(Bloomberg) -- Eni SpA hasn't submitted to Russian demands that customers pay for natural gas using rubles, and the company said it will comply with European Union rules and the terms of its current contract.
After suffering months of punishing sanctions, President Vladimir Putin is using gas exports as a powerful tool to impose some economic pain on Europe. His demand that customers in the region pay for gas in rubles, and the decision to cut shipments to two countries that refused to do so, threatens to fracture the EU's unity.
“We are going to pay for the gas delivered in compliance with the contract terms and following international sanctions, and to respect all these rules,” Eni's Chief Financial Officer Francesco Gattei said on a conference call on Friday. “The currency of contract is euro and we continue to receive invoices in euro and we've not opened a ruble account.”
The Italian energy giant has started making preparations to open a ruble account as a precautionary measures while continuing to seek clarity from national and European authorities, Bloomberg reported on April 28. The company has still time to assess the situation until the next round of payments, which is due after May 15. April deliveries payments are due in May, Gattei said in conference call.
Like most of its peers, Eni has already said it won't arrange new contracts to buy Russian oil. It will also sell its stake in a joint venture with Gazprom PJSC. As Europe rushes to reduce its reliance on the country, the Italian government, which owns about 30% of Eni, has been scouring the globe for replacement supplies -- securing new agreements with exporters particularly in North Africa.
Yet Eni, like almost every other European energy supplier, remains reliant on Russian energy in the short term. While this presents major challenges, the difficulties have so far been more than offset by gains from high fuel prices. The company posted a 12-fold increase in first-quarter adjusted net income to 3.27 billion euros ($3.44 billion) and raised the outlook for full-year earnings from its gas business.
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