Russia Cuts Off Gas Supply to Finland, but Germany and Italy will Pay

Russia has cut off gas supply to Finland, Poland and Bulgaria over payment disputes. However, despite foggy EU guidance on the legality of the euro-ruble payment system, gas buyers in Italy, France and Germany have opened ruble accounts over the past week, displaying an intent to comply with Russian demands to ensure security of supply.

Russia halted gas supply to Finland over the weekend, after Helsinki refused to pay for gas in rubles. Finland was relatively dependent on Russian imports but has increased supply from the Baltics via the Baltic connector pipeline since 2020.

Moscow has demanded that European buyers pay for gas in rubles, depositing euros into Gazprom Bank account, which are then converted into rubles by Russia’s central bank.

EU guidance on the legality of such payments has been ambiguous. However, buyers in Italy, Slovakia, Austria and Germany believe they can continue to pay for gas without breaching sanctions and have opened ruble accounts with Gazprom Bank.