Russia to only accept roubles for natural gas supplied to ‘unfriendly countries,’ Putin says

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Russia will seek payment only in roubles for natural gas supplied to “unfriendly countries,” Russia’s president Vladimir Putin has announced amid soaring gas prices in Europe.

Mr Putin, in a retaliatory move against the west’s multiple bouts of sanctions on Russia following the Ukraine invasion, told officials on Wednesday that it made “no sense whatsoever” to supply “our goods to the European Union, the United States and receive payment in dollars, euros and a number of other currencies”.

The Russian president said he was announcing “measures” to switch to payments in Russian roubles for “our natural gas, supplied to so-called unfriendly countries”.

Gas supplies from Russia account for nearly 40 per cent of Europe’s total consumption.

The decision is seen as an attempt to strengthen the rouble, which collapsed to a record low against other currencies after the west responded to Russia’s aggression with far-reaching sanctions.

Mr Putin instructed the Russian central bank to work out a procedure within a week’s time, but did not say how and when the new policy would take effect.

“Russia will continue, of course, to supply natural gas in accordance with volumes and prices... fixed in previously concluded contracts,” he said at a televised meeting.

Following his declaration, the rouble leapt briefly to a three-week high at 95 against the US dollar.

Mr Putin’s declaration drew criticism from Germany’s vice chancellor and economy minister Robert Habeck, who called it a breach of contract, adding that Germany will consult European partners over the Russian demand.

“There is no danger for the (gas) supply, we have checked, there is a financial counterparty in Bulgaria that can realise the transaction also in roubles,” Bulgarian energy minister Alexander Nikolov told reporters.

“We expect all kinds of actions on the verge of the unusual but this scenario has been discussed, so there is no risk for the payments under the existing contract,” he said.

A senior Polish government source told Reuters that the demand “would constitute a breach to payment rules included in the current contracts”, adding that Warsaw has no intention of signing new contracts with Russian gas giant Gazprom.

Earlier reports suggested that India, which has largely remained “neutral” in the conflict, is working out ways to facilitate trade with Russia using local currencies.

According to analysts, the rupee-rouble trade mechanism could take shape by the end of this month.

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