Page 6 - FSUOGM Week 13 2022

FSUOGM COMMENTARY FSUOGM

Russia warns ruble payments

required within days

Russia says gas buyers must pay in rubles, and the buyers are refusing

RUSSIA THE Kremlin has warned its Western adver- contracts everywhere, which include the cur-
saries that Russia’s state-owned gas supplier rency in which payments are made,” Scholz told
Gazprom will demand payment for its supplies reporters in Berlin. “And most of the time it says
WHAT: in rubles within days, in what marks Moscow’s euro or dollar … and that’s what counts then.”
Putin has ordered toughest response to Western sanctions imposed German Economy Minister Robert Habeck
Gazprom to only accept for the invasion of Ukraine. added that the ruble demand would be a breach
rubles for gas. Russian President Vladimir Putin has of contract. Germany is the largest buyer of Rus-
described Western sanctions as akin to eco- sian gas in Europe, using Gazprom’s supplies to
WHY: nomic warfare, and announced on March 23 cover two thirds of demand. In Poland, where
Russia is attempting that all payments for Russian gas by so-called Gazprom meets a third of demand, state-owned
to float the value of its “unfriendly states” should be paid in rubles, and gas importer PGNiG has also said it will refuse
currency. has instructed Russia’s central bank and Gaz- to pay in rubles.
prom to put the requirement in place within a “We don’t see how we could,” PGNiG head
WHAT NEXT: week. Putin has long wanted the ruble to play Pawel Majewski was quoted as saying on March
It remains to be seen if a greater role in Russia’s international trade, 24. “The contract … sets the means of payment.
the Russian strategy will although buyers of Russian gas have rejected It does not allow one party to modify this accord-
work, but at a time when such proposals because of concerns about the ing to its will.”
Moscow is scrambling ruble’s instability. Austrian oil company OMV’s CEO Alfred
for foreign currencies to Putin’s announcement caused European gas Stern has confirmed that its contract with Gaz-
pay debts, it is unclear prices to spike, as the market is clearly jittery prom does not allow for ruble payments, as has
whether the strategy is about how the plan will work in practice, espe- Lithuania’s Latvijas Gaze.
sound. cially as a number of European countries have Some buyers already pay rubles to Gazprom,
signalled they will not settle in rubles. however, including the governments of Bulgaria,
German Chancellor Olaf Scholz said on Moldova and Serbia.
March 24 that most existing gas supply agree-
ments between Russia and foreign buyers were Risks and motives
denominated either in euros or US dollars. It remains to be seen which, if any, buyers of Rus-
“We’ve looked at this to try to get an overview. sian gas will accept the demand. They may well
What we have learned so far is that there are fixed continue paying in other currencies stipulated in

P6 www. NEWSBASE .com Week 13 30•March•2022