Russia and the West at odds over ruble gas payments

Valves are pictured at the Atamanskaya compressor station, part of Gazprom’s Power of Siberia project outside the Far Eastern town of Svobodny in the Amur region, Russia November 29, 2019. REUTERS/Maxim Shemetov.

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  • Russia to decide on gas payment mechanism by Thursday
  • EU countries still at odds over how to pay in rubles
  • G7 countries refuse to pay for Russian gas in rubles

March 28 (Reuters) – Russia said on Monday it would not provide free gas to Europe as it develops methods to accept payments for its gas exports in roubles, but G7 countries have refused Requirement.

At a meeting of European Union leaders on Friday, no common position emerged on Russia’s demand last week that ‘unfriendly’ countries should pay in roubles, not euros, for its gas in the wake of the association of the United States and European allies on a series of sanctions targeting Russia. Read more

Concerns about security of supply have been heightened after the request, with companies and EU countries scrambling to understand the ramifications.

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The Russian central bank, the government and Gazprom (GAZP.MM), which accounts for 40% of European gas imports, are expected to present their proposals for gas payments in rubles to President Vladimir Putin by March 31.

“We’re not going to provide gas for free, that’s clear,” Kremlin spokesman Dmitry Peskov said in a conference call. “In our situation, it is hardly possible and appropriate to engage in charitable actions (with European customers).”

In an interview aired later Monday with US public broadcaster PBS, when asked if the gas would be cut off for non-payers, Peskov replied, “No payment – no gas.”

But he added that Russia had not yet made a final decision on how to react if European countries refused to pay in Russian currency.

Meanwhile, energy ministers from industrialized countries in the Group of Seven have rejected demands for ruble payments, German Economics and Climate Protection Minister Robert Habeck said after talks with his colleagues. counterparts. Read more

“All G7 ministers have agreed that this is a unilateral and clear breach of existing contracts,” he told reporters after a virtual conference with G7 energy ministers.

The ministers “once again underlined that the contracts concluded are valid and that the companies must and must respect them (…) payment in rubles is unacceptable, and we call on the companies concerned not to comply with the request of Putin,” he said.

ENERGY SECURITY

Wholesale gas prices in the Netherlands and the UK rose 20% on Monday due to concerns over Russian gas supplies.

The EU aims to reduce its dependence on Russian gas by two-thirds this year and end Russian imports of fossil fuels by 2027. Russian gas exports to the EU amounted to around 155 billion cubic meters (bcm) last year.

On Friday, the United States said it would strive to supply 15 billion cubic meters of liquefied natural gas (LNG) to the European Union this year. Read more

US LNG plants are producing at full capacity and analysts say most of any additional US gas sent to Europe is expected to come from exports that would have gone elsewhere.

Russian lawmaker Ivan Abramov said a refusal by the G7 to pay for Russian gas in rubles would lead to an unequivocal halt in supplies, according to the RIA news agency.

Abramov sits on the economic policy committee of the Federation Council, the upper house of the Russian parliament.

German Habeck called Russia an “unreliable energy supplier”.

Asked what would happen if Russia interrupted gas deliveries, he added: “we are ready for all scenarios and not only since yesterday”.

However, the EU would struggle to replace all Russian gas exports in a short period of time, experts said. Read more

Deliveries of Russian gas to Europe on three main pipeline routes were flat on Monday, with the Yamal-Europe pipeline continuing to flow east from Germany to Poland, operator data showed. Read more

Russia’s Gazprom (GAZP.MM) said it continues to supply natural gas to Europe via Ukraine in line with European consumer demands.

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Reuters reporting; written by Nina Chestney; Editing by David Evans and Stephen Coates

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