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The European Union is working with the United States to soften the blow without undermining their shared stance against Moscow. Gazprombank, pivotal for Russian natural gas transactions, has become a focal point of geopolitical and energy strategy since the U.S. imposed sanctions last month.
While President Vladimir Putin’s decision to scrap the requirement for foreign buyers to rely solely on Gazprombank offers some flexibility, it’s done little to untangle the legal and logistical challenges facing the EU.
The current discussions revolve around whether payments can flow through a Luxembourg-based subsidiary of Gazprombank or alternate channels entirely. The stakes are high: while Europe’s reliance on Russian pipeline gas has plummeted—from over 40% of imports in 2021 to about 8% last year—Russia still supplies nearly 15% of the bloc’s combined pipeline and LNG needs. Meanwhile, Norway and the U.S. have stepped in as Europe’s top suppliers, with shares of 30% and 19%, respectively.
Banks facilitating gas payments are still wary of any misstep that could land them in violation of sanctions. Slovakia and Hungary have found themselves in particularly vulnerable positions. Hungary has even petitioned the U.S. for a sanctions waiver, desperate to secure its energy future.
Turkey is also seeking a U.S. sanctions waiver to continue using the bank for paying for its energy imports from Russia, while also talking with Russian officials about the future of energy trade and payments.
Last month, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Gazprombank in what the Treasury said was “another major step in implementing commitments made by G7 leaders to curtail Russia’s use of the international financial system to further its war against Ukraine.”
