Russia, Türkiye to Use Rubles for Gas Supplies, Replacing US Dollars

Moscow and Ankara agreed to gradually start payments for gas supplies in Russian rubles.

Following a meeting between Russian President Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan on Friday, Russian Deputy Prime Minister Alexander Novak revealed that the parties discussed gas deliveries and agreed upon its partial payment in rubles.

“There was an important component; deliveries of gas to the Republic of Türkiye were discussed, which is supplied in a fairly huge volume - 26 billion cubic meters per year,” Novak told reporters. “The Presidents agreed during talks that we will start partial gas deliveries and payment in rubles.”

Novak went on further to say that the discussion between the two sides was still in its early stages, adding that part of the supplies would be paid in Russian rubles.

“Supplies will be partly paid in Russian rubles then at the first stage. This is indeed the new stage, new opportunities, including for the development of our monetary and financial relations,” Novak added.

The world's largest natural gas exporter Russia is still Türkiye's primary gas supplier despite a year-over-year decline in overall supplies. The two countries carry out gas trade through two major pipelines - the Blue Stream and the TurkStream. The annual transportation capacity of the Blue Stream is 16 bcm, while the TurkStream supplies twice as much or 31 bcm per annum.

During the talks in the Black Sea city of Sochi, Putin praised the TurkStream natural gas pipeline project, saying Europe should be grateful to Türkiye for uninterrupted supplies of Russian gas.

The two leaders also discussed the construction of the Akkuyu nuclear power plant (NPP) in southern Türkiye. The $20-billion project, financed by Russia’s Rosatom State Atomic Energy Corporation, will be the first nuclear power plant built in Türkiye. The facility is scheduled to become operational by mid-2023. Under an agreement reached in 2010, Russia is responsible for designing, constructing, maintaining, operating and decommissioning the plant after its service life of 60 years ends.

Russia supplied 26.34 bcm of natural gas to Türkiye, accounting for 40 percent of the latter's total gas imports in 2021, and marking a decrease from 51 percent market share in 2018.

Discussions over lira-ruble transactions began when Russia-US tensions soared following the crisis in Ukraine in 2014. Relations between the two countries further deteriorated when Moscow launched what it calls a “special military operation" in Ukraine earlier this year. On March 31, Russian President Vladimir Putin stated that “unfriendly” countries, including those responsible for sanctions against Russia, would have to pay for Russian natural gas in rubles rather than dollars or euros. In order for them to make these payments, the buyer of the gas must open both a euro and a ruble account at the Gazprombank in Moscow.

Russia has adopted various measures as part of its efforts to reduce its dependency on the US dollar. The Kremlin is reportedly making a deliberate push to convince other countries to stop making payments in dollars, and start making transactions in their respective national currencies.