Russia to keep gas contract prices unchanged in rouble switch, sources says

(Reuters) – Russia plans to keep a contract price for gas exports to “unfriendly” countries unchanged but the payment should be done in the rouble equivalent on a pre-agreed settlement day, as one of the options to switch the currency, two Russian sources said.

President Vladimir Putin has said Russia, the world’s top natural gas producer, will soon require “unfriendly” countries to pay for fuel in roubles, raising alarm about a possible gas crunch in Europe.

“Only payment currency is changing, the contract currency is not,” one source said. For example, for deals clinched in euros the payment should be made at the official rouble/euro exchange rate set by the Russian central bank, that source said.

The proposed scheme is one of the options and is not final, the sources said. According to a third Russian source, Gazprombank, Russia’s third biggest bank, could serve as an intermediary for transactions between the gas buyers and Gazprom.

“There is no final decision yet, the work is ongoing,” a financial source involved in drafting the gas payments scheme told Reuters. The central bank, Gazprom and Gazprombank did not reply to a Reuters request for a comment.

Moscow has yet to describe how it will go about the switch, which the Kremlin indicated on Wednesday could extend to Russia’s other exports, and the sources offered the first details investors and customers have been keenly waiting for.

There is no clarity whether gas buyers from so-called “unfriendly” countries – those which joined Western sanctions on Russia – will accept the demand to pay in roubles.

Gazprombank is one of the main channels for payments for Russian oil and gas. It was sanctioned by Britain along with some other Russian companies earlier this month.

On Wednesday, Germany triggered an emergency plan to manage gas supplies that could see Europe’s largest economy ration power if a standoff over Moscow’s demand for rouble payments disrupts or halts supplies.

Putin is due to listen to proposals how to switch the payments to roubles, including from Gazprom and the central bank, on Thursday, and the scheme will be made public, Kremlin spokesman Dmitry Peskov said on Wednesday.

The customers will not be obliged to switch to roubles as soon as from Thursday, Peskov said, as “payments and delivery is a time consuming process.”

Gazprom, which accounts for 40% of European gas imports, does not disclose gas prices country-by-country, but has planned to charge western countries an average $296 per 1,000 cubic metres this year, up from $280 in 2021.

(Reporting by Reuters; Editing by Tomasz Janowski)