Putin indicates he may turn off gas supplies to Europe overnight
Vladimir Putin has indicated that Russia could rip up contracts to supply gas to Europe unless “unfriendly” states drop their refusal to start paying for gas in roubles from Friday.
“To buy Russian gas, they need to open rouble accounts in Russian banks,” Putin said in a televised appearance.
“It is from those accounts that gas will be paid for, starting 1 April. If such payments aren’t made, we will consider this a failure by the client to comply with its obligations.”
According to an order signed by Putin, gas buyers should open accounts with the state-controlled Gazprombank to facilitate currency exchange on purchases.
The G7 group of advance economies – the US, UK, France, Germany, Italy, Japan and Canada – has so far refused to countenance meeting his demand for rouble payments.
However, one gas analyst said the use of Gazprombank as an intermediary may allow western economies to drop their opposition. He said market prices for gas, which have risen slightly today, did not indicate fears of an imminent major supply disruption.
The impasse has already led to Germany and Austria making preparations for potential gas rationing, activating an emergency plan designed to help it cope with any disruption in supplies from Russia.
There are fears Putin could extend the rouble payment plan to include exports of oil, grain, fertilisers, coal, metals and other key commodities.
The value of the rouble collapsed in the aftermath of the invasion of Ukraine, before making a partial recovery. With the currency still trading at low levels, Russian exports bring in less money to subsidise state services and fund the war than previously expected.
The gas payment plan could help prop up the rouble, shoring up a Russian economy that has been hit
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