What has changed in the process of gas exports since April? On March 31, Vladimir Putin signed a decree on a special procedure for fulfilling obligations to foreign suppliers to Russian natural gas suppliers. According to the document, from April 1, Gazprom will receive payments from “unfriendly” states in rubles. However, buyers will be able to continue to pay in foreign currency.
The decree states that gas supplies will be stopped if the buyer refuses to pay under the contract in rubles, will continue to pay in foreign currency or try to pay for supplies not through Gazprombank, appointed by the authorized bank for such calculations. At the same time, Gazprombank will buy rubles, which will open special ruble and currency accounts based on applications from foreign buyers. Buyers will have to transfer the currency to Gazprombank, which will sell it on the Moscow Stock Exchange, credit the proceeds in rubles to special ruble accounts of these foreign buyers and transfer rubles to Gazprom.
The Board of Directors of the Central Bank is empowered to determine a different procedure for selling foreign currency. He is also given the right to give official explanations on the new calculation scheme.
The decree does not change the payment currency, but only introduces a new settlement procedure, ie this decision is not a gross or significant breach of existing contracts, as payment in euros or dollars is maintained, said Alexei Gromov, director general of the Institute of Energy and Finance.
Gazprom’s foreign counterparties are only being offered to settle for gas through an authorized bank, Gazprombank, which is already one of the main banks through which payments for Russian gas are made, the expert said.
At the same time, Gromov says, the decree does not oblige Gazprom’s foreign counterparties to buy rubles. It is enough to open special currency and ruble accounts in Gazprombank.
“The decree is rigid in form, but the proposed mechanism does not require foreign buyers to buy rubles on their own or deal with the Central Bank,” said a source in the gas market, who wished to remain anonymous. “Neither volumes nor prices change.”
Thus, Gazprom’s foreign counterparties do not violate any sanctions imposed on the Russian financial system, especially since Gazprombank is not subject to sanctions, and Gazprom does not violate the essential terms of its existing contracts, but complies with the President’s decision to transfer payments for gas in rubles, “says Gromov.
The scheme is a “fairly soft version of the transfer of payments in rubles,” said Forbes analyst at Finam Sergei Kaufman.
The risk for Russia remains
This is an “elegant” decision under the current sanctions, but, of course, it does not fully protect Russia from further increasing sanctions, Gromov said. As long as the currency goes to the account in Gazprombank through correspondent accounts in foreign banks, the risk of blocking exists in the event of sanctions against Gazprombank, the expert explains.
“Another thing is that in the situation if a decision is made to impose sanctions on Gazprombank, other payment channels will be legally impossible after the transition to such a scheme. In this situation, we are waiting for the cessation of supplies, “said Gromov.
“The economic sense is the same – to remove the risk of revenue freeze,” – said Investment Director of “Loko Bank” Dmitry Polevoy. It is possible to block the transfer to the euro only if the counterparty wants to refuse gas supplies. Under the new decree, gas is considered paid for if Gazprom receives rubles. “If someone wants to block the euro, then there is no fact of payment, and gas supplies are stopped,” said Field Forbes.
The risk of suspending gas supplies after April 1, when it is necessary to open accounts, is low, believes Field. The scheme is economically simple and clear. The meaning of the operation “money-goods” does not change, transaction costs are insignificant. Foreigners just need to move to a new order, but the decision is up to lawyers and politicians, he said.
If buyers do not want to meet the requirements, the suspension of supplies will incur losses for buyers who will face gas shortages, rising spot prices and disruption of production processes, and Gazprom, as it is unlikely to sell all European gas to alternative suppliers on the spot market. the expert considers.
“Political and moral component”
The economic point of the decree is that instead of 80% of export revenue, 100% is repatriated, and the Central Bank and the government commission can set special rules for special accounts and individual countries, a source in the market told Forbes, who wished to remain anonymous. According to him, in this way the “currency power” is shifting from the exporter to the state.
“But there is also an important political and moral component: whether foreign buyers will want to comply with any new requirements of the Russian authorities, even if it does not violate sanctions,” said the source. “If they don’t want to, Russia has a clearly defined mechanism for stopping gas exports.”