear the dire consequences of the sanctions.

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