Kremlin downplays impact of gas payments in rubles

The Kremlin on Thursday downplayed the scope of measures forcing Europe to pay for natural gas deliveries in rubles, saying it would simply involve a currency exchange.

Russian President Vladimir Putin announced last week that European countries will need to pay for gas in rubles, instead of euros and dollars, after Western capitals slapped Moscow with unprecedented sanctions over military action in Ukraine.

Group of Seven (G7) countries have said that Moscow’s payment demand was “not acceptable”, with Germany saying it was a breach of contract.

“De facto, for those who receive Russian gas, who pay for the deliveries, there is in fact no change. They just acquire rubles for the amount in currency which is stipulated in the gas contract,” Kremlin spokesman Dmitry Peskov told reporters on Thursday.

“Russia remains committed to all its obligations under existing contracts, both in quantity and in price,” he said, adding that Putin and German Chancellor Olaf Scholz had discussed the system in detail a day earlier. 

On Thursday, the Russian government, its central bank and energy giant Gazprom are expected to present Putin with a system that will allow gas payment to be conducted in rubles. 

The German government said Wednesday that Putin told Sholz that payments from Europe next month would continue to be in euros and transferred to a bank which would then convert them into rubles.

Western countries have piled crippling sanctions on Moscow since it moved troops into Ukraine, with the United States banning the import of Russian oil and gas among other measures.

However, the European Union — which received around 40 percent of its gas supplies from Russia in 2021 — has retained deliveries from Moscow.

While payments in rubles will allow Russia to support its national currency, it will also deprive it of a source of foreign currency.