In this interview with Nadine Al Bitar from Qatar Television, Dr Carole Nakhle, CEO of Crystol Energy, outlines the technicalities of gas payments in rubles and explains the potential impact of the Ukrainian conflict on the global economy.
Some of the key points raised include:
- The ruble payments for Russian gas involves European customers opening an account with Gazprombank, which is exempt from international sanctions, and pay for the agreed price as specified in the contract they have with Gazprom (usually in euros or US dollars). Gazprombank then opens another account under the name of the customer to exchange the payments from euros or other currencies to rubles and transfers them to the Russian central bank. While technically, European customers are not directly paying in rubles, the Russian goverments assumes that since the customers are using the above set of transactions, they are paying in rubles.
- The strong ruble does not mean a strong Russian economy. On the contrary, most economic forecasting agencies expect that the Russian economy will shrink by around 10% in 2022. The strength of a currency is a reflection of trade between an economy and the outside world. Since Russia has limited trade because of sanctions and given the imposed capital control in the country, the only main trade that Russia has with the rest of the world is oil and gas, which result in an inflow of local currency with a limited outflow.
- The weakening of the Russian economy will not have major impact on the global economy. However, Russia’s influence stems from its oil and gas exports. Any disruption in its supplies will put a further upward pressure on energy prices which in turn will translate into greater inflationary pressure. The latter is currently a major economic concern.
Watch the discussion (in Arabic):
“Energy Sanctions and the Global Economy: Mandated vs Unilateral Sanctions“, Christof Rühl, Apr 2022
“Sanctions and the Economic Consequences of Higher Oil Prices“, Christof Rühl, Apr 2022
“Energy Markets and the Design of Sanctions on Russia“, Christof Rühl, Mar 2022
“A new oil cartel?“, Dr Carole Nakhle, May 2022
“EU Sanctions on Russian Oil“, Dr Carole Nakhle, May 2022
“EU Talks to Ban Russian Oil“, Dr Carole Nakhle, May 2022
“Rubles in exchange for gas exports“, Dr Carole Nakhle, Apr 2022
“Putin demands gas exports to be paid in rubles, and US SPR release“, Dr Carole Nakhle, Apr 2022