Belgium (Brussels Morning Newspaper) Russian President Vladimir Putin announced on Thursday that foreign buyers will be expected to pay for natural gas deliveries in Russian roubles starting 1 April, warning that delivery contracts would be voided if this requirement will not be observed.
Putin said he had signed a decree to that effect, also setting out a mechanism for foreign buyers to be able to fulfil this requirement. Foreign companies will be provided with a special account at a Russian bank not currently under western sanctions, to which they will be able to send their payments in their preferred currency. The bank would then send roubles back to the buyers, so they could make gas payments.
“In order to purchase Russian natural gas, they must open rouble accounts in Russian banks,” said Putin on Thursday in televised remarks. “It is from these accounts that payments will be made for gas delivered starting from tomorrow.”
While Putin’s previous announcement of plans to force rouble payments has provided a boost to the Russian currency, a vast majority of western governments have so far stated they will not comply with this requirement.
Virtually all existing gas supply contracts were signed with stipulated payments in euro or dollar, and both the G7 group of the world’s richest democracies and the EU have stated they would consider the change of payment currency as a breach of contracts.
According to French economy minister Bruno Le Maire, both France and Germany have begun contingency planning, preparing for a scenario in which Russia would stop delivering natural gas to Europe – something which would prompt a full-blown energy crisis in the EU. Russia currently supplies nearly 40% of Europe’s gas needs, with some countries being extremely dependent on these deliveries for their energy and industry needs.
