Eni Begins Process of Opening Gazprom Bank Current Accounts

Eni has announced that it has begun the process of opening two K current accounts at Gazprom Bank on a precautionary basis.

One of the accounts is in Euros and the second is in Rubles, according to Eni, which noted that the move follows Gazprom Export’s unilateral request to amend the existing contracts between the parties in accordance with the new gas payment procedure established by the Russian Federation.

“While Eni has rejected those amendments, the company is going to temporarily open the two accounts without prejudice to its contractual rights, which still envisage payment in Euros,” Eni said in a statement posted on its website.

“This explicit conditionality will be included in the payment procedure,” Eni added in the statement.

Eni revealed that the decision has been shared with the Italian institutions and said it was taken in compliance with the current international sanctions framework and in the context of an ongoing discussion with Gazprom Export to explicitly confirm that any possible risk or cost deriving from this new payment procedure will be allocated to Gazprom Export.

According to Eni, as of May 17, Gazprom Export and the relevant Russian federal authorities have confirmed that invoicing and payment will continue to take place in Euros, a clearing point agent operating at the Moscow Stock Exchange will carry out the conversion into Rubles within 48 hours without any involvement of the Central Bank of Russia, and in the event of any delays or technical inability to complete the conversion on time, there will be no impact on supplies.

“Making payments in this way would not face at the moment any European regulation aimed at preventing the implementation of the process outlined above (Eni, as requested by the European Commission, has clarified with Gazprom Export since the beginning that the payments obligations will be deemed satisfied by Eni upon the transfer of Euros consistent with the contract, and it will clarify it again when the K accounts are opened),” Eni said in the statement.

“The new procedure should be neutral in terms of both cost and risk, and not incompatible with the existing sanctions. The payment obligation can be fulfilled with the transfer of Euros. Therefore, non-payment by Eni would a) expose the company to the risk of violating its obligation to implement in good faith contractual requests by Gazprom Export imposed by its own authorities (which Eni is not subject to); and b) a potential supply disruption that could risk a breach of its sales commitments to customers,” Eni added in the statement.

Last month, Bloomberg reported that Eni was preparing to open Ruble accounts at Gazprombank JSC, citing people familiar with the matter.

A market note from Rystad Energy sent to Rigzone back in March outlined that gas markets were in a frenzy as Russian President Vladimir Putin announced that gas will have to be purchased in Rubles.

A separate note from Rystad sent to Rigzone in April highlighted that Hungary’s Prime Minister said that the country will pay for gas in Rubles if Russia ask them. Rystad outlined that the statement revealed fissures in what had been a common response from the EU - that such a unilateral demand was against the terms of their contracts.

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