Leaders from some EU member states on Thursday said that Russia’s demand that “unfriendly” countries use rubles to buy for its oil and gas could breach supply contracts.
Russian President Vladimir Putin’s demand on Wednesday for ruble payments sent European gas prices surging and added to concerns over supply disruptions in the EU, which gets about 40 percent of its gas from Russia.
Germany and Italy said the move might breach energy supply contracts.
Photo: Reuters
German Chancellor Olaf Scholz said the currency German companies must pay for Russian fossil fuels was fixed in their contracts.
“There are fixed contracts everywhere, with the currency in which the deliveries are to be paid being part of these contracts... In most cases it says euros or dollars,” Scholz said on his arrival for an EU summit in Brussels on Thursday.
That was echoed by Italian Prime Minister Mario Draghi.
“This is basically a breach of contract, this is important to understand,” he said.
European Commission President Ursula von der Leyen agreed, saying the move was an attempt to circumvent EU sanctions against Russia.
“We will not allow our sanctions to be circumvented. The time when energy could be used to blackmail us is over,” she said.
Payments in rubles would shore up the Russian currency, which has plummeted since the Feb. 24 invasion.
Analysts said ruble payments would be possible without breaking EU sanctions, which do not directly hit oil and gas supplies, but target banks that could be involved in ruble transactions.
Russia’s main gas exporter, Gazprom, has more than 40 long-term gas agreements with European counterparties, with Europe paying hundreds of millions of dollars per day to Moscow for fossil fuels.
Gazprom said that about 97 percent of its gas sales to Europe and other countries as of Jan. 27 were settled in euros or US dollars.
A disruption to Russian oil and gas imports would hit some EU countries harder than others. Germany, Europe’s biggest economy and energy consumer, receives 18 percent of Russia’s gas exports and 11 percent of its oil.
Lithuanian President Gitanas Nauseda said he was “not scared” by Putin’s demand, as Lithuania does not import Russian crude oil and could replace Russian gas with liquefied natural gas from elsewhere.
“Nobody will pay in rubles,” Slovenian Prime Minister Janez Jansa said.
Separately, the German Ministry for Economic Affairs and Climate Action wants to halve the country’s dependence on Russian oil by the summer and have no Russian hard coal imports by the autumn, Der Spiegel magazine said yesterday, citing a ministry memo.
“By the middle of the year, Russian oil imports to Germany are expected to be halved,” Der Spiegel quoted the memo as reading. “By the end of the year, we aim to be almost independent.
“By autumn, Germany can be independent of Russian coal,” it said.
Der Spiegel also quoted ministry sources as saying: “Despite the progress, an immediate embargo would still have too serious economic and social consequences.”
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