Russian gas is still flowing into the EU

Today (April 1) is the deadline for customers from countries Russia considers “unfriendly” to pay for gas in rubles. Otherwise, they will have their supply cut off, according to a decree signed by Russian President Vladimir Putin.

But as noted by Reuters, there are no signs of immediate disruption. The flow of gas remains steady through two of the three main pipelines bringing Russian gas to Europe. That is Nord 1 going through the Baltic Sea, entering Slovakia via Ukraine; and Yamal-Europe via Belarus.

Gas flow has recorded the change of destination. Accordingly, when burning to Germany switched to Poland. However, this only happens occasionally and is not necessarily due to the new policy.

Gazprom Group said it is continuing to supply Europe through Ukraine at the request of customers, with 108.4 million cubic meters of cubic meters today, slightly down from 109.5 cubic meters yesterday.

A source said on Reuters that some gas sales contracts with Europe are delivery first, pay later. Since the payment is not yet due, the gas valve may not be locked immediately.

After the decree was signed on March 31, Germany – Europe’s largest consumer of Russian gas, accused Mr. Putin’s move of “political blackmail”. Meanwhile, the US insists the measure shows the Kremlin’s financial “desperation”.

German Chancellor Olaf Scholz and Italian Prime Minister Mario Draghi believe the decree does not apply to them. The German government said that in a phone call on March 30, President Putin informed Chancellor Scholz that gas must be paid in rubles from April 1. But at the same time, Putin also emphasized during the conversation that nothing will change with the existing contract from the European partner.

Payments will continue to be made in euros as usual to Russia’s Gazprombank, which is not affected by the sanctions. The bank then converts that amount into rubles.

Similarly, Italian Prime Minister Mario Draghi also had a phone call with Putin on March 30. Therefore, Mr. Draghi still told the media that Italy did not expect to be cut off gas. Mr. Draghi said existing contracts will remain in place and companies will continue to pay in euros or dollars instead of rubles.

Energy analysts also believe it is unlikely that gas giant Gazprom will breach existing contracts by stopping gas supplies to customers who refuse to pay in rubles in the short term.

In fact, Russia’s oil and gas revenue contributed about 43% of the Kremlin’s federal budget from 2011 to 2020. This shows that fossil fuels play a central role for the Russian government. .

Session An (according to Reuters, CNBC)