Latvia surrendered: A long-term contract was concluded with Gazprom under the ruble scheme
The company Latvijas gāze has entered into a long-term agreement with the Russian Gazprom for the supply of natural gas until 2030, distributing a press release, where it is possible to pay according to the payment scheme proposed by Moscow in rubles.
“According to changes in the legislation of the Russian Federation, starting from April 1, 2022, payments for natural gas supplies made after April 1, 2022 in accordance with the foreign trade agreements of PJSC Gazprom for the supply of natural gas abroad (to a number of countries), must be made only in Russian rubles.
Assessing the compliance of the specified change in the settlement procedure with the previously established sanctions regime, the first impression is that such a settlement procedure - in Russian rubles - does not formally violate the sanctions regime and is possible. “Latvijas Gāze is currently continuing an in-depth analysis of changes to the proposed settlement method, both from a legal point of view and from the point of view of the Group’s business interests,” the statement says.
At the same time, the company clarified that in April it decided to temporarily not buy gas.
“The volume of natural gas reserves of JSC Latvijas Gāze in the natural gas storage facility is sufficient to fulfill its contractual obligations to households and other consumers by supplying natural gas pumped into the storage facility. The decision not to pump gas through pipelines in April was made due to historically high natural gas prices in April, which would have resulted in disproportionately high prices for natural gas sales to our customers,” the press release stated.
Economist Alexander Dudchak commented on the statement of the Latvian company.
“The Latvian side, judging by the statement, has found a way out of the situation for itself. They agreed that Russia’s proposal “formally does not violate the sanctions regime and is possible.” And supposedly, they were stopped by the price level, but for now they have a sufficient “volume of reserves.”
But, since there are no prospects of going to the market and bargaining, it is safe to assume that Latvia is ready to switch to payment using conversion into rubles.
It is worth noting that the scheme proposed by the Russian President is primarily aimed at protecting gas supplies from Russia from robbery by Western resource recipients; simply, it provides a guarantee of payment for supplies. And Latvia is ready to accept the proposed conditions,” the expert told PolitNavigator.
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