Russia’s gas supply to Europe at risk as ruble payment deadline nears

Russia said it would work out practical arrangements by Thursday for foreign companies to pay for its gas in rubles, raising the probability of supply disruptions.

Russia said it would work out practical arrangements by Thursday for foreign companies to pay for its gas in rubles, raising the probability of supply disruptions as Western nations have so far rejected Moscow’s demand for a currency switch.

President Vladimir Putin’s order last week to charge “unfriendly” countries in rubles for Russian gas has boosted the currency after it fell to all-time lows when the West imposed sweeping sanctions against Moscow over its invasion of Ukraine, which also sent European gas prices higher.

“No one will supply gas for free, it is simply impossible, and you can pay for it only in rubles,” Kremlin spokesperson Dmitry Peskov told reporters on Tuesday.

The move has drawn strong criticism from European countries, which pay for Russian gas mostly in euros and say Russia is not entitled to redraw contracts, with the G7 nations rejecting Moscow’s demands this week.

Russia has so far met its contractual obligations for gas supplies to Europe.

Peskov said that in line with a March 31 deadline set by Putin, “all modalities are being developed so that this system is simple, understandable and feasible for respected European and international buyers.”

Putin’s demand has also stoked fears in Germany, Europe’s top economy, about major disruptions to gas supplies should utilities fail to pay in rubles, and how this would affect industry and households.

Data from Gas Infrastructure Europe shows gas storage levels on the continent stand at just 26% currently, highlighting the challenge to replace Russia as an energy provider.