Energy Crisis

Russia converts gas payment in rubles, Gazprom continues to supply EU countries

Russia converts gas payment in rubles, Gazprom continues to supply EU countries nord stream

Nord Stream (photo: Gazprom)

Published

April 1, 2022

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Published:

April 1, 2022

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The deliveries of Russian natural gas to Europe continued on Friday, a day after Russian President Vladimir Putin signed a decree on the procedure for making buyers from unfriendly countries pay for natural gas in rubles. There was fear that such countries, mostly EU member states, could be left without supplies as they refuse to pay for gas in rubles instead in euros and dollars.

Natural gas continued to flow into Europe via Ukraine, Russian state-owned energy giant Gazprom said Friday, Reuters reported.

So far, the gas market didn’t react to the new rules, which could signify there is no threat that the supplies to Europe would be ceased.

Peskov: Russia remains committed to all its obligations under existing contracts

Dmitry Peskov, the Russian president’s press secretary, said yesterday that there would be virtually no changes for buyers of Russian gas. He added that Russia remains committed to all its obligations under existing contracts and agreements.

Peskov said the supply wouldn’t be stopped immediately because payments for deliveries from April 1 come in the second part of the month and in May. 

Yesterday, on March 31, Russian President Vladimir Putin signed a decree that came into force today, April 1.

Under the new rules, unfriendly states must transfer funds in foreign currencies to Gazprombank, which will buy rubles on exchanges and transfer them to special ruble accounts of importers, the Russian state-owned TASS agency reported.

Putin: New rules are the response to the Western countries’ move to freeze Russian assets

According to Putin, buyers from these countries have to open a ruble account in Russian banks, which will be used to pay for gas.

From April, Russia will stop supplying natural gas to unfriendly countries under existing contracts if it is not paid for in rubles, Putin asserted. He said earlier that the measure is necessary because Western countries are freezing Russian assets.

According to TASS, the procedure for buyers’ special accounts with Gazprombank will be determined by the Central Bank of the Russian Federation within ten days.

BASF CEO: do we want to destroy Germany’s entire economy?

After the decree was signed, officials from European Union member states again refused to pay gas in rubles. At the same time, German companies warned of the severe impact of halting energy deliveries from Russia. The EU imports 40 percent of its gas from Russia, while the share is 55 percent in Germany.

The switch of payments for Russian gas into rubles is not of great economic importance. The decision is aimed at achieving political goals, Poland’s Deputy Prime Minister Jarosław Kaczyński said. At the same time, Austria’s Chancellor Karl Nehammer pointed out that his country is waiting for details from Gazprom regarding the required currency when paying for gas supplies, TASS reported.

Jarosław Kaczyński: Paying in rubles doesn’t have great economic importance

On March 30, Germany had put in place an emergency plan in case Russia cuts off energy supplies. The plan includes three stages, and the country has entered the first one.

Martin Brudermüller, CEO of BASF, one of the biggest chemical conglomerates, stressed that Germany could experience the most severe crisis since the end of World War Two if Russian energy supplies were stopped.

“Do we want to destroy the entire economy with our eyes open?” Brudermüller asked and added that such an experiment would be irresponsible.

Brudermüller estimated that Germany could end imports of Russian gas in four-five years.

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