Russia’s state-owned exporter Gazprom is reportedly planning to start switching part of payments for gas supplies to Türkiye to rubles instead of dollars and euros.
The shift is also part of a push by Russia to reduce its reliance on the dollar, euro and other hard currencies in its banking system and for trade – a drive that Moscow has accelerated since it was hit with Western sanctions in response to its invasion of Ukraine.
President Recep Tayyip Erdoğan and his Russian counterpart Vladimir Putin agreed to step up cooperation in businesses and especially energy trade at a summit in the Black Sea resort of Sochi last month.
The two sides agreed to slowly transition to ruble payments for the natural gas exported by Gazprom.
The energy giant now plans to switch 25% of payments for gas shipments to Türkiye to rubles, a Bloomberg report suggested on Tuesday, while the rest will be paid for in euros and dollars.
The practice is said to expand gradually in the coming period.
Türkiye has criticized Moscow’s invasion and provided Ukraine with arms, including drones, which played a significant role in deterring a Russian advance early in the conflict, while refusing to join the West in imposing sanctions on Russia – a stance it says has helped its mediation efforts reap results. It also cites its reliance on Russian energy supplies.
Türkiye increasingly relies on Russia for trade and tourism. Russian gas covers almost half of Turkish energy needs, and Russia’s atomic agency is building Türkiye’s first nuclear power plant.
Türkiye’s annual gas consumption rose from 48 billion cubic meters (bcm) in 2020 to a record 60 bcm in 2021 and is expected to reach 62 bcm to 63 bcm this year, according to official figures.
Türkiye is said to have increased oil imports from Russia, including Urals and Siberian Light grades, beyond 200,000 barrels per day (bpd) so far this year compared to just 98,000 bpd for the same period of 2021.
Russia has been forging closer economic ties with China and other non-Western countries, in particular as new markets for its vital hydrocarbon exports.
Gazprom on Tuesday announced it had signed an agreement to start switching payments for gas supplies to China to yuan and rubles instead of dollars.
Gazprom CEO Alexei Miller said allowing for payments in Russian rubles and Chinese yuan was “mutually beneficial” for both Gazprom and Beijing’s state-owned China National Petroleum Corporation (CNPC).
“It will simplify the calculations, become an excellent example for other companies and give an additional impetus for the development of our economies,” he said.
Putin said on Wednesday that China would pay Gazprom for its gas based on a 50-50 split between the ruble and yuan.
“The fulfilment of Gazprom’s contractual obligations to increase the volume of gas supplies to China in 2023 will be ensured,” Gazprom said.
In February, China and Russia signed a 30-year contract for the supply of 10 bcm of gas a year.
Putin earlier this year forced European customers to open ruble bank accounts with Gazprombank and pay in Russian currency if they wanted to continue receiving Russian gas. Supplies were cut off to some companies and countries that refused the terms of the deal.
