Gazprom’s proposal to include LNG in the ‘rubles for natural gas’ scheme

The inclusion of liquefied natural gas in the “ruble for natural gas” scheme, which was imposed by Putin’s decree in March, has been proposed by the Russian energy giant Gazprom, according to a senior executive of the company cited by the Interfax news agency.

The proposal by Kirill Polous, deputy head of Gazprom’s LNG division, comes after Moscow moved to freeze and appoint a new operator at the Sakhalin-2 LNG plant in retaliation for Western sanctions on Russia, as reported by Reuters .

The Sakhalin-2 commitment came under a decree of Russian President Vladimir Putin, which provides for the creation of a new company that will take over all the rights and obligations of Sakhalin Energy Investment Co, in which Shell and Japanese trading companies had stakes. Mitsui and Mitsubishi, which together held just under 50%.

It is noted that Russia accounts for about 8% of the world’s LNG supply, providing 40 billion cubic meters of liquefied natural gas per year mainly from Sakhalin-2 and Novatek’s Yamal LNG, Russia’s largest LNG plant.

It is recalled that the “ruble for natural gas” scheme came into effect in March, following a decree by Putin, according to which Russia requires countries it characterizes as “unfriendly” to pay for the supply of natural gas in Russian currency.

Some of Gazprom’s biggest customers in Europe refused to bow to Putin’s demand, prompting the Russian energy giant to cut off their gas supplies.

“It’s a matter of coordinating natural gas exports through pipelines and LNG,” Poles said, adding that there has been a competition at the level of exchange rates between natural gas delivered through pipelines and sold in rubles and LNG taxed in dollars.

Unlike natural gas exported via pipelines to Europe, however, most Russian LNG is headed to Asia. Among the European countries, Spain is the one that stands out in terms of Russian LNG purchases.