Europe will pay for Russian gas in roubles: has anything really changed? | Morgana Lewis

Following Russian President Vladimir Putin’s statement that buyers from “hostile states” pay for Russian gas in rubles, it was unclear until recently what this demand would entail in practice.

Decree No. 172, “On the special procedure for fulfilling the obligations of foreign buyers to Russian natural gas suppliers” (Decree), effective from March 31, 2022, provides that from April 1, 2022, payments for Russian gas will be made in rubles and establishes a new procedure for gas supply payments. The decree of March 31 applies to “payment for deliveries of natural gas in gaseous state” and does not appear to apply to payment for deliveries of liquefied natural gas (LNG).

Arguably, the new payment procedure envisaged by the decree, in principle, does not change the main 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 main novelty is that all payments must now be made through special accounts that foreign buyers must open with Gazprombank in Russia, which then converts to rubles. However, as this is done on a unilateral basis (i.e. outside of contractual agreements), Russia’s enforcement of the new payment requirements may arguably trigger breach of contract claims.


According to the decree, payments for the supply of Russian gas made after April 1, 2022 by (1) foreign buyers registered in one of the foreign states who “commit hostile actions against Russia, or Russian legal or natural persons ” (i.e., “hostile states”) or (2) other foreign buyers if the gas is supplied to a “hostile state” (collectively, foreign buyers) must be made through Gazprombank in accordance with the procedure established by the decree.

The decree provides that, if a foreign buyer does not comply with the new procedure, further gas deliveries must be suspended. Arguably, a suspension may trigger an event of default on the supplier’s side, subject to the terms of specific gas supply contracts. In practice, however, non-compliance by a foreign buyer after April 1, 2022 would not immediately trigger the suspension, as payments on deliveries are usually made in advance, and therefore the effective suspension would most likely come into effect. effective at a later date (for example, the second half of April or May, depending on the terms of a particular gas supply contract).


On March 5, 2022, the Russian government published a list of “hostile states”, consisting of the following countries that have adopted sanctions against Russia: the United States, Canada, the European Union, the United Kingdom, the Ukraine, Montenegro, Switzerland. , Albania, Andorra, Iceland, Liechtenstein, Monaco, Norway, San Marino, North Macedonia, Japan, South Korea, Australia, Micronesia, New Zealand, Singapore and Taiwan.

This list could be expanded if more countries impose sanctions on Russia.


The decree requires foreign buyers to open special type “K” accounts, denominated in rubles and foreign currencies, with Gazprombank, a subsidiary of Gazprom, in Russia.

Accounts must be opened at the request of the foreign buyer concerned; however, the physical presence of its representative at the Gazprombank office in Russia is not required.

In order to pay for the gas, the foreign buyer must deposit the payments in the currency and the amount specified in the gas supply contract into his foreign currency account type “K”. Gazprombank will then sell these foreign currencies on the Moscow Stock Exchange and deposit the ruble proceeds into the Foreign Buyer’s type “K” ruble account. Finally, Gazprombank will transfer these ruble products from the type “K” account of the foreign buyer to an ordinary ruble-denominated account of the relevant Russian supplier. From that moment, the buyer’s payment obligation under the relevant gas supply contract would be deemed to be fully discharged.

Gazprombank has so far been spared the toughest US and EU sanctions (including an EU ban on Russian banks from transacting via the SWIFT system), but c He is a “designated person” in the UK, which means that his assets must be frozen and no funds or economic resources must be made available to Gazprombank or for its benefit.[1]

In addition, since 2014 the United States and the European Union have prohibited certain transactions in new debt and new equity issued by Gazprombank, which was recently extended in the European Union to prohibit (1) entering into or to be part of any agreement to grant new loans or credit, whatever the maturity, after February 26, 2022; and (2) the purchase, sale, provision of investment services, assistance in the issue or negotiation of transferable securities and money market instruments, whatever their maturity, issued after the 12 April 2022. However, this does not appear to have an immediate effect on the new gas payment terms (with the exception of UK buyers, who would not be able to deal with Gazprombank).

The decree also expressly authorizes the Board of the Central Bank of the Russian Federation to establish a different exchange procedure for gas payments. At this time, we are not aware of any developments in terms of potential alternative currency arrangements.

The decree specifically limits potential circumvention of its requirements by novation of debt from a foreign buyer to a third party. If such a novation takes place, the new buyer will be treated as a foreign buyer.


Under Russian law, type “K” accounts are better protected against third-party claims than regular bank accounts. It is prohibited to suspend operations and to seize or cancel products deposited in type “K” accounts for obligations unrelated to the gas supply contracts concerned.

In addition, it is provided that, unless corresponding changes are made to Russian tax and customs legislation, the ban on opening bank accounts for taxpayers whose operations in bank accounts are suspended, as well as certain obligations tax audit imposed on banks otherwise established by Russian legislation, does not apply to type “K” accounts.


The Russian Government Commission for Control of Foreign Investments can issue permits allowing foreign buyers to pay for natural gas supplies without observing the procedure established by the decree. We are not aware of any such permit granted to date.

[1] Note that the United Kingdom’s Office of Financial Sanctions Implementation has issued general license INT/2022/1424276 authorizing the liquidation of positions involving various designated banks, including Gazprombank, until April 23, 2022.

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Mary I. Bruner