US authorities have imposed broad sanctions on the Russia’s leading financial institution, Gazprombank — that is partly owned by state-controlled Gazprom — and is the agent for the gas giant, which handles payments from its remaining gas customers in Europe and other global regions.
In a statement released on Thursday evening, the US Department of the Treasury said that it has sanctioned Gazprombank alongside its six foreign subsidiaries.
In 2022, Gazprom unilaterally changed payment terms for its European customers, requiring them to pay for Russian gas supplies solely to this Russian financial institution, with proceeds converted into roubles. The gas giant has a 28% direct stake in Gazprombank.
The US said that Gazprombank is “a conduit for Russia to purchase military material for its war effort against Ukraine”.
“The Russian government also uses Gazprombank to pay its soldiers, including for combat bonuses, and to compensate the families of Russian soldiers killed fighting Putin’s war against Ukraine. Australia, Canada, New Zealand and the UK have previously sanctioned Gazprombank,” it continued.
Sanctions were also introduced against Luxembourg-based bank GPB International, Hong Kong-based GPB Financial Services, Cyprus-based GPB Financial Services and GPB-DI Holdings Limited, Switzerland-based Gazprombank and South Africa-based GPB Africa and Middle East, which are wholly owned subsidiaries of Gazprombank.
The US move immediately caused concern among Gazprom’s remaining customers in Europe that receive gas via the TurkStream gas pipeline, which crosses the Black Sea, exiting in Turkey and then extending via Bulgaria to Serbia and Hungary.
Hungary’s Foreign Minister, Peter Szijjarto, in a statement said that the “country’s lawyers are studying the effects of the American sanctions [on the gas contract] between Hungary and Gazprom. We will provide energy supply to our country in the future as well, regardless of any kind of external pressure or intervention attempts”.
Hungary’s state gas importer and distributor MVM CEEnergy — that holds a long-term contract with Gazprom — is in talks with Turkish state gas company Botas on a new gas import deal, the company’s chief executive told Reuters on Friday.
“We are working on a new agreement for 2025, aiming for much bigger volumes now,” Laszlo Fritsch, said on the sidelines of the Istanbul Energy Forum.
In the first such deal between the two countries, MVM in 2023 signed an agreement with Botas to import around 300 million cubic metres of gas per annum.
Sanctions against Gazprombank are also seen as a US contribution to ongoing European efforts to reduce to zero remaining Russian pipeline gas supplies to Slovakia and Austria.
Such supplies are set to halt in January because Ukraine is adamant it will not negotiate a new transit deal with Gazprom to replace the expiring transit agreement that permitted Russian gas to flow across the country to Europe for almost three years of the war.
Senior fellow at the US-based Center for European Policy Analysis, Sergiy Makogon, in a social network post said that “the sanctions [against Gazprombank] are a very clear signal from the US to the EU and Ukraine that there should be no further transit of Russian gas to Europe, or attempts to transport it involving Azerbaijan’s state oil player Socar as a middle company”.
Austria, Slovakia and the Czech Republic from 1 January 2025 are set to lose more than 41 million cubic metres per day of Russian gas that arrives in these countries via war-torn Ukraine, as a five-year transit agreement expires at the end of December.
Concurrently with this action, the US Department has issued two new general licences instructing US persons to wind down transactions involving Gazprombank, among other financial institutions, and to take the necessary steps to divest from debt or equity issued by Gazprombank.
Source: By Vladimir Afanasiev from upstreamonline.com