a big problem
Last week, Serbian President Aleksandar Vučić noted that Belgrade gets Russian gas almost for free. The undisguised joy of a successful deal with Gazprom was reinforced by a generally friendly rhetoric towards Moscow, which, according to the Serbian politician, was the victim of “shameful” and “stupid” accusations from the West.
Shortly after Russian President Putin’s decision to convert gas payments with unfriendly countries into rubles, the rhetoric received a minor adjustment.
“It’s a big problem for the whole world <...>. Some consider it a brilliant decision to counter the petrodollars with the ruble or the yuan in the geopolitical game. The Germans have already stated that this was the reason for the termination of the treaty. All this just brings us a lot of trouble, ”Vučić said on the RTV channel.
According to Vučić, the decision of the Russian president is unlikely to cause admiration among Bulgarians and Hungarians, since these countries will not be able to pay Gazprom in rubles. Vučić did not talk about the specific reasons for this scenario.
It is known that Hungary can buy gas from Russia five times cheaper than the market price in Europe, thanks to long-term contracts. President Putin spoke about this in February. At the same time, Gazprom and Budapest are bound by a 15-year contract signed less than six months ago (in September 2021).
Alexander Nikolov, head of the Bulgarian Ministry of Energy, also saw no cause for concern. In an interview with NOVA, he said that nothing threatens the Russian gas supply, and that there is “a financial counterparty that can carry out this operation in rubles” in the country.
Other countries reacted differently. Polish energy company PGNiG said that it is not possible to switch to rubles for payments for Russian gas supply – it is not included in the contract. Austrian oil and gas company OVM referred to a contract listing the euro as the currency for transactions. In Japan, they have not yet figured out how the Russian authorities will enable the transition to the ruble in gas deals.
Are there reasons for concern?
The reasons for raising concerns remain unclear, as Serbia is not on the list of “unfriendly countries” and can pay in any currency. Igor Yushkov, a specialist at the Financial University under the Government of the Russian Federation, spoke about this in an interview with socialbites.ca.
According to the expert, companies on the list should not have major problems with the transition to Russian rubles for gas payments.
“From the point of view of companies’ work, there are no problems. Now they give dollars or euros to Gazprom for gas supply.
In the new plan, they are invited to come to the Russian stock exchange and transfer the amount they will buy gas in the same dollars and euros, but not directly to Gazprom, but to other structures, banks or importing companies. this will convert the currency into rubles. And they will be able to take these rubles to Gazprom. How much did they pay and will they pay. The price does not change,” Yushkov said.
“If companies come to the stock market for rubles, then they need to see which companies they can trade with and which ones they can’t. We don’t have many companies that are under the harshest sanctions. You can trade even with sub-sanctions, as the restrictions apply to credit transactions.”
Yushkov pointed out that it would be more appropriate for European companies to receive a ruble money supply from the Central Bank of the Russian Federation, but the sanctions against the regulator do not allow this.
“Perhaps the transition to the ruble in gas deals is aimed at removing the Central Bank from sanctions and then interacting normally again,” the expert said.
Politically, the situation is more complicated, Yushkov said, as Russia’s decision to switch to the ruble seems like a definitive ultimatum to Europe.
“Europe, by agreeing to switch to the ruble, actually admits to dependence on Russian gas. This has a symbolic meaning. However, European politicians may disagree with the ultimatum form and oppose the transition to the ruble. There are no difficulties for companies. But politicians will oppose it,” he said.
Formerly socialbites.ca analyzed situation in the energy market. Then experts agreed that it would be difficult for the European Union to give up on Russian oil and gas.
Yushkov believes that the time to abandon Russian gas is not right, even if European countries do not dare to switch to the ruble in their settlements.
“They come out of the heating season with empty gas tanks and risk losing the biggest supplier. It is not clear how countries will provide themselves with electricity,” Yushkov summarized.
Marcel Salikhov, head of the economics department of the Institute of Energy and Finance, believes that countries can revise contracts with Gazprom, since the transaction currency is an integral part of the contract, which cannot be changed unilaterally.
“Companies will have different reactions. Someone can claim additional reductions in price for themselves. “This is a long process because Gazprom has more than 100 contracts in the European Union,” he said.
At the same time, Salikhov noted that nothing prevents foreign companies from entering the Moscow Stock Exchange.
In principle, European companies can buy rubles on the Moscow Stock Exchange through Russian banks and transfer rubles to Gazprom under contracts. The Central Bank will soon clarify the technical issues.
But for both European companies and Gazprom these are additional costs. The Russian company still needs money. They will continue to buy some from China and Turkey, which are the biggest buyers from friendly countries. Or they will buy the money themselves,
Salikhov summed up.
Calvin Turley is an author at “Social Bites”. He is a trendsetter who writes about the latest fashion and entertainment news. With a keen eye for style and a deep understanding of the entertainment industry, Calvin provides engaging and informative articles that keep his readers up-to-date on the latest fashion trends and entertainment happenings.