Sunday, May 19, 2024

Ruble Russian gas .. Who pays the price?


On Friday, French President Emmanuel Macron called on Russian President Vladimir Putin to pay in rubles, not dollars or euros, to send gas to the EU, which he considered “impossible” and “not provided for in contracts.”
Responding to a question after the European Summit in Brussels on Wednesday about Moscow’s declaration, Macron said the Russian request was “inconsistent with what was signed and there was no reason to implement it.”
“We are continuing our analytical work,” he added, but “all the texts signed are clear: this is forbidden. So European players who buy gas and are on European soil have to pay in euros.”
Emmanuel Macron emphasized that the letter was not a signal of a formal antitrust inquiry into the allegations.
With this demand, the French president considered that Moscow was trying to establish a “bypass mechanism” on the economic and financial sanctions imposed by the Europeans in the wake of the invasion of Ukraine.
For its part, Germany, concerned about Russia’s purchase of gas, denounced Putin for “violating the agreement” by giving his government a week to set up a new ruble tariff system.
Germany relies heavily on Russian gas, which accounts for 55 percent of its total gas imports.
Despite the war in Ukraine, Russian gas continues to flow into the EU, which refuses to ban it. But European countries have promised to speed up the reduction of their dependence on Russian gas.
“We are the biggest buyers of Russian gas, and what we consider to be our weakness is a weakness for Russia as well, which cannot change the structure of its pipelines overnight,” the French president said.
Putin’s order
The Kremlin said on Friday that President Vladimir Putin had ordered Russia’s energy company Gazprom to accept tariffs on its natural gas exports in rubles and how to convert billions of dollars in sales into rubles within the next four days.
On Wednesday, Putin announced the first in a series of reactions to the Kremlin’s description of declaring an economic war on the world’s largest nuclear power.
Putin said Russia, which supplies 40 percent of Europe’s gas needs, expects to get natural gas in exchange for selling in rubles, one of the strongest changes in Russia’s energy policy since the Soviets set up pipelines to transport gas from Siberia to Europe. In the early 1970s ..
This would pose a potential problem for Gazprom, the world’s largest natural gas company.
Kremlin spokesman Dmitry Peskov told reporters that “Gosbrom has been instructed by the President of the Russian Federation to accept the payment in rubles.”
Peskov said Cosprom had four days to arrange the ruble payment system. “Buyers of Gosprom products will be informed of this information,” he said.
Putin said this week that as EU nations fight each other to impose additional sanctions on Russia, the United States and the European Union have failed in their obligations and have eroded confidence in dollar and euro assets by freezing Russia’s reserves abroad.
“Of course, there is no point in supplying goods to the EU and the United States in exchange for the dollar, the euro and other currencies,” he said.
The mechanism by which Russian gas exports worth $ 880 million a day are paid for is unclear. Payments in euros represent 58 per cent of Gasprom’s exports, while payments in dollars account for 39 per cent, while payments in pounds represent about 3 per cent in sterling.
Putin’s move represents a revolution in the gas market because the Communist Soviet Union accepted accepting the value of its energy exports in foreign currencies. It is not immediately clear whether switching to euro payments would violate the agreement. Many import companies claim that long-term agreements with Gazprom should be paid in euros or US dollars, not Russian rubles.

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Rolf Colon
Rolf Colon
"Creator. Award-winning problem solver. Music evangelist. Incurable introvert."

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