Moscow is demanding payments in rubles in retaliation for sanctions imposed on Moscow by Western countries over its war against Ukraine.
The sanctions have frozen large chunks of Russia’s foreign reserves and cut off its financial institutions from the international banking system. By insisting on ruble payments, Moscow is effectively forcing Europe to buy its currency.
Gazprom’s announcement came just a day after Latvian energy company Latvijas Gaze said it was buying natural gas from neighboring Russia, adding that it was not buying from Gazprom and was paying in euros.
Earlier this month, Latvia’s parliament voted in favor of a proposal to ban Russian gas supplies from January 2023.
Meanwhile, Gazprom has also dramatically cut flows through the Nord Stream 1 pipeline earlier this month, accusing the West of withholding vital equipment due to sanctions. Europe said Russia’s actions were politically motivated.
The pipeline, which supplied around 35% of total Russian gas imports to Europe last year, had been shut down for 10 days for routine maintenance work. When imports resumed last week, natural gas was flowing through Nord Stream 1 at 40% of its total capacity.
The move prompted Germany to declare a “gas crisis” and trigger the second phase of a three-stage natural gas emergency program, bringing it one step closer to cutting supplies to the industry
The EU, of which Latvia is a member, agreed last week to cut gas demand by 15 percent this winter to save gas “in order to prepare for possible interruptions in gas supplies from Russia.”
However, the bloc has tempered its ambitions, offering countries some significant leeway. The EU will exclude countries that are not interconnected with other members’ gas networks from the 15% target, as they “will not be able to release significant volumes of natural gas for the benefit of other member states”, the EU Council said . a press release.
