Russia: Gazprom threatens to change terms in gas contracts if West imposes price cap

The Kremlin announced today that Gazprom is likely to seek a change in the terms of gas supply contracts to Western countries that will impose a ceiling on Russian gas prices.

G7 leaders have agreed to consider a possible cap on Russian oil and gas prices, with the aim of limiting Moscow’s ability to finance its war in Ukraine.

Western officials have said they want to boost sales of Russian oil to levels slightly above production costs to ensure a reduction in Russian profits while maintaining production volume.

“It depends on the direction, it depends on the decision that Gazprom will take. Most likely, the issue of changing the terms of existing contracts will change, changing the price,” said Kremlin spokesman Dmitry Peshkov, when asked about its prospects. imposing a ceiling on gas prices.

Peshkov did not specify whether the changes would mean linking the contracts to the proposed ceilings or a comprehensive revision of the terms of the contracts.

Asked whether the G7 proposals to impose a ceiling on Russian oil and gas prices would hit the state budget, Peshkov replied: “We still do not know what it is about … According to our Constitution, Russia It is a welfare state – fulfilling our social obligations is our top priority. ”

Russia is forecasting a budget deficit of 2% in the wake of rising energy prices caused by the spike in energy prices caused by the Russian invasion of Ukraine amid the difficulties of imposing Western sanctions on Moscow. GDP this year as it strengthens support for business and social benefits to offset sanctions.

Even with this projected budget deficit, Russia needs an oil price of $ 100 / barrel to balance its budget, according to Natalia Orlova, chief economist at Alfa Bank.