World

Putin says Russia will switch gas sales to roubles for 'unfriendly' countries

Russian president says government and central bank had one week to come up with a solution

Reuters March 23, 2022

Russian President Vladimir Putin listens to Governor of the Novgorod Region Andrei Nikitin during a meeting at the Kremlin in Moscow, Russia March 22, 2022. PHOTO: REUTERS

MOSCOW:

Russia plans to switch its gas sales to "unfriendly" countries to roubles, President Vladimir Putin said on Wednesday, responding to a freeze on Russia's assets by foreign nations over events in Ukraine that he said had destroyed Moscow's trust.

European countries' dependence on Russian gas and other exports has been thrown into the spotlight since Russia sent tens of thousands of troops into Ukraine on Feb. 24 in what it called a special operation to degrade its southern neighbour's military capabilities and root out people it called dangerous nationalists.

"Russia will continue, of course, to supply natural gas in accordance with volumes and prices ... fixed in previously concluded contracts," Putin said at a televised meeting with top government ministers.

"The changes will only affect the currency of payment, which will be changed to Russian roubles," he said.

Putin said the government and central bank had one week to come up with a solution on how to move these operations to the Russian currency and that gas giant Gazprom (GAZP.MM) would be ordered to make the corresponding changes to gas contracts.

According to Gazprom, 58% of its sales of natural gas to Europe and other countries as of Jan. 27 were settled in euros. U.S. dollars accounted for about 39% of gross sales and sterling around 3%.

Russian gas accounts for some 40% of Europe's total gas consumption.

"An understandable and transparent procedure of making payments should be created for (all foreign buyers), including acquiring Russian roubles on our domestic currency market," Putin said.

Ukrainian forces have mounted stiff resistance to Russia's actions and the West has imposed sweeping sanctions on Russia in an effort to force it to withdraw its forces.

Russia has drawn up a list of "unfriendly" countries, which corresponds to those that imposed sanctions. Among other things, deals with companies and individuals from those countries have to be approved by a government commission.

The list of countries includes the United States, European Union member states, Britain, Japan, Canada, Norway, Singapore, South Korea, Switzerland and Ukraine.