According to two sources, Gazprom has encouraged India’s primary gas transmitter GAIL (India) to pay for gas imports in euros rather than dollars, implying that the Russian energy giant is attempting to wean itself off the currency in the aftermath of the Ukraine crisis.
Since Moscow sent troops into Ukraine on February 24, European countries and the US have imposed harsh sanctions on the Russian government.
GAIL has a long-term gas import agreement with Gazprom Marketing & Trading Singapore to buy 2.5 million tonnes of liquefied natural gas every year, and it has been paying Gazprom in dollars.
GAIL, in addition to importing and distributing gas, owns and runs India’s largest gas pipeline network.
Gazprom wrote to GAIL last week, demanding that payments for gas purchases be made in euros rather than dollars, according to individuals familiar with the case, who added that the state-run Indian firm is still looking into the proposal.
“GAIL has no problem with paying in euros because European countries pay in euros for their imports,” one of the insiders added.
According to the sources, sanctions may not affect GAIL’s payments in euros because the company’s contract is with a Gazprom subsidiary in Singapore.
Reuters reached out to Gazprom and GAIL for comment, but neither company responded.
Although Western sanctions have crippled Russia’s economy, the European Union, which relies on Russian oil and gas, has refrained from imposing energy import restrictions and continues to pay in euros.
Russia, the world’s top gas producer, would soon demand “unfriendly” countries to pay for gasoline in roubles, according to President Vladimir Putin.
India, on the other hand, has refrained from overtly condemning Russia, while it has called for an end to the violence in Ukraine and, unlike other Western countries, has not restricted Russian oil and gas imports.