Putin Demands Payment in Rubles for Russian Gas sold to “Unfriendly Countries”

a reply to: Onlyyouknow

Thank you.

How do you think this will impact the stock market, the willingness of banks to loan money, and interest rates on loans?

You tell me.

Imagine you are a banker. You expect prices to soar in the next year or so. That means any dollars you get will be worth less than they are now. So do you give out money now to get money worth less a year from now?

Or really any other good to know impacts you foresee?

Interest rates could easily rival or beat out the crazy rates of the 1970s. Prime could go to double digits, as it tries to keep up with expected inflation. That will create a shortage of money for investment/repair, which will mean jobs decrease. Expect double-digit unemployment as well.

That is all contingent upon things progressing as they are going now. If we change policies fast enough, perhaps the effects will be lessened. I expect (hope) such a change is coming in 2023 with a change in Congress... I say hope as much as expect because I am not convinced we will ever have a free and fair election again. But even if that hope comes true, the damage has already been done... we will deal with the consequences of 2021/2022 for years to come.

TheRedneck

a reply to: TheRedneck

I imagine in the very near future we will all be working at manufacturing facilities building windmills and solar panels.

For the green new deal to even make a dent in current energy usage we are going to need a windmill farm in every city in America.

As for the rubles question, Putin is just taking a card out of the petro dollar concept from 50 years ago. Maybe it will work, maybe it won't. Either way, the United States and Canada is sitting on so much oil we could go independant in a few years of hard work and shut that down.

I've always had the theory the think tanks in this country would never really start mass production of our continental oil reserves when we can just get it cheap from other countries. Once they start running out and prices go up, then we'll be the global leader in oil exports and we'll be the ones living in golden palaces.

a reply to: litterbaux

For the green new deal to even make a dent in current energy usage we are going to need a windmill farm in every city in America.

Even if we did that, wind couldn't affect our oil dependency enough to make much difference. There are just not enough places with sufficiently stable wind patterns. Not to mention, the attempt itself would cause actual, real climate changes. The weather is driven by prevailing winds; take energy out of that system and it leaves less energy in the system.

For those who poo-poo what I just said, the very concept that fossil fuels would ever run out or affect the environment was poo-pooed some years back.

Either way, the United States and Canada is sitting on so much oil we could go independant in a few years of hard work and shut that down.

Not really. If the US does not have the infrastructure to get to the oil, it helps no one. Infrastructure does not appear overnight, and it takes a LOT of money... money that has to come from banks. What bank is going to make a loan in the middle of another Great Depression?

Sure, given the right policies, the USA could recover from a global conversion to Russian oil, but that makes two assumptions: there will be the right policy changes, and there will be enough of an economy to rebuild our oil infrastructure. Those are two pretty big "if"s right there, and the whole idea ignores the time needed to restart infrastructure.

The economy is like a skyscraper: each floor depends on the floors above it. If the only floor left is the first level, it's kinda hard to put a penthouse on the 72nd floor.

I've always had the theory the think tanks in this country would never really start mass production of our continental oil reserves when we can just get it cheap from other countries.

I've heard that theory before... but it assumes that the US government has our best interests at heart. The same US government that claims that 81 million Americans voted for higher taxes, hyperinflation, soaring gas and food prices, and WWIII. Really, I have a hard time attributing any benevolence to our present government. Malevolence I have no problem with.

TheRedneck

a reply to: ScepticScot

Dont think its failed outside of Western media. He seems to have the heart of the Ukrainian people

originally posted by: Raggedyman
a reply to: ScepticScot

Dont think its failed outside of Western media. He seems to have the heart of the Ukrainian people

You are joking I trust?

A long time ago in the somewhat recent past; the British pound etc was killing India's Rupee so much so that it became illegal to cross the border with any Rupees.

Greece went bankrupt under the Euro currency and not really a word was said about it... Britain obviously seeing the threat of losing the pound etc. exited(Brexit) the EU other countries that joined under the Euro have been feeling the economic crunch under the European social currency... it was thought in theory that it would make things way more fluid avoiding all the foreign exchanges import, excise, and duty taxes and it did for awhile. But as it joined the forex it became loads more valuable than the local currencies so many communities and countries started adopting the Euro as the only one traded...

Like crop rotation and diversification being of utmost importance? Dumping all of Europe's currency into one or solely relying on the Euro as a countries main trade or exchange token? Is being seen as not very wise move... like going to Disneyland or World buying a bunch of Mickey bucks and expecting any place outside of Disneyland or World to honor it as the only valid currency.

Hopefully; Russia doing this? Signals Europe to really look at their traditional trade currency against the Euro to make sure it isn't all gone and they are stuck in an only Euro situation; for such a situation could be very dire and unstabilizing to a lot of Countries.

a reply to: scraedtosleep

Because it somehow offsets the moves of the entities that harass Russia.

I think this is related to the topic.


www.cnbc.com...

The U.S. said Friday it will work with international partners to provide at least 15 billion cubic meters more of liquified natural gas to Europe this year, seeking to end the bloc’s dependence on Russian energy exports following the Kremlin’s invasion of Ukraine.

Executive order on special procedure to allow foreign buyers to meet their commitments to Russian natural gas suppliers

March 31, 2022 16:05

This Executive Order supplements measures included in executive orders of the President of the Russian Federation No. 79 of February 28, 2022, On Special Economic Measures in Connection with the Unfriendly Actions by the United States and the Foreign States and International Organisations that Joined Them; No. 81 of March 1, 2022, On Additional Temporary Economic Measures to Ensure the Financial Stability of the Russian Federation; No. 95 of March 5, 2022, On Temporary Procedures for Meeting Obligations to Certain Foreign Creditors; and No. 126 of March 18, 2022, On Additional Temporary Economic Measures to Ensure the Financial Stability of the Russian Federation in currency regulation.

This Executive Order states, in part, that as of April 1, 2022, natural gas transactions executed after April 1, 2022, that include resident companies taking part in foreign economic activities that have exclusive rights to export natural gas shall be made in rubles under the foreign trade contracts with foreign entities if these natural gas supplies are sent to foreign states that commit unfriendly actions as regards the Russian Federation and Russian legal and physical entities. The same procedure applies to contracts for natural gas supplies signed with foreign entities and registered in the above foreign states.

Under the Executive Order, Gazprombank, which is the authorised bank for the purposes of said Executive Order, shall open, based on an application by a foreign buyer, special K type ruble accounts and special K type currency accounts for natural gas transactions.

The Executive Order establishes the rules for opening and using these accounts. Thus, under the Executive Order, a foreign buyer transfers the foreign currency specified in a contract on natural gas supplies to a special K type currency account. Based on the foreign buyer’s instruction, the authorised bank sells the foreign currency transferred by the foreign buyer to this account at a trade session organised by the Moscow Interbank Currency Exchange (MICEX) – RTS and credits the proceeds in rubles to the K type ruble account for the foreign buyer; it then transfers the proceeds, in rubles, to the ruble account opened by the Russian supplier in the authorised bank.

The Government Commission on Monitoring Foreign Investment in the Russian Federation is authorised to issue permits allowing foreign buyers to meet their commitments on natural gas purchases without following the procedures established in this Executive Order.

The Central Bank Board of Directors is authorised to determine the procedures for selling foreign currency, other than that in the current Executive Order, as well as to establish the procedure for K type special ruble accounts and K type special currency accounts.

A number of related instructions were given to the Government of the Russian Federation, the Board of Directors of the Central Bank and the Federal Customs Service.

en.kremlin.ru...

Meeting on development of air transport and aircraft manufacturing

March 31, 2022 17:35

President of Russia Vladimir Putin:

Colleagues, good afternoon.

Today’s agenda focuses on the situation in the aviation industry. We have long wanted to discuss these issues holistically, and today we will talk about it in more detail.

However, I would like to begin with something we discussed last week.

Today I signed an Executive Order establishing the rules for trading Russian natural gas with so-called unfriendly states. We have offered our counterparties from these countries a clear and transparent procedure. To purchase Russian natural gas, they will have to open ruble accounts with Russian banks to be used to pay for gas distribution starting tomorrow, on April 1 of this year.

If no payment is made, we will consider this a default on the part of the purchaser – with all the ensuing consequences. No one sells us anything without payment, and we are not doing charity either. This means the current contracts will be suspended.

I emphasise this again – in a situation where the Western countries’ financial systems are being used as a weapon, when companies from these countries refuse to fulfill their contracts with Russian banks, enterprises, and individuals, when our dollar and euro assets are frozen, it makes no sense to use those countries’ currencies.

In fact, what has been happening? We supplied resources to our European customers – in this case, gas. They received it and paid in euros – which they later had frozen. Thus, we have reasons to believe that some of the gas supplied to Europe was essentially provided free of charge.

Obviously, this cannot continue, especially considering that, should we continue to supply gas under the same process, euro or dollar payments could once again be blocked. This development is quite possible, especially given that some Western politicians have been talking about it publicly. Moreover, EU heads of governments have been suggesting similar approaches. This kind of risk is, of course, unacceptable to us.

If we look at this issue from a general perspective, converting to gas payments in Russian rubles is an important step towards reinforcing our financial and economic sovereignty. It has been our long-term plan to consistently and gradually move in this direction, increasing the share of national currency transactions in foreign trade – that is, in our currency and the currency of our reliable partners.

You may have already heard that many long-time energy suppliers in the world market are also talking about diversifying transaction currencies.

To reiterate, Russia values its business reputation. We fulfill and we will continue to fulfill our obligations under all contracts, including our gas contracts. We will continue to supply gas as agreed and, I would like to stress, at the rates specified in the effective long-term contracts.

I want to stress that these rates are several times lower than the current rates on the spot market. What does this mean? In simple terms, Russian gas means cheaper energy, heat and power in European homes, affordable fertilisers for European farmers and, consequently, cheaper food. Finally, it means higher competitiveness for European companies and higher wages for European citizens.

However, judging by the statements made by some politicians, they are willing to disregard their citizens’ interests so they can enjoy the good graces of their overseas master and overlord. This is the opposite of populism. People are urged to eat less, put on more clothes, and use less heating, give up on travel – presumably for the benefit of the people who are demanding this kind of voluntary deprivation as a sign of some abstract North Atlantic solidarity.
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Naturally, the question arises: Who is responsible for this? Who will be held accountable for this?

Obviously, the United States will again try to resolve its problems – just its own problems – at the expense of others. In part, it will trigger a new wave of emission and budget deficits. The deficit has soared enormously and inflation is setting records in both the leading European countries and in the United States. In the process, they are trying to blame us for their own economic mistakes; they are always looking for someone to blame. This is perfectly clear, we are aware of this.

I would add that the United States will also try to make money on the current global instability, as it did during WWI and WWII, and its aggressions against Yugoslavia, Iraq and Syria, to name a few. Global markets are falling while the stock value of the companies from the US military-industrial complex is going up all the time. Money is flowing away to the United States, depriving the other regions of the world of development resources.

Attempts to do everything possible to push Europe towards expensive American liquid natural gas fall into the same category. As a result, the Europeans are not only compelled to dip into their pockets but actually to undermine the competitiveness of European companies with their own hands, to remove them from the global market. For Europe, this means large-scale de-industrialisation and the loss of millions of jobs. Another consequence is a drastic reduction in living standards against the backdrop of price increases on food, petrol, electricity, housing and utilities.

This is the price the ruling Western elite are telling people to pay, as I said, for their ambitions and short sighted actions – both in politics and the economy, including the economic war that they are trying to unleash, or in fact have already unleased against Russia.

This did not start just now, nor in the past month. Illegal sanctions and restrictions have always been imposed on our country, for many years. The goal is to curb Russia’s development, undermine our sovereignty, and weaken our industrial, financial and technological potential.

I will repeat that all these sanctions have been prepared in advance and would have been imposed in any case. I would like to emphasise this point. In effect, these are sanctions against our right to freedom, to be independent, to be Russia. They are imposed because we do not want to dance to their tune and to sacrifice our national interests and traditional values.

The “collective West” does not seem willing to abandon its policy of economic pressure on Russia. Moreover, it is certainly going to try to find more reasons for sanctions, or rather pretexts. One can hardly count on any change in their approach, at least in the near future.

In this regard, I am asking the Government, the Bank of Russia, and the regional governments, to consider this while planning their systemic efforts to promote economic growth and support specific sectors, to keep in mind that the sanctions are not going anywhere, just like in previous decades. Such is the objective reality.
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en.kremlin.ru...

a reply to: turretless

That sounds reasonable to me. Russia is just not going to accept assets that are useless to them. If they can exchange the currencies through this new banking system, they'll accept them. If not, they won't.

TheRedneck

a reply to: TheRedneck

I agree with you.

I believe that he clearly explained why Russia did it.

a reply to: turretless

The problem is that others will be by soon to explain how this is all a part of Putin's plan to cover the planet in nukes...

TheRedneck

a reply to: TheRedneck

We will meet them and have a nice chat.

I have more arguments.

a reply to: turretless

He was clear and to the point. The politicians will be freezing out a lot of older pensioners this time around.At the moment its either heat or food. now they cant afford either.

a reply to: anonentity

Sons and daughters of the pensioners don't help them?

Meeting on current situation in oil and gas sector

April 14, 2022 14:50

President of Russia Vladimir Putin:

...today we will review the situation in the oil and gas sector. We will discuss its long-term development plans and approaches to resolving problems faced by the companies in this sector as a result of actions by the so-called unfriendly states.

As we have said many times, the most urgent problem here is the disruption of export logistics. I would like to ask you to describe specifically what action are you taking to adjust transport chains and overcome the rising logistics costs.

Furthermore, there are setbacks in payments for Russian energy exports. Banks from these unfriendly countries are delaying the transfer of funds.

I will remind you that our aim is to convert payments for energy resources into national currencies and to gradually depart from dollars and euros. In general, we intend to drastically increase the share of settlements in national currencies in our foreign trade system.

Important steps are already being taken in this area, and the key task is to prepare our currency market for this transition and enable customers to exchange any foreign currency for the required amount of Russian rubles.

As I have said, giving up unreliable, compromised currencies and jurisdictions is a strategic goal for the financial and economic security of our country, which is important for the preservation and strengthening of our foreign trade, and for the development of stable ties with predictable partners who are true to their word, value their reputation and are aware of the consequences of their decisions.
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Of course, we must take into account the ambivalence and continuously changing policies of certain countries. That said we must be guided – now and for years ahead – by our own interests. In this context, our oil and gas industry is facing three tasks. First, we must ensure sustainable energy supplies for our domestic market. Moreover, in conditions when external markets are shrinking, it is important to increase supplies to Russian consumers. To encourage domestic demand, we must seek price reductions whenever possible.

Second. We must diversify exports. Let us assume that energy supplies to the West will continue going down in the foreseeable future. Therefore, it is important to consolidate the trend of the past few years: to redirect our exports gradually to the rapidly growing markets of the South and the East. To achieve this, we must determine the key infrastructure facilities and start their construction in the near future.

Third, we must develop deep processing of oil and gas. We have already made much progress in this area. We have implemented major projects and put modern plants into operation. Now we must provide additional support for the investment-stage projects in order to launch them into production as soon as possible.

And, of course, import substitution for oil and gas production equipment requires special attention. It is important for both operating deposits and for developing new fields, including those in the Arctic, as we discussed with several colleagues recently.
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Above all, I would like to ask the Government to take the results of today’s discussion into account when drafting the Energy Strategy of Russia. As we agreed, its planning horizon must be extended until 2050, and the strategy must be adopted by September 15.

What priorities must be considered when drafting this document?

First, it is necessary to expand the regional gas supply programme and change approaches to its implementation so that it covers as many regions, localities and households as possible. This task is quite specific: gas – either pipelined or liquefied – should reach the consumer wherever possible.

Second, regardless of external conditions, it is necessary to ensure a sufficient supply of petroleum products on the domestic market, and at affordable prices: for car owners, transport companies and businesses, including agricultural ones. All additional decisions in this regard must also be set out.

Let me add that large-scale plans on the development of petrochemistry and natural gas conversion have already been drafted and are being implemented; it is very important to focus on this. I also mean the non-market restrictions we are facing. We need to see them through, these projects, and move forward in strengthening and building up the potential of these important sectors of the economy.

Third. Energy exports. It is necessary to speed up the implementation of infrastructure projects – on railways, pipelines and ports – which will make it possible to redirect the supplies of oil and gas from the West to promising markets in the South and the East in the next few years.

en.kremlin.ru...

I wonder if Serbia got a good deal from Putin for their new gas contract?

abcnews.go.com...

I assume Serbia is not part of NATO or the European Union?