Russia's President Vladimir Putin March 23 ordered Gazprom to sell gas to Europe in rubles and threatened extending the measure to other exports, in a move that has sent prices surging.
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"The changes will affect only the currency of payment, which will be changed to Russian rubles," Putin said, according to the Prime news agency. "I ask the government to give an appropriate directive to Gazprom to amend existing contracts."
Gas prices surged 10%, with ICE Brent futures rising to $1,359/1,000 cu m, up from $1,240/1,000 cu m following Putin's remarks
Russia's interest in switching away from the US dollar has grown since the invasion of Ukraine. The possibility of restricting Russia's access to the US dollar was first raised in 2014 in discussions over potential sanctions in response to Russia's annexation of Crimea. The ruble has lost 26% in value against the euro and almost 30% against the US dollar since Russia invaded Ukraine on Feb. 24.
"I decided to implement a set of measures to transfer payments as soon as possible -- let's start with our natural gas -- to transfer payment for our natural gas, supplied to so-called unfriendly countries, for Russian rubles. That is, to refuse to use all compromised currencies in such calculations," Putin said.
Concerns over the reliability of Russian gas supplies to Europe have grown amid concern the Kremlin will retaliate in response to US and European sanctions. EU countries are considering restrictions on imports of Russian hydrocarbons and Western sanctions are raising the risk of a Russian response that would include restricting energy supplies to Europe.
"Russia will certainly continue to supply natural gas in accordance with volumes, prices and pricing principles set in existing contracts," Putin said.
Gazprom has said that its supplies of Russian gas to Europe via Ukraine are being carried out as normal and will total 106.5 million cu m on March 23.