HomeForex UpdatesRussian demand for rouble gasoline funds can be breach of contract, EU...

Russian demand for rouble gasoline funds can be breach of contract, EU leaders say By Reuters

FILE PHOTO: A view exhibits pipelines at a gasoline processing facility, operated by Gazprom firm, at Bovanenkovo gasoline subject on the Arctic Yamal peninsula, Russia Might 21, 2019. REUTERS/Maxim Shemetov

By Kate Abnett

BRUSSELS (Reuters) – Leaders from some European Union member states stated on Thursday Russia’s demand that “unfriendly” nations use roubles to purchase for its oil and gasoline may breach provide contracts.

President Vladimir Putin’s demand on Wednesday for rouble funds despatched European gasoline costs surging and added to issues over provide disruptions within the EU, which will get about 40% of its gasoline from Russia.

Germany and Italy stated the transfer might breach power provide contracts. German chancellor Olaf Scholz stated the foreign money German firms should pay for Russian fossil fuels was mounted of their contracts.

“There are mounted contracts in all places, with the foreign money during which the deliveries are to be paid being a part of these contracts… typically it says euros or {dollars},” Scholz stated on his arrival to an EU summit in Brussels on Thursday.

That was echoed by Italian Prime Minister Mario Draghi. “That is mainly a breach of contract, that is necessary to know,” he stated.

European Fee President Ursula von der Leyen agreed, and stated the transfer was an try to avoid EU sanctions towards Russia.

“We won’t permit our sanctions to be circumvented. The time when power might be used to blackmail us is over,” she stated.

Funds in roubles would shore up the Russian foreign money which has plummeted because the Feb. 24 invasion. Putin’s speech lifted the rouble 9% towards the greenback on Wednesday.

Analysts stated rouble funds can be attainable with out breaking EU sanctions, which don’t instantly hit oil and gasoline provides however goal banks that might be concerned in rouble transactions.

Russia’s primary gasoline exporter Gazprom (MCX:) has greater than 40 long-term gasoline agreements with European counterparties, with Europe paying a whole bunch of thousands and thousands of euros per day to Moscow for fossil fuels.

In line with Gazprom, round 97% of its gasoline gross sales to Europe and different nations as of Jan. 27 had been settled in euros or U.S. {dollars}.

A disruption to Russian oil and gasoline imports would hit some EU nations tougher than others. Germany, Europe’s greatest financial system and power client, receives 18% of Russia’s gasoline exports and 11% of its oil.

Lithuanian President Gitanas Nausėda stated he was “not scared” by Putin’s demand, since Latvia doesn’t import Russian and will substitute Russian gasoline with liquefied from elsewhere.

“No one can pay in roubles,” Slovenia’s Prime Minister Janez Jansa stated.

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