Gas price spikes as Russia demands payment in roubles and Germany activates emergency supply plan

Gas prices spiked today as Russia doubled down on a demand for payment in roubles and Germany triggered an emergency plan to deal with shortages.

Natural gas prices were up more than 13% at 300p per therm this morning as Moscow demanded international customers pay for imports in roubles to stem a crash in the value of its currency following the invasion of Ukraine.

"European politicians need to stop the talk, stop trying to find some justification about why they cannot pay in roubles," Vyacheslav Volodin, the speaker of the lower house of parliament, said in a post on Telegram. "If you want gas, find roubles."

The demand is in contravention of contracts which stipulate payment in euros or dollars.

According to the IEA, the European Union imported 155 billion cubic metres of natural gas from Russia in 2021, accounting for around 45% of EU gas imports and close to 40% of its total gas consumption.

Robert Habeck, the German economics minister, on Wednesday activated the first of three stages of an emergency law to try to deal with acute energy shortages.

Earlier this month, Germany said that it had signed a contract with Qatar to supply liquefied natural gas (LNG) in an attempt to limit its dependency on Russian energy. Other European countries such as Italy are also heavily dependent on Russia for supplies of natural gas, a relatively clean source of energy. Around 40% of Italy’s total gas imports come from Russia.

Besides Qatar, European customers have ramped up negotiations with other gas exporters such as Algeria and Azerbaijan, which operates the TAP pipeline. The US has also said it will send substantial supplies of gas to Europe.

Gas prices have been highly volatile amid fears around supply. Futures reached an all-time high of 788p on March 7.