Putin gives Gazprom four days to arrange payment in rubles from ‘unfriendly’ countries

The move was met with dismay in Europe, where contracts with Gazprom stipulated that payment be made in euros or US dollars.

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President Vladimir Putin has ordered Russian energy giant Gazprom to accept ruble payments for its natural gas exports and must determine how that can be done in the next four days, the Kremlin said on Friday.

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Kremlin spokesman Dmitry Peskov said Russia’s largest liquefied natural gas producer, Novatek, had received no such instructions.

Putin said on Wednesday that Russia would seek payment in rubles for gas sold to “unfriendly” countries after the United States and its European allies joined forces to impose sanctions on Russia to force its withdrawal from Ukraine.

The move was met with dismay in Europe, with many companies saying contracts with Gazprom stipulated that payment be made in euros or US dollars, not Russian rubles.

Putin’s order to Gaxprom comes on the same day the US and European Union announced a push to increase LNG supplies to European countries by the end of 2022 in a bid to displace Russian gas.

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Under the deal, Europe will get at least 15 billion cubic meters of additional LNG supplies by the end of the year, though it is unclear where that will come from. Member states will also work to secure demand for 50 billion cubic meters of US fuel until at least 2030. The goal is to work with international partners to help the continent wean itself off Russian gas, which accounts for around 40% of needs. of Europe.

“We come together to reduce Europe’s dependence on Russian energy,” US President Joe Biden said at a joint news conference with European Commission President Ursula von der Leyen, adding that 15 billion cubic meters this year “is a big step in that direction.” address.”

Europe is trying to diversify its energy sources in a bid to deprive Russia of the revenue it needs to finance the war in Ukraine. But that is a gigantic task. Russia sends about 150 billion cubic meters of gas to Europe through pipelines every year, and another 14 to 18 billion cubic meters of LNG. That means any disruption to pipeline gas flows from Russia would be difficult to manage.

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“It’s a start, but relatively small compared to overall supplies from Russia,” said Jonathan Stern, a research fellow at the Oxford Institute for Energy Studies. “All contributions are welcome, but the task is huge.”

The issue is critical as Russia is the largest supplier of gas to the EU.

The EU also relies on the country for most of its coal and oil imports, and has struggled to shift its energy policy away from Moscow.

Details of how the plan works are now in the hands of energy companies, with US LNG carriers and German buyers due to meet next week in Berlin to discuss potential deals.

With additional reporting from Bloomberg News



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