Russia's Gazprom signs gas deal with China to convert payments to ruble, yuan

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Russia’s Gazprom on Tuesday said it had reached an agreement with China to start fulfilling its gas supply contracts with payments made in rubles or yuan instead of euros or dollars.

The announcement on Telegram comes just six months after a 30-year deal was signed between Gazprom and the China National Petroleum Corporation in early February, which said Russian gas supplies would be paid in euros as Russia looked to separate itself from the U.S. just weeks before it invaded Ukraine.

Gazprom CEO Alexei Miller said the payment arrangement would prove "mutually beneficial" for both state owned energy agencies as Russia and China look to bolster their economies amid flagging relations with the West. 

A view shows a gas flare at Portovaya Bay on the coast of the Gulf of Finland in the Leningrad Region, Russia, Aug. 26, 2022.  (REUTERS/Stringer / Reuters Photos)

RUSSIA'S GAZPROM INDEFINITELY SHUTS GAS FLOW TO EUROPE

"I believe that it will simplify the calculations, become an excellent example for other companies, and give an additional impetus to the development of our economies," Miller said.

Russian President Vladimir Putin enforced a mandate in March that required all Gazprom sales to Europe be paid in rubles after the U.S. and NATO hit Moscow with steep international sanctions immediately following its invasion in Ukraine. 

Moscow has since cut gas to several European nations including Germany, Denmark, Poland, Bulgaria, Finland and the Netherlands after they refused to abide by Putin’s mandate.

Gazprom, which has repeatedly staunched its supplies to Europe over alleged "maintenance" issues, said Monday it would not resume pumping gas until Germany energy company Siemens Energy adheres to its equipment repair demands. 

Russian President Vladimir Putin (L) and Chinese President Xi Jinping pose during their meeting in Beijing, on February 4, 2022.  (Alexei Druzhinin/Sputnik/AFP via Getty Images / Getty Images)

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Siemens Energy on Friday had already countered Gazprom’s claims over faulty equipment and its inability to fulfill its gas commitments to Europe.

"We have already pointed out several times that there are sufficient other turbines available at the Portovaya compressor station for Nord Stream 1 to operate," the company said in a statement.

Russia has claimed that the West’s sanctions have prevented it from effectively maintaining the Nord Stream 1 pipeline and in sent a 20-ton Siemens Energy turbine to Canada for repairs in July.

The German company, which manufactures the turbines, claimed Gazprom’s actions were unnecessary and said, "Such leaks do not normally affect the operation of a turbine and can be sealed on site. It is a routine procedure within the scope of maintenance work."

A photo taken on May 12, 2022, shows pipes at the Gasum plant in Raikkola, Imatra, Finland. Russia may cut gas supplies to Finland soon over the Nordic country’s refusal to pay Gazprom in rubles, Finnish state-owned Gasum said on May 17.  (Photo by VESA MOILANEN/Lehtikuva/AFP via Getty Images / Getty Images)

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However, as Europe scrambles to secure energy demands ahead of the winter months, Russia and China are beefing up several gas supply agreements.

"It was emphasized that cooperation between Gazprom and CNPC is of a strategic nature and is consistently developing," a readout of the video meeting said. 

Moscow and Beijing have agreed to at least two pipeline deals to secure gas flow from Russia to China.

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