Russian energy giant Gazprom says it has signed a deal with China to start paying for gas supplies to China in yuan and rubles instead of US dollars, in a sign of warming relations between Beijing and Moscow, which is under Western sanctions. “The new payment mechanism is a mutually beneficial, timely, reliable and practical solution,” Gazprom CEO Alexei Miller was quoted as saying in a statement after a video conference meeting with China’s CNPC oil group head Dai Houliang. Miller added that it would “simplify the calculations” and “become a great example for other companies.” Miller briefed his Chinese counterpart on “the status of work on the project to supply natural gas through the ‘Eastern route’ – the ‘Power of Siberia’ natural gas pipeline” connecting the Russian and Chinese gas networks, it said. announcement by Gazprom. Gazprom did not elaborate on the plan or say when payments would switch from dollars to rubles and yuan. The change is part of a push to reduce Russia’s reliance on the US dollar, euro and other hard currencies, which has been accelerated by Western sanctions in response to the war in Ukraine. Recently, Russia has been working to build closer economic ties with China and other non-Western countries. Russian President Vladimir Putin earlier this year forced European customers to open ruble bank accounts at Gazprombank and pay in Russian currency if they wanted to continue receiving Russian gas. Supplies were cut to some companies and countries that reneged on the deal’s terms, sending energy prices soaring. The Kremlin has said that Russian gas supplies to Europe will not resume until Western sanctions against Moscow are lifted. Russia signed a landmark $37.5 billion extension to its deal to supply natural gas to China on the eve of the invasion. It began pumping natural gas into China through the 3,000-km (1,865-mile) Power of Siberia gas pipeline in late 2019. Putin hailed the move as “a truly historic event, not only for the global energy market, but mostly for us . for Russia and China”. The energy giant said gas from the under-developed Kovykta field would start flowing through the Power of Siberia pipeline “before the end of the year”, allowing for “increased [in] the volume of natural gas deliveries to China in 2023”.
