Moscow has demanded that customers of Russian natural gas pay in Russian rubles, a demand unanimously rejected early this week by the G7 countries (Canada, the U.S., the U.K., France, Germany, Italy, and Japan).
Russian President Vladimir Putin is also reported to want to expand ruble payments to certain other of Russia’s exports, including fertilizers.
Putin on March 31 issued a decree requiring “unfriendly” foreign countries pay Russian rubles for their natural gas supplies from Russia, starting April 1, or see their supply contracts halted. However, he appeared to temper the order by allowing U.S. dollar and Euro payments through a designated bank.
Countries deemed “unfriendly” for imposing sanctions on Russia over its war in Ukraine can continue to pay in foreign currency through a Russian bank that will then convert the money into rubles, according to a Kremlin decree published by Russian state media on March 31.
Kremlin spokesperson Dmitry Peskov on March 30 dismissed reports that the new mechanism of payment for Russian natural gas would start from March 31, conceding the new payment mechanism would take some time to implement, according to a Prime news report.
Peskov earlier in the week told reporters that Russia aims to keep supplying gas to foreign buyers and “remains a trusted supplier,” but reiterated Russia wants to receive rubles for its gas supplies, Bloomberg reported.
“Buyers in the European Union [and elsewhere] must pay Russian rubles for Russian gas, but other contract terms will remain unchanged,” Bloomberg cited Peskov as saying.
Putin earlier had ordered the government to create a mechanism of switching Russian gas major Gazprom PJSC’s contracts with “unfriendly countries” into rubles by March 31.
Natural gas supplies from Gazprom remained broadly stable this week, but the gas major is reported to be assessing its options in case supplies have to be cut, according to the Bloomberg report, citing a person with direct knowledge of the matter.
According to Bloomberg, citing a Gazprom statement on the company’s official Telgram channel, the gas giant was sending notifications about the new payment order to customers on April 1.
European benchmark natural gas prices on the Dutch TTF gas futures exchange fluctuated as traders struggled to make sense of Russia’s ruble payment plans. The front-month contract (currently May) closed at €120.980 per megawatt-hour on March 31, up 0.959 percent on the day. The May contract had closed the day’s trading on March 25 at €101.27 per megawatt-hour.
Putin is also reported to want to expand ruble payments to other exports such as fertilizers, grain, oil, coal, metals, and timber.