(Bloomberg) -- President Vladimir Putin changed the procedure for foreign buyers to pay for Russian gas, easing some concerns that US sanctions imposed on Gazprombank will lead to a halt of supplies to Europe.
In a decree signed off Thursday evening, Putin lifted a requirement to pay for Russian gas directly via Gazprombank. Hours later, the bank clarified it remains the sole authorized bank for payments, but foreign buyers may be able to use other financial institutions to convert money into rubles before transferring it.
Payments via third parties weren’t previously possible, and may allow central European importers to settle their bills despite recent restrictions.
“This decree means that there is no expectation on Russia’s part that a sanctions waiver will be provided any time soon,” said Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Studies. “Therefore this amended mechanism has been set up to allow flows gas and money to continue regardless.”
The payments system is still riddled with complexity. Buyers will need to find banks that are willing and able to exchange currencies into rubles and facilitate transfers to Gazprombank.
The US last month slapped sanctions on the Russian bank as it intensified efforts to punish Moscow for its war in Ukraine. The move raised the risk of Europe’s remaining gas flows from Russia being cut off, prompting warnings about energy security. Since 2022, Putin has required payments to gas giant Gazprom PJSC to be made in rubles directly via accounts at Gazprombank.
Another option made possible by Thursday’s decree is reaching settlements among involved partners, according to former Slovak economy minister and energy expert Karel Hirman.
“In the Slovak case, this could mean that SPP, Eustream and Gazprom would offset their payments against each other,” Hirman said. “For example, SPP would not pay Gazprom Export for gas, but instead, SPP would pay Eustream for gas transit on behalf of Gazprom Export.”
SPP, which is Slovakia’s largest energy supplier, said it will continue to act in accordance with the terms of the valid commercial contracts and that any changes will be analyzed in terms of their impact on contractual relationships.
While Europe’s gas market responded to the decree with early signs of relief — prices are set to end the week lower for the first time since early November — not all relevant stakeholders appeared to have their concerns erased.
Turkey is still seeking an exemption from US sanctions on Gazprombank, Energy Minister Alparslan Bayraktar said on Friday morning on the sidelines of an event in Istanbul.
Europe was already bracing for a potential end to Russian gas flows via Ukraine before the latest events, with a transit agreement between Moscow and Kyiv expiring at the end of the year and no alternative in sight. That would close off one of two remaining pipeline routes to Europe and leave it more vulnerable to spikes in demand.
--With assistance from Daniel Hornak and Patrick Sykes.
(Updates with analyst quote in fourth paragraph.)
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