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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Comply Or Be Cut Off: Putin Is Serious About His Rubles Threat

  • Putin's deadline for Gazprom, and the central bank of Russia to make the arrangements for payments in rubles is today.
  • As the deadline for the gas-for-rubles switch approaches, Germany and other European countries activated emergency plans on Wednesday.
  • Putin's comments on paying in euros to Gazprombank has caused confusion among traders.

Russian President Vladimir Putin said on Thursday that Moscow would halt active natural gas contracts if Russia’s customers fail to comply with the demand to pay in rubles for gas, Bloomberg News reported on Thursday.

Putin has set a March 31 deadline for the government, Gazprom, and the central bank of Russia to make the arrangements for payments in rubles for Russian gas from the so-called “hostile” countries. And Putin has told “unfriendly” states that the gas supplies will be halted as of April 1 if they do not pay in rubles.

The Kremlin, however, has issued unclear—and at times, contradictory—messages over the past few days, while European economies started to activate emergency plans in anticipation of a potential disruption to gas supply from Russia.

The Russian President—whose list of “hostile” states includes the United States, all EU member states, Switzerland, Canada, Norway, South Korea, Japan, and many others—ordered last week the central bank to develop a system for payments in rubles within a week.  

The EU, G-7, and leaders of the biggest economies in Europe have said over the past week that changing the currency of the payments would be a breach of contract and that Europe would not be blackmailed into buying gas with rubles. Related: Oil Drops As Biden Prepares Largest Ever SPR Crude Release

As the deadline for the gas-for-rubles switch approaches, Germany and other European countries activated emergency plans on Wednesday.

Also on Wednesday, the Kremlin said it would not require payments in rubles immediately, and said there would be a gradual phase-in to gas-for-rubles payments.

Thursday’s reports about Putin threatening to halt existing gas contracts further confused the market and traders.

This week, Germany and Italy—major European economies and major importers of Russian gas—said that they had received assurances from Russia that they could continue paying in euros for the gas coming from Russia. During a call with Putin on Wednesday, the Russian president assured Italy’s Prime Minister Mario Draghi that “existing contracts remain in force. ... European companies will continue to pay in dollars and euros,” Draghi said as carried by AP.  

By Tsvetana Paraskova for Oilprice.com

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