 "oil and gas")
Russian gas flowed into Europe while regional gas prices rose further on Friday as firms grappled with President Vladimir Putin's threat to cut off supplies unless they paid in roubles.
The Kremlin said it would not turn off gas exports to Europe from Friday as payments on deliveries due after April 1 come in the second half of this month and May.
Under Putin's decree, foreign buyers of Russian gas must open rouble accounts in Gazprombank from Friday so foreign currency can be converted to roubles.
Analysts said the plan, which puts state-controlled oil and gas company Gazprom at the heart of Russian gas trade, was more about shielding it from future sanctions than depriving Europe.
"It is of course a game to dodge sanctions, adding to uncertainty, propping up gas prices and filling Putin's pockets," a European gas trader said.
The move has caused consternation in Europe, which relies on Russia for more than a third of its gas supply, and among companies buying Russian gas to generate electricity for industry and heat homes in the region.
Ditte Juul Jorgenesen, director general of the European Commission's energy division, said on Twitter that European Union coordination was taking place to figure out a common approach on currency payments.
"Working closely with Member States and operators. EU coordination today to establish a common approach on currency payments for gas contracts with Russia," Jorgenesen tweeted.
The European Commission declined further comment.
GAZPROMBANK
Energy exports are Putin's most powerful lever as he tries to hit back against sweeping Western sanctions imposed on Russian banks, companies, businessmen and associates of the Kremlin in response to Russia's invasion of Ukraine, which Moscow calls a "special military operation".
But Russia does not have an alternative market to deliver its natural gas to, so stopping flows would also hit its income.
Putin's decision to enforce rouble payments has boosted the Russian currency, which fell to historic lows after the Feb. 24 invasion. The rouble has since recovered much lost ground.
European buyers are still prepared to buy gas under existing contracts while they seek clarity on Putin's demand.
Austria's OMV has made initial contact with Russia's Gazprom regarding paying for gas in roubles as demanded by Moscow, a spokesperson said on Friday, adding that the company is still waiting for written information.
Denmark's Orsted, which has a take-or-pay contract with Gazprom running until 2030, said it had not yet received any enquiry from Gazprom.
"Therefore we still do not know what the (Putin) statement will actually mean for the contract and for the supply of gas from Russia to Danish and European households and businesses," Orsted said in a statement.
Gazprom said on Friday it had started to notify clients of a requested switch of end-payment currency to roubles.
So far, Gazprombank has been spared from a ban on Russian banks transacting through the SWIFT payments messaging system although Britain did freeze its assets last week. Britain, however, only gets about 4% of its gas from Russia compared to around 40% for Germany and a third for the entire region.
PRICE RISES
Gazprom's natural gas exports outside former Soviet Union countries fell to 38.5 billion cubic metres (bcm) in the quarter ended March 31, down 27.1% from a year earlier, according to the company.
Nevertheless, two of the three main pipelines into Europe, Nord Stream 1 across the Baltic Sea and into Slovakia over Ukraine were flowing normally on Friday, while flows through the Yamal-Europe pipeline over Belarus reversed.
While this meant gas was flowing from Germany to Poland through the Yamal-Europe route, it is not an uncommon switch.
European gas prices have risen as a result of uncertainty over Putin's order, with British and Dutch gas prices up between 7% and over 10% since his announcement.
Although they remain far from record highs seen earlier this year, European prices were on the rise again on Friday.
The front-month contract for May delivery in the Dutch gas market was up 3.7 euros at 124.7 euros per megawatt hour (MWh) by 0925 GMT, while the weekend contract was up 4.00 euros at 123 euros/MWh.
In the British gas market, the day-ahead price was 15 pence higher at 300 pence per therm.
Meanwhile, requests for Russian gas into Slovakia from Ukraine through the Velke Kapusany border point rose to their highest since the end of November, while requests from Italy for Russian gas deliveries were slightly higher.
Greece said its next payment for Russian gas was due around April 20, but it saw no security of supply issue even if Moscow halts flows as it can activate a contingency plan which would enable it to get additional liquefied natural gas (LNG) and switch four gas-fired electricity plants to diesel.
It might also ramp up Azeri gas purchases.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
