President Vladimir Putin on Thursday signed a decree requiring gas buyers from “unfriendly countries” to hold accounts with Gazprombank – Russia’s third-largest bank – and to settle contracts in rubles. Effective Friday.
“If these payments are not made, we will consider it a non-return on the part of the buyers and this will lead to consequences,” Putin said in a televised address. “Nobody gives us anything for free and we are not going to be charitable,” he added.
Putin has given Russia’s central bank and state-owned gas giant Gazprom until Thursday to submit detailed proposals for a change in the ruble gas payment currency.
According to the decree, Gazprombank would open accounts on behalf of Western gas buyers, buy rubles on their behalf and then transfer the cash to Gazprom’s accounts.
Europe’s top economies have rejected any change in the terms of existing supply agreements, saying they were prepared for all scenarios, including the disruption of gas supplies.
“The contracts are in euros and must be paid in euros and will be paid in euros,” French Finance Minister Bruno Lemerre told a joint news conference with his German counterpart Robert Habek. “We will not accept the payment method for [Russian] “Gas in any currency other than that stated in the contract,” Le Maire added.
German Chancellor Olaf Solz also said that Berlin would make payments for Russian gas only in euros.
“We examined the contracts for the delivery of gas and other deliveries. [The contracts state] that payments must be made in euros, sometimes in US dollars, but mainly in euros. “And I made it clear in my conversation with the Russian president that this will remain as it is,” Soltz told reporters in Berlin.
A spokesman for British Prime Minister Boris Johnson said Britain would not accept Putin’s request. Energy Minister Kwasi Kwarteng had made it clear that “this is not something the UK will consider”, the spokesman added.
The German government on Wednesday launched a three-stage plan for managing gas reserves in the event of a crisis, issuing an “early warning” of possible shortages. The gas crisis plan could lead to a coup if supplies are severely disrupted, with large industrial customers being the first to strike to protect households, hospitals and other basic services.
Hubeck said the country has enough gas at the moment, but urged all consumers to reduce their use as much as possible with immediate effect, a call repeated by other governments in Europe.
The European Union is dependent on Russia for about 40% of its natural gas. EU leaders have set a goal of reducing Russian gas consumption by about 66% by the end of this year and are trying to find alternative sources, including additional liquefied natural gas shipments from the United States.
Experts say a cut in Europe’s gas supply is now more likely, but not inevitable.
“Neither Gazprom nor the Kremlin seem willing to stop Russia’s huge gains on gas exports,” Eurasia analysts wrote in a note Wednesday. “In contrast, the ruble payment system is seen in Russia as a way to stimulate demand for rubles by converting more of these export earnings into Russian currency.”
However, any move by Moscow to halt or severely curtail deliveries would cause a huge shock in the region. Germany, the region’s largest economy, is already at risk of recession as factories struggle with rising energy costs.
– Inke Kappeler, Niamh Kennedy and Anastasia Graham Yooll contributed to this article.
