By Kate Abnett

BRUSSELS, (Reuters) – Energy ministers of the European Union meet on Monday to discuss a joint response to Moscow’s request that European buyers either pay in roubles for Russian gas or have their supply cut.

    Russia halted gas supplies to Bulgaria and Poland last week after they refused to meet its demand to effectively pay in roubles.

These countries had already announced that they would stop using Russian gas in the coming year. They claim that it is possible to handle this stoppage. However, there are fears other EU nations, such as Germany which relies on Russian gas for its economic strength, may be affected.

It also threatened to disintegrate the EU’s unitary front against Russia, amid differences on the correct course of action.

    With many European companies facing gas payment deadlines later this month, EU states have a pressing need to clarify whether companies can keep buying the fuel without breaching the EU’s sanctions against Russia over its invasion of Ukraine.

Moscow said that international gas buyers should deposit dollars or euros into the Gazprombank account, which will then convert these into roubles. 

    The European Commission has told countries that complying with Russia’s scheme could breach EU sanctions, while also suggesting countries could make sanctions-compliant payments if they declare the payment complete once it has been made in euros and before its conversion into roubles. 

Brussels has begun to provide additional guidance after last week’s requests from Bulgaria, Greece, Poland and Slovakia for clearer advice.

RUSSIA STAINS NO PROBLEM

Russia stated Friday it was happy with its Decree. It states that buyers are only obligated to pay the hard currency after they have been converted to rubles.   

    While Bulgaria and Poland refused to engage with Moscow’s scheme, Germany has echoed the Commission’s workaround to allow companies to pay, and Hungary has said buyers can engage with Russia’s mechanism.

Paying in rubles can protect Russia’s economy against the effects of sanctions. Fuel revenues can be used to help finance the so-called special military operations.

The Centre for Research on Energy and Clean Air discovered that the EU has paid Russia more than 45 Billion Euros ($47.43Billion) for its gas and oil supplies since Russia invaded Ukraine on Feb. 24.

Russia supplies 40% EU gas, and 26% EU oil. Germany is dependent on Russia. Germany has so far not resisted the calls to stop Russian fuel imports because of fears of economic loss.

After talks held between EU countries and the Commission at the weekend in preparation for meetings this week, diplomats stated that the EU was moving closer to a ban on Russian oil imports by the end.

The sixth set of EU sanctions targeting Moscow will be discussed by Ambassadors at Wednesday’s meeting.

As countries prepare for shocks, the ministers of Monday will talk about how urgently non-Russian supplies must be secured and storage. 

    Dependency on Russian gas varies between countries, but analysts have said an immediate total cut-off of Russian gas would plunge countries, including Germany, into recession and require emergency measures such as factory closures to cope.

    Austria, Hungary, Italy and Slovakia also had reservations over the weekend about the idea of an oil embargo, diplomats said.

    The Commission will later this month unveil plans to end Europe’s dependency on Russian fossil fuels by 2027, including by expanding renewable energy and renovating buildings to consume less.

($1 = 0.9488 euros)