May 17 (Reuters) - French power company Engie (ENGIE.PA) said on Tuesday it would make the next payment to Russian gas producer Gazprom (GAZP.MM) in euros before the end of the month as both companies have agreed on a solution in line with European sanctions.

CEO Catherine MacGregor told a call with analysts that Engie will be paying Gazprom in euros and although she did not give any specific timing for the payments, she said they were imminent.

Following Russia's demand to be paid for its gas in roubles, the European Commission, the EU executive, on Friday shared updated guidance with countries on whether this could be compatible with EU sanctions on Moscow. 

It confirmed previous advice that EU sanctions do not prevent companies from opening an account at a designated bank, and companies can pay for Russian gas - as long as they do so in the currency agreed in their existing contracts and declare the transaction completed when that currency is paid.

Nearly all of the supply contracts EU companies have with Russian gas giant Gazprom are in euros or dollars.

"We have today line of sight for a solution that will allow us to pay using the currency for the contract, which seems to be acceptable for Gazprom and which is in compliance with the EU sanctions at least to our understanding," MacGregor said in a call with analysts.

Engie declined to say whether this meant the utility had opened, or planned to open, an account with private Russian bank Gazprombank.

Russia's invasion of Ukraine on Feb. 24 drove already high energy prices higher because of fears of supply disruption.

In the context of the price rise, Engie upgraded its 2022 financial guidance, saying it expects 2022 group share net recurring income of 3.8-4.4 billion euros ($3.97-$4.59 billion), versus a previous target of 3.1-3.3 billion euros.

Engie's revenue for the first quarter ending March 31 rose 85% from a year ago to 25.6 billion euros, while its earnings before interest (EBIT) grew 74% to 3.5 billion euros.

Engie shares were up 5.2% to 12.24 euros at 1043 GMT taking them to the top of France's CAC 40 Index (.FCHI).

Analysts at JP Morgan said the first-quarter results were very strong.

"We believe that the company is very well on track to deliver: this will ultimately depend on a number of factors including power prices evolution and the evolution of Russia/Ukraine situation," they said in a note.

Given the uncertainties, Engie said its actions to improve security of supply included increasing volumes from existing suppliers and contracts with new suppliers, as well as adapting its hedging.

The energy group said it has reduced its direct exposure to Gazprom from a maximum of 15 terawatt hours (TWh) to just under 5 TWh at the end of March.

($1 = 0.9576 euros)