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23 March, 05:39 PM

Putin orders gas supplies to Europe to be paid in Russian currency

Vladimir Putin, Russia’s authoritarian leader, makes an executive order to conduct payments for Gazprom gas supplies in rubles.

As the Russian ruble continues on its devaluation path, Kremlin leader Vladimir Putin has changed the currency strategy of Gazprom, the state-owned gas monopoly.

The executive order by Putin is expected to come into effect soon and will cover all the financial transactions that Gazprom has with European customers, reports RBC, a Russian news agency.

After the decision was announced, the ruble somewhat recovered, while gas prices also went up. According to Moscow stock exchange figures, the dollar hit the 95-ruble level following Putin’s announcement. The natural gas spot price in Europe increased by 10%.

“I approved a decision to introduce a set of measures for paying for gas sup-plies conducted to so called unfriendly countries in Russian rubles,” said the Russian dictator.

Under current conditions, Putin also said, Russia will continue its gas sup-plies uninterrupted according to the contract obligations that were fixed previously.

Meanwhile, Yuriy Vitrenko, CEO of Naftogaz in Ukraine, said the Ukrainian gas transportation system will continue delivering Russian gas to the EU, unless this becomes technically impossible.

Gazprom planned to increase the volume of gas exports to the EU through the Nord Stream 2 gas pipeline which would deliver gas produced in Russian regions with the biggest explored reserves, including the Yamal gas field. But the set of U.S. and EU sanctions effectively blocked Nord Stream 2 from operating.

“There is over 100 years’ worth of gas in Yamal, and Russia is very keen to squeeze the most it can out of the European market, Ben Aris, chief editor of bne IntelliNews, told NV. “Some 75% of Russia’s untapped gas is in the Arctic regions and the Yamal complex,” he said.

“Gazprom had to triple investment into its (Siberian) fields in recent years just to maintain production at the same levels,” Aris added.

Meanwhile, European countries are diversifying away from dependence on Russian gas. The German government, with the intention of reducing sup-plies from Russia’s Gazprom, has announced the signing of a new contract with Qatar.

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