Friday marks the deadline for European Union countries and elsewhere to start paying for their gas in rubles. Non-compliance, President Vladimir Putin said, would lead to Russia shutting down gas supplies to Europe, causing widespread energy shortages on the continent. Mr Putin has urged importers of Russian gas in Europe to stop paying in dollars and euros and instead open ruble accounts in Russian banks to support the country ‘s troubled currency. But the Kremlin seemed to leave the door open to a final compromise, saying Russia would not stop all supplies today, as payments for deliveries ending after April 1 would not be made until May. About 60% of gas imports to Europe are currently paid in euros and the rest in dollars. It is possible that Russia and the European Union will reach an agreement, according to energy experts, according to which customers in countries such as France and Germany will continue to pay for their gas in euros and Gazprom converts it into rubles in Russia. “It was in the interest of both parties to avoid a complete shutdown,” said Leon Izbicki, a gas analyst at Energy Aspects. “Europe will have to implement the gas embargo, which would have a huge impact and lead to industrial shutdowns, while Russia would lose another revenue stream.” However, Gazprom insisted on Friday that it was moving forward, saying it had begun sending requests for ruble payment switches to its customers. Meanwhile, a Kremlin spokesman said Mr Putin’s mandate to receive payments for gas in rubles was irreversible. “In our view, the overall risk of a complete shutdown is lower,” Izbicki said, referring to Russia’s announcement Thursday that it would accept payments in dollars or euros to a special foreign exchange account at Gazprombank. EU sanctions specifically exclude Gazprombank, leaving room for compromise. The demand for ruble payments could support the faltering currency and boost exchange rates, experts said, while allowing Russia to face sanctions more easily. However, it is unlikely to dramatically change the country’s dire economic situation. Daily gas flows from Russia to Europe via Ukraine peaked on Friday in November, according to Bloomberg.
