It doesn't look like the Russian gas taps going to Europe will get turned off today, but there is always the possibility of some surprises. Germany and Austria have already begun preparations for rationing, while the bloc of EU countries warned that they were preparing for all contingencies. Russian gas sales to Europe are estimated at $350M a day, and unlike oilfields, gasfields are relatively easy to turn on and off without damaging them.
Backdrop: When Vladimir Putin first announced the ruble payment demand from "unfriendly countries" last week, G7 nations rejected it, saying it would violate contract terms. Since then, the Kremlin has outlined a payment mechanism that would allow foreign buyers to convert their dollars and euros via non-sanctioned Gazprombank. The state-controlled bank would send along rubles to energy giant Gazprom (OTCPK:OGZPY), which has a monopoly on Russian gas exports by pipeline. Putin said the goal was to prevent western governments from seizing payments made in foreign currency and strengthen Russia's sovereignty.
"For us, with regard to Putin's threat or announcement or plan - one doesn't really know what to call it anymore - to get paid in rubles, the main point is that the contracts are being kept," German Economy Minister Robert Habeck declared. "In any case, it remains the case that companies want to, can and will continue to pay in euros," added Chancellor Olaf Scholz. Germany is the biggest importer of Russian gas in the European Union, which gets around 40% of its natural gas needs from the now heavily-sanctioned nation.
Go deeper: "I think ultimately Russia wanted to send a message that as long as its gas is being paid for in time and in full [irrespectively of which currency is used] the gas will continue to flow," noted Katja Yafimava, Senior Research Fellow at the Oxford Institute for Energy Studies. "If Europe were to lose supplies of Russian gas it would be not because of Russia cutting them off but because of Europe not paying for them."