Eesti Gaas: Not clear how ruble payments to be made to Gazprom

A Tallinn tram in Eesti Gaas livery.
A Tallinn tram in Eesti Gaas livery. Source: Siim Lõvi /ERR

Exactly how Estonia will have to pay for imports of Russian natural gas in rubles, following an announcement from Russian leader Vladimir Putin that European customers would have to do just that, is not yet clear, Estonia's largest gas supplier, Eesti Gaas says.

The next payment, to Russian state energy firm Gazprom, is due this month, ETV news show "Aktuaalne kaamera" (AK) reported, while an explanation of how this will be transacted in rubles is still wanting.

Raul Kotov, Eesti Gaas board member, said: "Nothing like this has happened before and, as we have understood, this could take another week or more. The processes are still being clarified and the rules are being discussed, so we look forward to seeing it," adding that as far as he understood it the policy applied to the whole of Europe so far as gas purchases go.

Marko Allikson, board member of independent energy traders Baltic Energy Partners, said that the reasons why Moscow had taken such a step was also not entirely clear.

He said: "The first thought was definitely one of PR, as if to announce that if you don't pay in rubles, you won't get any gas, and that's a threat. What Russia is essentially doing is probably trying to cement major commercial bank Gazprombank's position. This bank is currently not under sanctions, and this would mean that the EU in future should not sanction the payments or the bank."

The move might also prop up the ruble, which has rallied some what in recent days after hitting rock bottom a month ago, though at the same time the price in contracts is generally in US dollars or in euros, he said,

The effect longer term will be for customers to look for alternatives to Russian natural gas, Allikson added, including inside the EU, which to date still purchases Russian oil and gas.

The other two Baltic states, Latvia and Lithuania, have announced that they are no longer importing Russian natural gas, with the head of Latvia's natural gas storage operator making an announcement to that effect on Saturday, public broadcaster LSM reports on its English-language portal.

Lithuania's President, Gitanas Nauseda, made a similar announcement on his social media account and called on the rest of the EU to follow suit.

Lithuania has a liquefied natural gas (LNG) terminal vessel at the port of Klaipėda, while calls to put in place a similar floating terminal at Paldiski, Estonia, to serve Finland and Latvia as well as Estonia, are under discussion.

Late last week, Putin announced that European customers should either pay for their gas in rubles or be cut off, a development which major customer Germany has referred to as "blackmail".


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Editor: Andrew Whyte

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