©Reuters. FILE PHOTO: The model of the fuel pump is seen in front of Gazprom’s logo in this March 25, 2022 illustration. REUTERS/Dado Ruvic
By Marwa Rashad
LONDON, April 1 – European governments and companies on Friday worked on a joint approach to President Vladimir Putin’s demand that Russian gas be paid for in rubles as the threat of an imminent supply disruption receded.
European capitals have been on alert for weeks that gas imports could be suspended as Putin seeks revenge for Western sanctions against Russia for invading Ukraine.
On Thursday, Moscow issued a decree obliging foreign buyers of Russian gas to open ruble accounts with the state-owned Gazprombank starting Friday or risk a disruption in supplies.
The Kremlin said on Friday it would not halt gas exports to Europe immediately, as payments for supplies due after April 1 will be made in the second half of this month and in May.
With the bills just weeks away, governments in Europe, which depends on Russia for more than a third of its gas supplies, were talking to their energy companies about how to pay them.
“Working closely with member states and operators, the EU is coordinating today to set out a common approach to foreign exchange payments for gas contracts with Russia,” tweeted Ditte Juul Jorgenesen, Director-General of the European Commission’s Energy Department.
Energy exports are Putin’s strongest lever to resist sweeping Western sanctions, but his room for maneuver is also limited because Moscow has no alternative markets for its gas, which is routed to Europe.
“If Putin shuts off the gas, maybe it will be for a relatively short period of time because he needs our money and he can’t divert all the gas,” said a European gas trader who asked not to be named.
Analysts said the plan, which cements Gazprom’s (MCX) position at the heart of Russia’s gas trade, has more to do with shielding the oil and gas company from future sanctions than depriving Europe of much-needed fuel.
“Of course this is a game to dodge sanctions, increase uncertainty, prop up gas prices and line Putin’s pockets,” said a second trader.
Germany said it was examining Putin’s decree, and a spokesman for the economy ministry said private contracts were in place and the country was paying in euros for Russian gas.
Germany, which relies on Russia for 40% of its gas needs, has already activated a contingency plan that could result in gas rationing if supplies run out.
(Reporting by Marwa Rashad and Nina Chestney; additional reporting by Kate Abnett in Brussels and Stephen Jewkes in Milan; Spanish editing by Carlos Serrano)
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