Four buyers from Europe have already paid for Russian gas in rubles, Bloomberg reported on Wednesday, citing a source close to Gazprom, as the Russian gas giant halted supply to Poland and Bulgaria.
Vladimir Putin has threatened to cut off the gas supply to Europe if the “hostile” nations—including all of the EU—do not start paying in rubles for gas. The EU has rejected Putin’s demands for payments in rubles, while Russia did not immediately cut off the gas supply to Europe after April 1, partly because it is dependent on revenues from gas and partly because payments for gas delivered after April 1 are not due until later this month or early May.
Some of Russia’s natural gas customers have agreed to pay in rubles for Russian gas, Deputy Prime Minister Alexander Novak said earlier this month, without disclosing which buyers had agreed to pay in rubles for gas.
According to Bloomberg’s source on Wednesday, ten companies in Europe have already opened accounts at Gazprombank, which Putin has designated as the bank that will be handling the payments in rubles for Russian gas.
The EU’s refusal to pay directly in rubles tests Putin’s threat to cut off the gas supply, and buyers in Europe “would be running a very real risk of their supplies being cut,” Katja Yafimava, a Senior Research Fellow at the Oxford Institute for Energy Studies, told Bloomberg last week.
Late on Tuesday, Poland and Bulgaria said they had been notified by Gazprom that Russian gas supply to the two countries would be cut off as of Wednesday. Gazprom says supply was stopped “due to absence of payments in rubles.”
Gazprom confirmed on Wednesday that the gas had been shut off to the two countries.
In the contract with Gazprom, Bulgaria has to pay in U.S. dollars for Russian gas and Russia’s demand for payment in rubles is a breach of contract, Bulgarian Energy Minister Alexander Nikolov said on Wednesday.
“It is clear that in the current war in Ukraine, Russia uses natural gas as a political and economic weapon,” Nikolov added, noting that Bulgaria will not negotiate under pressure.
By Tsvetana Paraskova for Oilprice.com
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And contrary to claims by the author of this article, President Putin did not immediately cut off the gas supply to Europe after April 1 not because of Russia’s dependence on revenues from gas but because payments for gas delivered after April 1 are not due until later this month or early May.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London