Latvijas Gaze will not be issued special permit for making payments to Gazprom - FCMC

RIGA - The Financial and Capital Market Commission (FCMC) does not issue special payment permits to companies, only to financial institutions whose customers have requested that a payment be made to a person targeted by sanctions, and only in certain exceptional cases, FCMC representatives told LETA commenting on Latvijas Gaze natural gas company's request for a special permit for changes in the procedure of settlements with Russian natural gas giant Gazprom.

Furthermore, FCMC cannot issue such a permit as it has been requested for transactions with a Russian credit institution, which does not fall within the scope of FCMC supervision, said FCMC representatives.

In addition, the FCMC representatives point out that the European Commission's common position is that it is currently possible to receive Russian gas if this is done within the framework of the existing agreements. Other scenarios are not currently being considered and are not possible, and could be interpreted as an attempt to circumvent the sanctions.

At the same time, the FCMC representatives emphasize that compliance with sanctions is not only a responsibility of the supervisory authorities, it is also a responsibility of each individual company. Circumvention of the sanctions can have significant negative impact on the company's future operations and reputation, and it may be interpreted as a criminal offense.

As reported, Latvijas Gaze has approached FCMC with a request for a special permit for changes in the procedure of settlements with Gazprom, Latvijas Gaze CEO Aigars Kalvitis said in an announcement to Nasdaq Riga.

Kalvitis notes that Latvijas Gaze has a long-term agreement with Gazprom on natural gas supplies in 2000-2030. So far, as stipulated by the agreement, payments for supplies have been made in the euro currency.

On March 31, Russian President Vladimir Putin signed a decree obliging countries labelled by Russia as "unfriendly" to pay for Russian gas imports in rubles as of Friday, April 1. Western countries indicated that such a requirement is a breach of the existing contracts and that they have no intention of paying for Russian gas in rubles.

Latvijas Gaze has not made any natural gas purchases from Gazprom since the introduction of the changes. There are both political and commercial reasons to the decision of not purchasing natural gas.

The stance of the European Commission and Latvia regarding the changes in the procedure of settlements is still not clear, and the natural gas market price is economically uncompetitive and excessive, Kalvitis says in the statement to the stock exchange.

The Saeima on Thursday approved amendments to the Energy Law banning Russian gas imports, but it is still not clear when exactly the ban might take effect. The government has said that the ban might be enacted as of 2023. It is expected that the issue will be decided during the third and final reading of the draft legislation in the Saeima.