[Asia Economy Reporter Kim Hyunjung] As Russia insists on receiving payment for natural gas exports in rubles, tensions with the European Union (EU), which has officially rejected this demand, are escalating. With domestic demand in Russia also surging, the possibility of supply to the EU being cut off has increased.
The Financial Times (FT) reported on the 29th (local time) that Russian officials said the day before that they would "not supply gas for free" in response to the G7 countries' refusal to pay for gas in rubles. Dmitry Peskov, Kremlin spokesman, told the local state news agency Interfax, "Payment is only possible in rubles," and repeatedly insisted, "Companies must understand the completely new reality arising from the changed market situation and the economic war imposed on Russia."
European leaders have questioned the legality of Putin's proposed move in the gas industry, where long-term contracts are most important, and argue that payments should be made in euros or dollars.
French President Emmanuel Macron also said during a call with Russian President Vladimir Putin that Western gas companies cannot pay contract costs in rubles, and France opposes such a move, according to a senior French official.
Gazprom, Russia's state-owned gas supplier, emphasizes that existing supply contracts do not allow 'ruble payments' to its European customers. Pavel Majewski, CEO of Poland's state-owned gas company PGNiG, explained last week, "The possibility of switching payments to rubles for Gazprom is low," adding, "It is not a situation where the counterparty can arbitrarily change the payment method."
Ann Sophie Korbo, a researcher at Columbia University's Center on Global Energy Policy, said European buyers are struggling to comply with the EU plan to reduce dependence on Russian gas through contracts that specify minimum purchases. She emphasized, "Long-term contracts are very important in the gas business."
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