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- Mechanism for rouble payments to be presented by Thursday
- G7 nations reject rouble payment demands
- European gas prices rise on supply concerns
Russia said it would work out practical arrangements by Thursday for foreign companies to pay for its gas in roubles, raising the probability of supply disruptions as Western nations have so far rejected Moscow’s demand for a currency switch.
President Vladimir Putin’s order last week to charge “unfriendly” countries in roubles for Russian gas has boosted the currency after it fell to all-time lows when the West imposed sweeping sanctions against Moscow over its invasion of Ukraine.
“No one will supply gas for free, it is simply impossible, and you can pay for it only in roubles,” Kremlin spokesperson Dmitry Peskov told reporters on Tuesday.
The move has drawn strong criticism from European countries, which pay for Russian gas mostly in euros and say Russia is not entitled to redraw contracts, with the G7 nations rejecting Moscow’s demands this week.
European wholesale gas prices have made further gains this week on concerns about supply stopping.
Russia has so far met its contractual obligations for gas supplies to Europe.
Peskov said that in line with a March 31 deadline set by Putin, “all modalities are being developed so that this system is simple, understandable and feasible for respected European and international buyers.”
But G7 countries have called upon companies not to accede to rouble payments and that most gas supply contracts stipulate euro or U.S. dollar payments.
“That’s a position that we share, that our energy Commissioner subscribed to,” a European Commission spokesperson said at a news conference in Brussels on Tuesday.
The European Union is assessing a scenarios including a full halt to Russian gas supplies next winter, as part of its contingency planning for supply shocks, the European Commission said last week.
DAMAGE
Europe gets around 40% of its gas from Russia. Imports were at around 155 billion cubic metres (bcm) last year.
Putin’s demand has stoked fears in Germany, Europe’s top economy, about major disruptions to gas supplies should utilities fail to pay in roubles, and how this would affect industry and households.
