Gazprom demands GAIL pays in euros: press

Gazprom has told Indian gas distribution company GAIL it would rather take LNG payments in euros than dollars, in a move that furthers Moscow's shunning of Western currencies amid the war in Ukraine, Reuters reported March 28.

GAIL has a long-term gas import contract for 2.5mn metric tons/year of LNG with Gazprom's Singaporean marketing and trading unit. It has been using dollars to pay for the gas and is still considering Gazprom's request, though it believes using euros could be a working compromise.

Reuters' sources said Gazprom was continuing to supply LNG to GAIL while negotiations are ongoing.

"GAIL doesn't see any problem in settling payments in euros as European countries are paying for their imports in euros," said one of Reuters sources.

Russian president Vladimir Putin is powerless to stop EU and US sanctions wreaking havoc on the economy, despite his assertion that the impact on livelihoods amounts to a "declaration of war".

Hoping to use its energy sector as a bargaining chip, Russia has since declared that "unfriendly" countries must use rubles to pay for its gas, but it is unclear how this will work in practice, and some buyers have been deterred from making purchases.

Meanwhile, EU leaders are scrambling to quickly ramp up alternatives to Gazprom's gas. US president Joe Biden joined the bloc's leaders at a EU summit last week and has struck a new agreement for US producers to provide additional gas. US LNG suppliers could supply as much as 10% of EU gas consumption before the end of 2020, eating into Russia's 40% market share.

Exports to key customers to the continent continue to be billed in euros, meaning Gazprom will have reduced access to one of the world's two reserve currencies, at a time when the ruble's value is depleting. Putin's stance limits Gazprom's options, which makes an Indian switch to euros - presented as a blow to the US dollar - more appealing.

India abstained in the UN Security Council resolution condemning Russia's war in Ukraine, and could also offer Moscow a crucial alternative to its economic partnership with China, as Beijing stands to gain colossal bargaining strength as Western sanctions take effect. Already, Reuters says some Indian companies have scored big discounts on Russian oil as Western buyers have cut back on supplies.