Gazprom is turning off Taps

Gazprom is turning off Taps


The day before it became known that 10 European buyers of Russian gas have already opened accounts in Gazprombank to pay for the fuel according to a new mechanism, based on the conversion into rubles.

So far, the overwhelming number of these clients remains unnamed, although four of them have already executed the first tranches in Russian currency. New deals will be concluded as early as 15 May. The countries friendly to Russia such as Belarus, Moldova, Serbia and Armenia have also expressed their readiness to buy gas for rubles. Notably, Eni SpA, an Italian generating company, is also preparing to open ruble accounts in Gazprombank to pay for gas supplied from Russia.

Meanwhile, the day before, gas supplies to Poland and Bulgaria, which refused to pay in rubles for the Russian gas were completely suspended. The suspension will last until the payment is made in accordance with the new procedure specified by Russia. This measure has already left several districts of Warsaw without gas.

The Head of the European Commission, Ursula von der Leyen, called this action by Gazprom blackmail, and Russian presidential press secretary Dmitry Peskov, in turn, explained that the new payment methodology was caused by “unprecedented unfriendly’ steps in the economy, when “we were deprived” of a significant amount of reserves.

“Today, we are dealing with a kind of short-term positional struggle,” Vyacheslav Mishchenko, head of the Center for Analysis of Strategy and Technologies of Development of the Fuel and Energy Complex of the Gubkin Oil and Gas University, told, “which is taking place between players representing the economic and political interests of the entire European community. At this stage, we hear the rejection of all our proposals, which is being voiced by the European Commission on the part of Ursula von der Leyen. In fact, there is rhetoric of complete denial of payment for Russian gas in Russian currency.”

It should be noted that that there can be no claims against Gazprom from the legal point of view, because the Russian gas company was simply deprived of the opportunity to dispose of dollars and euros. However, in practice any decision of the international arbitration, which is supervised by the West, is possible, and Russia will simply refuse to execute an unfair verdict.

Nevertheless, according to Mishchenko, national governments of some European countries are already beginning to show themselves as independent players, for example, Hungary has taken a fairly independent position. As for the positions of Bulgaria and Poland, they are transit countries, according to the expert, through which gas is delivered not only to their markets, but also to the neighboring countries – Serbia, Hungary and Austria.

On March 23, 2022 Russian President Vladimir Putin explained the new rules for the purchase of Russian natural gas, in connection with which trade in rubles could be a kind of disaster for the so-called unfriendly countries that are dependent on oil, gas and coal produced in our country.

This mechanism came into force as early as April 1 this year, but the G7 had previously rejected this approach. However, their objections were not accepted by Moscow, and in case of default, the Russian side will suspend the contracts.

“If Bulgaria, for whatever reason, is not ready to pay for Russian gas in rubles today,” said Mishchenko, “then gas supplies to the Bulgarian market will naturally be suspended. So, they have already been suspended. I stress that gas transit will be continued. If an unauthorized extraction of gas starts in Bulgaria, the transit of gas to the neighboring countries will be suspended or limited as Gazprom has already warned.”

Indeed, it would be strange to suppose that the Kremlin would not respond to an economic war unleashed against Russia by the “civilized” world. It would be more appropriate to call blackmail the freezing of Russian assets in Western countries, which led to Moscow's demand to pay for gas supplies in its national currency. All transactions will now take place in the domestic bank accounts, which eliminates the risk of freezing, seizure and other problems in the calculations. The conversion of foreign currency revenues, which will be carried out by Gazprom, is also guaranteed.

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