Europe's Russian gas in jeopardy
Summary
- Moscow demands that European gas buyers pay in roubles
- Europe says it will not be 'blackmailed'
TROSTYANETS/LVIV, Ukraine, March 31 (Reuters) - President Vladimir Putin threatened on Thursday to halt contracts supplying Europe with a third of its gas unless they are paid in Russian currency, his strongest economic riposte so far to crushing Western sanctions over his invasion of Ukraine.
European governments rejected Putin's ultimatum for Friday, with the continent's biggest recipient of Russian gas, Germany, calling it "blackmail". Moscow did, however, offer a mechanism for buyers to obtain roubles via a Russian bank.
The energy showdown has huge ramifications for Europe as U.S. officials circle the globe to keep pressure on Putin to stop a five-week invasion that has uprooted a quarter of Ukraine's population. read more
Europe wants to wean itself off Russian energy but that risks further inflating soaring fuel prices. Russia has a huge revenue source at stake even as it reels from sanctions.
Facing stiff resistance from Ukraine's military, Putin has played one of his biggest cards in the demand on European energy buyers.
"They must open rouble accounts in Russian banks. It is from these accounts that payments will be made for gas delivered starting from tomorrow," he said on Thursday.
"If such payments are not made (in roubles), we will consider this a default on the part of buyers, with all the ensuing consequences ... existing contracts will be stopped."
ENERGY CRISIS?
With the war exacerbating global fuel prices, President Joe Biden launched the largest release ever from the U.S. oil reserve and challenged oil giants to drill more to bring down gas prices. read more
"This is a moment of consequence and peril for the world," Biden said at the White House as he announced a release of 180 million barrels starting in May. But that amount fails to cover a U.S. loss of Russian oil, which Biden banned this month.
Western governments say Putin's demand for rouble payments would be a breach of contracts in euros or dollars. Germany and Austria declared "early warnings" on gas supplies, but no EU country has yet signalled it is facing a supply emergency. read more
An order signed by Putin allows customers to send foreign currency to a designated account at Russia's Gazprombank, which would then return roubles for the gas buyer to make payment.
"Russia would have to physically halt gas flows to EU 27 (European Union member states) to force the issue, marking a major escalation not even performed at the height of the Cold War. It would mark another major financial blow to Russia's coffers," said analysts at Fitch Solutions.
Wakakaka... the Gas will keep flowing ....Europe will continue ti pay in Euros and Dollars, per original contract.
ReplyDeleteIf the Gas stops flowing, the money stops flowing, and Russia runs out of money to run its invasion of Ukraine.
Wakakakaka…
DeleteU do buying into the farts of CNN/BBC that Russia needs the gas money to sustain his special operation in Ukraine!
With this war & a already tight gas supply with high price, there r many other willing buyers for Russian resources.
Yaloh, Europe will continue to pay in Euros and Dollars as the buyers of Russian gas in opening rouble accounts in state-run Gazprombank.
Note that those a/c r foreign owned & the conversion is dictated by the Russian bank!
Ooop… u r one mfering businessman who deals in international trades. Perhaps, all our payment terms r of doggy nature!