Russian President threatens to stop supplying gas if not paid in roubles

Russian President has told “unfriendly” foreign countries they must start paying for gas in roubles or it will cut supplies.

Vladimir Putin has signed a decree stating buyers “must open rouble accounts in Russian banks” from Friday.

“Nobody sells us anything for free, and we are not going to do charity either – that is, existing contracts will be stopped,” the Russian president said.

Western companies and governments have rejected Russia’s demands to pay for gas in roubles as a breach of existing contracts, which are set in euros or US dollars.

Mr Putin’s demand is being seen as an attempt to boost the rouble, which has been hit by Western sanctions.

Since Russia invaded Ukraine, Western nations have issued economic and trading sanctions on Russia, but the European Union has not placed bans on oil or gas, unlike the US and Canada, as its member nations rely heavily on it.

The EU gets about 40% of its gas and 30% of its oil from Russia, and has no easy substitutes if supplies are disrupted. Meanwhile, Russia currently gets €400m (£340m) per day from gas sales to the bloc and it has no way of rerouting this supply to other markets.

Mr Putin said the switch to roubles was meant to strengthen Russia’s sovereignty, and it would stick to its obligations on all contracts, if Western nations obliged.

Germany said the change announced by Mr Putin amounted to “blackmail”.

At a news conference, German Economy Minister Robert Habeck said he had not yet seen the new decree signed by Mr Putin.

“With regard to the threat, demand or consideration – one doesn’t know what to call it anymore – to be made to pay in roubles, it is crucial for us that the contracts are respected,” he said.

Separately, German Chancellor Olaf Scholz said German companies would continue to pay for Russian gas using euros as stipulated in contracts.

Gazprombank will then convert this into roubles which will then be used to make the payment for gas.