No payment in euros
Putin instructs Gazprom to convert the ruble
03/25/2022, 18:36
Russia wants to counter Western sanctions with an obligation to pay for energy purchases in the country in rubles in the future. The buyers refer to existing contracts. But head of state Putin is now giving the state-owned company Gazprom four days to adapt its systems accordingly.
Energy giant Gazprom has until early next week to accept payments for its natural gas exports in Russia’s ruble, the national currency. President Vladimir Putin gave Gazprom a corresponding instruction, said Kremlin spokesman Dmitry Peskov. The group now has four days to set up a payment conversion system. “This information will then be made available to buyers of Gazprom products,” said Peskov.
To date, around 58 percent of Gazprom’s exports are in euros, 39 percent in dollars and 3 percent in pounds sterling. Putin recently declared that Russia would demand payment in rubles for gas sold to “unfriendly” countries. Earlier, the US and its European allies had imposed joint sanctions on Russia to force the country to withdraw from Ukraine.
Putin’s announcement was sharply criticized in Europe. Many companies pointed out that the current contracts with Gazprom provide for payment in euros or dollars, but not in rubles. Russian supplies cover about 40 percent of Europe’s gas needs. At the same time, Peskov pointed out that Novatek, Russia’s largest producer of liquefied natural gas, had not received such instructions.
The federal government initially sees the energy suppliers in Germany as having an obligation to ensure compliance with the contracts with Russia for supplying oil and gas. This also applies to the payment of bills either in euros or dollars, said a spokesman for the Federal Ministry of Economics in Berlin. But we are always in conversation here.
At the same time, it became known that Gazprom is allowing Indian customer Gail to pay for gas imports in euros instead of dollars, two insiders said. Gail operates India’s largest pipeline network and has a long-term contract to purchase 2.5 million tons of LNG annually from Gazprom. Neither Gail nor Gazprom wanted to comment when asked.
India has so far refrained from openly condemning Russia for the war. Indian firms are currently buying Russian oil as it is available at a deep discount after some companies and countries avoid buying from Moscow.