Europe continued to receive Russian natural gas via pipelines on Friday, even after Vladimir Putin threatened European countries that Moscow would cut off gas flows unless buyers complied with Russia’s gas-for-rubles-only demand.
Gas flows via two of the three main pipelines from Russia to Europe—Nord Stream 1 to Germany and one through Ukraine and Slovakia—continued normally as of Friday, while the Yamal-Europe pipeline via Belarus to Poland and Germany was in a reverse flow from Germany to Poland. This has happened occasionally in recent weeks and months and is not reason alone to assume a major change in policy, according to Reuters.
All in all, even after the March 31 deadline Russia has given to buyers to comply with the gas-for-rubles payment, flows to Europe have not stopped.
Yet, concerns could intensify later this month because payments from customers for deliveries after April 1 should be made in the second half of April and in May.
The Kremlin signaled on Friday that it would not cut off the supply immediately, Reuters reported.
On Thursday, in the most serious threat to customers yet, Putin said that Moscow would halt active natural gas contracts if Russia’s customers failed to comply with the demand to pay in rubles for gas. 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. Under Putin’s orders, buyers should open accounts at Gazprombank to convert foreign currencies to rubles.
Throughout this week, the Kremlin has issued unclear—and at times, contradictory—messages, while European economies started to activate emergency plans in anticipation of a potential disruption to gas supply from Russia. Germany and Italy—major European economies and major importers of Russian gas—said earlier this week that they had received assurances from Russia that they could continue paying in euros for the gas coming from Russia.
By Tsvetana Paraskova for Oilprice.com
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Any other supplies ordered after 31 March will have to be paid for by rubles. Under President Putin’s orders, buyers should open accounts at Gazprombank to convert foreign currencies to rubles.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London