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Some European buyers have already paid Russia in rubles for natural gas supplies, Bloomberg reported.
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Austria said Wednesday that Russian gas deliveries are continuing unrestricted.
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Russia’s Gazprombank requires companies wanting to buy gas to hold special accounts that convert foreign currency to rubles.
Four European natural gas buyers have already paid Russia in rubles for supplies, complying with the country’s demand to pay in its official currency, Bloomberg reported Wednesday.
This development emerged as Russia halted gas supplies to Poland and Bulgaria on Wednesday, spurring a 28% surge in European gas prices. Russia’s Gazprom said the reason for the stoppage is that both countries didn’t pay for supplies in rubles, an order President Vladimir Putin put forth last month.
The report didn’t mention which four European buyers have made ruble payments. But Austria, which gets 80% of its gas from Russia, said Wednesday that deliveries are continuing unrestricted, according to Reuters.
Additional cutoffs — as a result of failure to meet Moscow’s rubles-for-gas requirement — are unlikely until the second half of May, Bloomberg said, citing a source close to Gazprom.
Separately, the report said 10 European companies have opened accounts at Russia’s Gazprombank as a means to meet Putin’s payment demands. No company names were mentioned in the report.
Under a special mechanism, a requirement for companies wanting to receive Russian gas is that buyers should open special accounts at Gazprombank. These would allow for foreign currency to be converted to rubles for settlements.
Europe depends on Russia for around 40% of its gas supplies, but Moscow’s demands have changed this trade dynamic. After Russia demanded payment for gas in rubles, some European governments said this would amount to a breach of contract and would avoid sanctions.
Germany is especially reliant on Russian energy, particularly the natural gas that’s shipped directly through the Nord Stream pipeline network. The Bundesbank has warned that cutting out Russian gas would plunge Germany’s economy into recession.
The European Union is considering an embargo on Russian energy, and says it wants to reduce its dependence on the country for imports. EU diplomats have said Gazprombank has been exempt sanctions so far so that gas imports can continue, the Wall Street Journal reported.
The Russian bank has also managed to escape the ban on the financial-messaging infrastructure SWIFT, which was aimed at cutting off Russia’s economy from the rest of the world.
“So far, Russia has halted supplies to relatively small European countries, probably with the intention of sending a message to bigger countries, like Germany and France,” Walid Koudmani, chief market analyst at financial brokerage XTB, told Insider.
“While the sudden interruption of Russian gas exports to Europe will have significant repercussions for the European economy, it will also be a blow to Russia as the country cannot replace exports to the EU with exports to other customers due to inadequate infrastructure,” he added.
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