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G7 rejects Russia's demand to pay for gas in rubles

G7 rejects Russia's demand to pay for gas in rubles

TUESDAY, March 29, 2022

The Group of Seven (G7) has reached a consensus to reject Russia's demand to pay for gas in rubles, said German Vice-Chancellor Robert Habeck on Monday.

Russia's demand was "a unilateral and clear breach of existing contracts," Habeck, who is also the German minister for economic affairs and climate action, said after a virtual meeting of the G7 energy ministers.

Germany is currently chairing the G7.

Contracts that had been concluded should continue to apply, said Habeck. "A payment in rubles is not acceptable," he added, urging companies involved not to follow Russia's demands.

Last week, Russian President Vladimir Putin announced that gas deliveries to a number of "unfriendly countries" which buy Russia's gas would now have to be paid in rubles.

On March 7, the Russian government issued a list of countries "taking unfriendly actions against Russia, Russian companies, and citizens," referring to the economic sanctions introduced amid the Russia-Ukraine conflict.

Asked at a daily briefing in Moscow what Russia will do if Europe refuses to pay for gas deliveries in rubles, Kremlin spokesman Dmitry Peskov Russia has begun to draw up a ruble settlement plan for natural gas exports. If European countries refuse to pay in rubles, Russia will respond in due time, he said.

When attending an energy conference in the United Arab Emirates on Monday, Claudio Descalzi, CEO of Italian energy giant Eni, said his company will not pay their energy bills using the Russian ruble. He said Eni doesn't have rubles, noting the contracts say fuel payments should be made in euros.

The leaders of EU member states failed to reach an agreement on banning the import of Russian energy at the just-concluded EU summit. A German government spokesman reiterated on Monday that Germany does not support sanctions against Russia's energy sector, which will significantly blow the German economy and employment.

The EU imports about 40 per cent of its natural gas from Russia, most of which are settled in euros. The "ruble settlement order" announced by Putin means that these "unfriendly" countries with import demand will have to buy rubles.

In recent days, EU countries have successively imposed mounting sanctions against Russia, but they are heavily dependent on Russia's energy. They say payment in rubles is not acceptable.