Russia Wants to See Other Export Products Paid in Rubles in Addition to Gas and Oil

Russia Wants to See Other Export Products Paid in Rubles in Addition to Gas and Oil

Countries that want to import Russian gas will not immediately have to pay in rubles. The new measure will be introduced in phases, the Russian government says.

 

She is thinking of expanding the list of export products that should eventually be paid in rubles. In any case, several European countries are already preparing. For example, the first “warning phase” of an emergency plan comes into effect in Germany.

A week ago, Russian President Vladimir Putin announced that he had instructed the Russian Central Bank to develop a system whereby exported natural gas and oil would henceforth be paid in Russian rubles instead of US dollars or euros.

In this way, Russia wants to better protect its economy against Western sanctions because of the war in Ukraine. The measure would also benefit the weak ruble exchange rate, as importing countries would have to buy rubles, especially European countries. About 40 percent of the gas imported into Europe comes from Russia.

However, the measure will not be fully implemented immediately, the president’s spokesman said today. There will be a gradual transition, it says. “Payments and deliveries are a time-consuming process. This measure does not mean that delivery will have to be paid in rubles tomorrow. This is a longer process.” More details about the exact timing were not given. The government and the Central Bank are expected to provide more information about this tomorrow.

At the same time, it is said that the list of export products that should be paid in rubles in the future may be expanded. Grains, metals, fertilizers, coal, wood and other products could be added to the list in the future, Russian MP Vyacheslav Volodin warned. The Kremlin confirmed that such a list should be worked on.

The announced measure was previously rejected by several European countries and the G7 – the seven richest industrialized countries in the world. Russia cannot just withdraw contracts, it says.

In any case, some European countries are already taking steps to reduce their dependence on Russian gas, should Russia stand firm and lead to shortages. For example, Germany today initiated an emergency plan to secure its gas supplies. Slightly more than half of the gas that Germany imports come from Russia.

For now, only phase 1 of that plan is in effect, namely the “first warning phase”. This means that there will be no interruptions in supply for the time being. However, the German economy minister does receive a daily update of the deliveries. If problems arise, phases 2 and 3 could eventually affect the “alarm phase” and the “emergency phase”.

In the alert phase, all players in the market are pressured to “eliminate the failures through efficiency and short-term measures such as importing gas from other countries”. The final phase means, among other things, that the government can intervene in the event of a gas shortage if “all relevant market-based measures have already been implemented”. For example, families and hospitals would then be given priority over the industry.

Despite that plan, Germany won’t be able to be independent of Russian gas until mid-2024, German Economy Minister Robert Habeck added. He emphasized that gas supplies were still secured, but he urged the German population and companies to consume less gas. “Every kilowatt hour counts.”

Italy and Latvia had already initiated a similar plan. France, which is less dependent on Russian gas than Germany, is not yet concerned about possible shortages. “Everything is fine, and the gas depots are well stocked, we will get through the winter,” Jean-Fran├žois Carenco, the head of the French energy regulator CRE, told the French TV channel BFM-TV.

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