LONDON, May 17 (Reuters) - Dutch wholesale gas prices fell on Tuesday morning after companies readied to make payments for Russian gas following clarification from the European Commission they can pay without breaking sanctions, easing fears of possible supply cuts.

The Dutch day-ahead < TRNLTTFD1> contract was down 0.65 euros at 91.25 euros per megawatt hour (MWh) by 0921 GMT. The June contract was down 0.87 euros at 92.03 euros/MWh.

The European Commission has explained how EU companies can pay for Russian gas without breaching the bloc's sanctions against Russia, in an updated guidance on the issue seen by Reuters on Monday.

“This should ease fears of any cuts to supply as per Gazprom's recent advice saying those paying in Euros/Dollars would not (default) if said payments are converted in time,” analysts at Refinitiv said in a daily research note.

Traders said with companies now seemingly confident they can make payments for Russian gas the threat of supply cuts had eased.

French power group ENGIE said on Tuesday it was in talks with Gazprom regarding changing the payment scheme for Russian gas supplies.[ nS8N2X808C]

Sources on Monday said Italy’s ENI would open bank accounts this week to pay for Russian gas following the Commission’s clarification.

Prices, however, remain more than 250% higher than they were this time last year and analysts warned the ongoing crisis in Ukraine is likely to mean they will stay elevated.

“Longer term, we believe European gas prices will remain well above historical average levels ... as Europe seeks to reduce its exposure to Russian gas (supporting LNG demand growth) and Russia's LNG projects are deferred or cancelled,” analysts at Jefferies said in a research note.

British gas prices were up amid weaker supply from the country’s liquefied natural gas (LNG) terminals.

The British day-ahead contract was up 5 pence at 100 p/therm and the June contract up 15.35 p at 191.35 p/therm.

In the European carbon market, the benchmark contract rose by 1.12 euros to 90.68 euros a tonne. (Reporting by Susanna Twidale Editing by Mark Potter)