Europe to Pay for Russian Gas in Rubles—Has Anything Really Changed? | Morgan Lewis
From www.jdsupra.com
2022-04-12 22:55:04
Excerpt:
Following Russian President Vladimir Putin’s pronouncement that buyers from “unfriendly states” pay for Russian gas in rubles, it has been largely unclear, until recently, what this demand would imply in practice.
Decree No. 172, “On Special Procedure for Discharge of Obligations of Foreign Buyers to Russian Suppliers of Natural Gas” (Decree), effective as of March 31, 2022, provides that from April 1, 2022, payments for Russian gas shall be made in rubles and establishes a new procedure for gas supply payments. The March 31 Decree applies to “payment for supplies of natural gas in a gaseous state” and does not seem to apply to payment for liquefied natural gas (LNG) deliveries.
Arguably, the new payment procedure contemplated by the Decree, in principle, does not change key payment terms for existing foreign buyers of Russian gas. They are allowed to continue to pay in the currency established by their gas supply contracts with Russian suppliers, while the principal novelty is that all payments are now required to be made through special accounts that foreign buyers must open with Gazprombank in Russia, which then makes the conversion into rubles. However, as done on a unilateral basis (i.e., outside of contractual arrangements), Russia’s enforcement of the new payment requirements, arguably, can trigger claims for breach of contract.
