July 22, 2024

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Russia says it will not cut off gas supply until the rouble payment dispute is resolved

In a deadlock over its desire to be paid in roubles, Russia has declared it will not cut off gas deliveries to Europe just yet.

On Thursday, Russian President Vladimir Putin signed a regulation requiring buyers to pay in roubles via Russian bank accounts beginning on Friday.

This, according to the Kremlin, will not affect supplies that have already been paid for, with payments for deliveries after April 1 due at the earliest in mid-April.

As Western sanctions bite, the country is attempting to prop up the rouble.

The EU has stated that it is in discussions with energy providers about how to pay for gas.

Since Russia invaded Ukraine, Western nations have imposed sanctions on Russian corporations and individuals.

Unlike the United States and Canada, the EU has not imposed any restrictions on oil or gas, even though its member countries are strongly dependent on it.

About a third of the EU’s gas and oil imports are supplied by Russia, which is mostly paid for in euros and dollars.

If supplies are stopped, the EU has no obvious substitutes, but Russia is making €400 million (£340 million) per day from gas sales to the EU, and it has few choices for rerouting this supply to other markets.

As tensions between Russia and the West over the invasion of Ukraine grow, EU member states have been on high alert for any disruption in Russian gas imports.

When Moscow issued a regulation on Thursday forcing international customers of Russian gas to open rouble accounts by Friday or risk being cut off, it appeared that a crisis was on the way.

Moscow, on the other hand, provided a way for buyers to receive roubles through the state-owned Gazprombank.

The bank has avoided EU penalties, allowing energy trading to continue.

Although the United Kingdom has placed sanctions on Gazprombank, the country gets less than 5% of its gas from Russia.