Economy 25 March 2022, 9:20am

Message to Putin: Russia cannot blackmail Europe with its energy resources

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The time when Russia could use its energy resources to blackmail Europe is over, the European Commission President Ursula von der Leyen has said on Thursday.

Russia will force Europe to start paying for gas supplies in rubles, President Vladimir Putin said on Wednesday in televised remarks. He has ordered the country's gas giant Gazprom to convert oil and gas contracts with hostile countries into roubles to boost the currency. Hungary is one of the 'unfriendlies'.

At the same time, European Union member states remain divided on whether to sanction Russian oil and gas directly, a move already taken by the United States.

Europe imports around 40% of its natural gas from Russia, with contracts typically priced in euros.

Hungary's Prime Minister Viktor Orbán categorically refuses to support energy sanctions on Russia, saying that 85% of all gas entering Hungary comes from Russia, and fuel is produced from oil, 64% of which comes from Russia.

As regards Putin's demand, EC President Ursula von der Leyen said:

This would be a unilateral decision and a clear breach of contract. It would be an attempt to circumvent the sanctions. We will not allow our sanctions to be circumvented.

"The time when energy could be used to blackmail us is over," she added.

Several EU countries, including Germany and Italy, have already stated the demand to pay for gas in rouble would be a breach of energy supply contracts.

German chancellor Olaf Scholz said the currency German companies must pay for Russian fossil fuels was fixed in their contracts; in most cases it's euros or dollars.

Analysts said rouble payments would be possible without breaking EU sanctions, which do not directly hit oil and gas supplies but target banks that could be involved in rouble transactions, Reuters reported.

Russia's main gas exporter Gazprom has more than 40 long-term gas agreements with European counterparties, with Europe paying hundreds of millions of euros per day to Moscow for fossil fuels.

According to Gazprom, around 97% of its gas sales to Europe and other countries as of Jan. 27 were settled in euros or U.S. dollars.

A disruption to Russian oil and gas imports would hit some EU countries harder than others. Germany, Europe's biggest economy and energy consumer, receives 18% of Russia's gas exports and 11% of its oil.

Nobody will pay in roubles,

Slovenia's Prime Minister Janez Jansa said.