The announcement by Russian President

The announcement by Russian President. If you want to import natural gas from Russia, you have to pay for it in ruble. Moscow will suspend the gas supply agreement

Apr 1, 2022 - 18:49
Apr 1, 2022 - 18:56
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The announcement by Russian President
The announcement by Russian President. If you want to import natural gas from Russia, you have to pay for it in ruble. Moscow will suspend the gas supply agreement

If you want to import natural gas from Russia, you have to pay for it in ruble. For this you have to open a special account in a Russian bank. Except for this, Moscow will suspend the gas supply agreement. The announcement by Russian President Vladimir Putin last Thursday is expected to take effect on Friday (April 1). However, the governments of European countries, including Germany, have already called it a "political blackmail." Russia has also denied the allegations. This information was given in an analysis of Al-Jazeera on Friday. Russia has said it will not suspend gas exports to Europe amid tensions over a ruble payment, the BBC reported

The Kremlin says there will be no disruption in the delivery of gas for which it has been paid. Kremlin spokesman Dmitry Peskov said gas supplies had not been cut off since April 1, although there was no confirmation of the ruble. Putin's decree was not immediately effective.

The European Union (EU) says it is discussing with gas companies how to pay for the gas.
The European Commission's director general of energy regulation, Ditti Jules Jর্গrgensen, said in a tweet that the EU was discussing with member countries and gas companies how to pay for a gas deal with Russia.

What is the reason behind Putin's directive?

Putin's decision is linked to the widespread sanctions imposed on Russian banks, companies and businesses by Western nations in response to Russia's military action in Ukraine. Russia thinks the sanctions are like an economic war. 

According to Putin's new announcement, foreign buyers of gas must first open a special account with Russia's Gazprom Bank. They will deposit foreign currency as such. After the Gazprom Bank converts that currency into rubles, it can be used to pay for gas.

"If anyone does not pay, he will be considered a defaulter and the next step will be taken," Putin said. No one sells anything to us for free. And we are not going to do anything charitable. '

After the Russian invasion of Ukraine on February 24, the ruble fell sharply due to Western sanctions. However, after Putin's decision to pay for the ruble gas, the value of the Russian currency began to fluctuate.

Moscow will sell ruble gas to its "non-friendly countries" - 61.6 rubles to the dollar on Thursday, a week after the announcement; Which is almost equal to 23rd February.

So far this year, Europe has spent between 200 million and কোটি 600 million a day on Russian gas. This sale, no matter how paid, has already greatly weakened the effect of the ban. As a result, Russia's foreign exchange reserves are getting stronger and its treasury is getting richer. There are also political goals here. There is talk of forcing Western countries to violate their own sanctions by transacting with Moscow's blacklisted central bank or else cutting off their supplies.

This is why it is important

Europe is heavily dependent on Russia's energy resources. Those countries import 40 percent of their gas from Russia. If Moscow cuts off supplies, Europe will face an energy crisis. As a result, their factories will close. Fuel prices will continue to rise across the region.

Germany, Europe's largest economy and industrialized country, will suffer the most. Before the war, the country imported 55 percent of its gas from Russia. However, in the first three months of this year, the amount decreased to 40 percent.

The German government has already implemented the first phase of a three-stage "emergency plan". So that if gas supply is reduced, they can go for gas rationing. Gas prices have already risen to record levels in the Netherlands this year amid fears of a gas shortage 

Russia wonders which countries can respond

Russia's list of "friends" includes the United States, European Union member states, Canada, Japan, Norway, Singapore, South Korea, Switzerland, Ukraine and the United Kingdom. Some countries, including the United States and Norway, do not buy gas from Russia.

What foreign buyers will do

So far it does not seem that foreign buyers will change their position. Western nations have said that paying in rubles would violate the agreement. It may take a few months or more to discuss this again.

Christian Lawrence, a senior market strategist at RoboBank, a multinational banking and financial services company in the Netherlands, said there were not many opportunities to make direct payments in European rubles. "Putin has made it very clear that he needs rubles for this gas," he said. So if that happens, I think he will seek the help of a third party. "

How to work if foreign buyers agree

According to Putin, Gazprom Bank will mediate in the gas trade. A foreign buyer is now required to transfer foreign currency to a special account called 'K' at Gazprom Bank. Gazprom Bank will then buy the ruble on behalf of the buyer and transfer it to another special account called 'K'.

Gazprom Bank is on the UK's sanctions list. However, Gazprom Bank is not one of the banks in Russia that has been banned by the European Union from the Swift Payment Network, an international organization that transmits financial transactions.

Analysts believe that the Kremlin fears that sanctions may soon be imposed on Gazprom Bank as part of the EU's complete severance of energy ties with Russia. 

What will happen in the future

Russia will have to literally cut off gas flows to the EU to force the European Union to buy gas in rubles. However, it is not clear whether he will do so. And even if it did, it would be a major event that Russia did not do during the Cold War.

Meanwhile, the European Commission is reportedly preparing new sanctions against the Kremlin. However, the extent of the ban will depend on Moscow's position on the payment of gas in rubles

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