Russia decrees that it will only trade its gas in rubles

This measure is directed against countries described by the Kremlin as “unfriendly”, a long list that includes the US, Canada, the United Kingdom, Ukraine and the nations belonging to the EU. This new law was adopted to counteract the freezing, by the West, of Russian foreign currency and gold reserves due to the military offensive on Ukrainian territory.

The presidential decree that obliges buyers of Russian gas to pay for supplies in rubles came into force this Friday while the gas giant Gazprom informed its clients of the new mechanisms but without yet closing its pipelines.

“Gazprom unquestionably and fully complies with the requirements of Russian law. We have today officially sent notifications about the new ruble payment mechanisms to counterparties,” the company said in a statement, assuring that it remains a reliable partner. and “continues to export the gas to consumers.”

The most preferable variant

The Kremlin spokesman, Dmitri Peskov, stated that this measure, approved the day before by Russian President Vladimir Putin, was “the preferable and safest variant under current conditions”, after the West froze part of the Russian reserves in currency and gold for the military offensive in Ukraine.

Of course, he did not rule out that the payment mechanisms may vary “if conditions change.” “There’s nothing set in stone about it,” he said.

This measure is directed against the countries described by Russia as “unfriendly”, a long list that includes the USA, Canada, the United Kingdom and the Ukraine, among others, without forgetting all the EU countries, many of which not only They are regular buyers of Russian gas, but rely heavily on these supplies.

Peskov sent a reassuring message by pointing out that the entry into force of the decree did not mean the immediate cut off of gas if it is not paid in rubles, since “payment for current supplies is not carried out now, but in mid-April or even in early May.

And it is up to Gazprom, he explained, to work with the buyers to fine-tune the payment mechanisms, which, according to Putin, would allow the West to deposit euros and dollars in Gazprombank, not included in the Western sanctions, which would be converted into rubles that the giant would charge. Russian gas.

Acceptable Terms

Russian Foreign Minister Sergei Lavrov called Moscow’s proposed terms for gas sales “acceptable,” noting that the West pays Russia in foreign currency “and then freezes our accounts.”

Although Putin assured the day before that Russia offers “unfriendly countries” that will have to buy gas exclusively in rubles “a clear and transparent mechanism”, which does not convince importers.

The German chancellor, Olaf Scholz, whose country is one of the main buyers of Russian gas, which represents 55% of its consumption, reiterated the day before that Berlin would continue to pay for this fuel in euros and that he was not willing to change the form of payment. .

However, he ruled out the imposition of an energy embargo against Russia due to Germany’s dependence on gas from Moscow, especially when there are no conditions to supply these supplies, a position supported by his Austrian counterpart, Karl Nehammer.

Russian gas is of great importance to Europe, which imported 155 billion cubic meters of gas in 2021, 40% of total consumption.

Wet powder

In this context, the banking pirouette that allows customers to pay in foreign currency and Gazprom to collect in rubles, could be, according to what Mijaíl Krutikhin, an expert on oil and gas issues, told Efe in a telephone conversation, a sign that “the plan of Putin has failed.”

This announcement “was a step of patriotic propaganda”, but the Kremlin quickly understood that “the measure would have a disastrous effect on the country’s budget”, according to the analyst.

“Hence, to save face, they have designed a mechanism that will allow consumer countries to continue paying in dollars and euros,” said the expert.

In this sense, he insisted that “nothing will change” for importers of Russian gas, that they will not even have to open an account in rubles at Gazprombank, the bank authorized to receive payments in foreign currency and that it will be in charge of converting rubles currencies.

“Perhaps the only modification that needs to be made in the contracts refers to the name of the bank in which the payments are made, if it is not Gazprombank,” he ventured.