HomeMediaLatest NewsThe transition to payment in rubles undermines Russia's position in the gas market

The transition to payment in rubles undermines Russia's position in the gas market

24 March 2022

Belogoryev Alexey M. Deputy Principal Director on Energy Studies, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Deputy Principal Director on Energy Studies of the Institute for Energy and Finance, commented to the Svobodnaya Pressa Internet portal on the pros and cons of Russia's transition to paying for gas in rubles.

According to the economist, Russia will be able to receive an influx of non-residents to the Russian currency market by this step, which will help strengthen the national currency.

“Actually, I don’t see any other benefit. But the risks are very big,” the expert notes.

Aleksey Belogoryev points out that long-term contracts, which oblige consumers to buy contracted volumes, should keep exports at a high level: “However, changing the payment currency in most contracts is a sufficient reason to terminate the contract.”

“The transition to rubles is extremely unprofitable for consumers: the ruble exchange rate is very volatile, which creates big risks that need to be hedged. And this is an additional cost for both parties. If we talk about those who buy, they will need to factor in a possible change in the course,” Belogoryev warns.

In his opinion, the transition to paying for gas in rubles could become a serious risk for Russia.

“Until now, in terms of gas supplies, Russia has not given any reason to doubt its reliability. However, this step may have an extremely negative impact on the credibility of our country. Of course, this will not lead to a collapse in exports, but it greatly undermines not only the long-term, but also the medium-term positions of our country in the gas market,” Alexey Belogoryev emphasizes.

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