European gas buyers navigate Russian ruble order as supply threat eases

Russian President Vladamir Putin has demanded payments for his country's gas be made in rubles, a move aimed at halting additional sanctions.

Russian gas flowed into Europe while regional gas prices rose further on Friday as firms grappled with President Vladimir Putin’s threat to cut off supplies unless they paid in rubles.

The Kremlin said it would not turn off gas exports to Europe from Friday as payments on deliveries due after April 1 come in the second half of this month and May.

Under Putin’s decree, foreign buyers of Russian gas must open ruble accounts in Gazprombank from Friday so foreign currency can be converted to rubles.

Analysts said the plan, which puts state-controlled oil and gas company Gazprom at the heart of Russian gas trade, was more about shielding it from future sanctions than depriving Europe.

“It is of course a game to dodge sanctions, adding to uncertainty, propping up gas prices and filling Putin’s pockets,” a European gas trader said.

The move has caused consternation in Europe, which relies on Russia for more than a third of its gas supply, and among companies buying Russian gas to generate electricity for industry and heat homes in the region.

Ditte Juul Jorgenesen, director general of the European Commission’s energy division, said on Twitter that European Union coordination was taking place to figure out a common approach on currency payments.

“Working closely with Member States and operators. EU coordination today to establish a common approach on currency payments for gas contracts with Russia,” Jorgenesen tweeted.