Russian President instructs Gazprom to deploy a payment system in rubles

According to Reuters news agency, speaking to reporters, Kremlin spokesman Dmitry Peskov said that President Putin had instructed Gazprom to accept payment for gas purchases in rubles. The group has four days left to launch the new payment system.

Earlier, on March 23, President Putin said that Russia would only accept payments in rubles for contracts to transfer gas to “unfriendly countries”, including all EU member states. Europe (EU), after Moscow suffered unprecedented sanctions from the West over Ukraine. Immediately after the Russian leader’s announcement, the ruble – which has been severely depreciated since the conflict in Ukraine – appreciated against the dollar and the euro, while gas prices rose.

Currently gas from Russia accounts for about 40% of total consumption in Europe. The EU’s gas imports from Russia are worth between 200-800 million euros/day. Contracts paid in euros accounted for 58% of Gazprom’s total gas export contracts, while contracts settled in USD accounted for 39% and in sterling 3%.

On the same day, according to the Russian news agency RIA, the Russian Foreign Ministry warned of global bankruptcy if countries refused to pay for contracts for importing Russian gas in rubles. The ministry also stressed that excluding Russia from the World Trade Organization (WTP) would be counterproductive.

On March 23, Russian Deputy Prime Minister Alexander Novak warned that a complete embargo on Russia’s oil and gas would lead to a collapse of global energy markets and an unpredictable rise in prices.

In a related development on the same day, March 25, Britain revised its sanctions guidance to clarify that gold-related transactions are within the scope of the ban aimed at Russia. A summary of the guidance posted on the UK Government website highlights that the text has been updated to clarify that the prohibition on providing financial services for the purpose of foreign exchange reserves and wealth management also applies to gold-related transactions.