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dollars into an account at Russia’s Gazprombank, which has to convert them into rubles and transfer the payment to Russian gas giant Gazprom. In March Putin demanded that European consumers pay for gas in rubles in violation of gas supply contracts. Eventually the European Union refused to pay in rubles, and the Kremlin came up with the Gazprombank scheme. Tim McPhee, a spokesman for the European Commission, said on May 12 that the Gazprombank scheme would breach EU sanctions because it involves Russia’s central bank, which has been sanctioned by the European Union.
Traders outsmart sanctions to supply Russian oil to US. The oil is being concealed in blended refined products such as gasoline, diesel and chemicals, while traders obscure its origins to keep it flowing, the Wall Street Journal reported. Fuels believed to be partially made from Russian crude landed in New York and New Jersey in May, according to the newspaper. Oil is also being transferred between ships at sea, a scheme used to buy and sell sanctioned Iranian and Venezuelan oil. The U.S. and U.K. imposed an embargo on Russian oil in March, while the European Union introduced a partial oil embargo in May.
Saudi Arabia has indicated to its Western allies it is preparing to ramp up oil supply in the event of a substantial drop in Russian flow as a result of sanctions, the Financial Times reported on June 2. The EU is set to reduce imports of Russian oil and oil product supplies by around 90% by the end of the year under an embargo that has been adopted in its sixth set of sanctions. And the bloc has also agreed with the UK to bar the insurance of ships that carry Russian oil within six months. Western countries have put pressure on Saudi Arabia in recent months to ramp up supply to replace Russian oil and reduce prices, but so far the kingdom has resisted such calls. In their latest monthly meeting, however, Saudi Arabia and its OPEC+ allies agreed to boost output by 648,000 barrels per day (bpd) in July and by a similar amount in August, signalling that they are willing to capitalise on Russia’s loss of market share. “Saudi Arabia is aware of the risks and that it is not in their interests to lose control of oil prices,” one person briefed on Saudi Arabia’s thinking told the FT.
Russia’s sanctions on Gazprom Germania and its subsidiaries could cost German taxpayers €5bn ($5.4bn) for the purchase of alternative gas supplies, German newspaper Welt am Sonntag reported on June 5. German regulators took over operational control of Gazprom Germania, formerly owned by Russia’s Gazprom, in mid-April, in a bid to safeguard its gas supply. But in mid-May, the Russian government responded by slapping sanctions on the company and halting deliveries to it. Acting as Gazprom Germania’s trustee, Germany’s Bundesnetzagentur energy regulator has since been buying replacement gas on the market, in order to fulfil supply obligations with German utilities and regional suppliers. But this has come at a significant expense. Germany’s economy ministry estimates that some 10 mcm per day
141 RUSSIA Country Report October 2020 www.intellinews.com