A recent Russian Federation (RF) declaration that in future all “hostile” states must pay for Russian gas in rubles or face an end to gas deliveries, is a hollow bluff that will fall apart in coming weeks if not months, a senior official from Ukraine’s Energy Ministry said late on Wednesday, March 30. Olena Zerkal, a senior Energy Ministry adviser, made the comments during a Channel 24 TV marathon.
Russian President Vladimir Putin said in remarks March 24 that in future the Kremlin will sell its natural gas to most countries only if they pay in Russian rubles, and if they refuse to do that Moscow will cut them off.
Market analysts said the Russian move was motivated by a Kremlin desire to “punish” western states for opposing its invasion in Ukraine, and a desire to prop up, if possible, the Russian ruble, which lost close to half its value against major currencies in the weeks following the attack.
EU states heavily dependent on Russian natural gas called the move Kremlin blackmail and a violation of longstanding contracts designating US dollars or euros as means of payment.
Zerkal said that Ukrainian government intelligence is confident that even were Russia to halt natural gas deliveries to EU states, the Russian natural gas monopolist could only sustain the cut off for several weeks or a few months, because of limited capacity in natural gas holding sites and reservoirs in Russia.
“They (Gazprom and the RF) would either have to start delivering its gas to other countries (like China) at a giant discount, or just burn the gas – there would be no other place to put it,” she said. According to news reports on March 30 from Berlin, German Chancellor Olaf Scholtz told Putin in a phone call that Germany would either pay in euros or dollars per contract, or live without Russian gas. Other EU states have taken a similar hard line against Putin’s threat.
