European nations could continue paying euros for Russian gas instead of rubles as previously sought by the Kremlin, Russian President Vladimir Putin told German Chancellor Olaf Scholz in a phone call on Wednesday, with authorities in many capitals possibly breathing a sigh of relief as Moscow's proposal left gas supplies in limbo.
German government spokesperson Steffen Hebestreit said Putin had told Scholz that payments from Europe next month "would continue to be in euros and transferred as usual to the Gazprom Bank, which is not affected by sanctions."
The bank would then convert the payments into rubles, Hebestreit quoted Putin as saying.
"Scholz did not agree to this procedure in the conversation but asked for written information to better understand the procedure," said the German spokesperson, adding that the previous Group of Seven (G-7) agreement on payments with euros and U.S. dollars remained.
"The decision taken should not lead to worsening of contractual terms for European importer companies of Russian gas," the Kremlin said in a statement summarizing Putin's comments in a phone conversation with Scholz.
Putin said the payment method was needed because the Russian central bank's currency reserves have been frozen by the EU.
Putin and Scholz have agreed in a call that experts from their countries would discuss how payment for Russian gas exports could be made in rubles, Tass news agency reported.
Separately, Putin outlined the ruble plan in a phone call with Italian Prime Minister Mario Draghi, Draghi's office said.
The call came as Germany triggered an emergency plan to manage gas supplies on Wednesday that could see Europe's largest economy ration power if a standoff over a Russian demand to pay for fuel with rubles disrupts or halts supplies. Austria announced that it was following suit.
Moscow's insistence on ruble payments for the Russian gas that meets a third of Europe's annual energy needs has galvanized others in Europe: Greece called an emergency meeting of suppliers, the Dutch government said it would urge consumers to use less gas, and France's energy regulator told consumers not to panic.
The demand for rubles, which has been rejected by G-7 nations, is in retaliation for crippling Western sanctions on Russia following its invasion of Ukraine. Moscow, which says it is conducting a "special military operation" there, calls Western measures an "economic war."
Russia's most senior lawmaker said on Wednesday Russia could demand ruble payments also for other commodities including oil, grain, fertilizers, coal and metals, raising the risk of recession in Europe and the United States.
Moscow is expected to make public its plans for ruble payments on Thursday, although it said it would not immediately demand that buyers pay for gas exports in the currency. Two Russian sources told Reuters as one of the options for the switch, Russia planned to keep contract prices for gas exported to "unfriendly" countries but demand the payment be done in the ruble equivalent on a pre-agreed settlement day.
Western countries have said payment in rubles would breach contracts that can take months or more to renegotiate, a prospect that has driven commodity prices higher. It would also blunt the impact of Western curbs on Moscow's access to its foreign exchange reserves and bolster its currency.
The European Union is preparing more sanctions against the Kremlin, EU sources told Reuters on Wednesday, with their scope depending on Moscow's stance on gas payments in rubles.