Gazprom, the world’s largest energy company, says they have reached an agreement with China to begin accepting yuan and rouble payments in place of US dollars for gas shipments to China as a symbol of improving ties between Beijing and Moscow, which is subject to Western sanctions.
According to Gazprom CEO Alexei Miller, the new payment mechanism is a mutually beneficial, timely, reliable and practical solution.
Miller added that it will “simplify calculations” and “become an excellent example for other companies”.
Miller also informed his Chinese counterpart of the “status of work on the project for gas supplies via ‘the eastern route’ – the ‘Power of Siberia’ gas pipeline” which connects the Russian and Chinese gas networks, the Gazprom statement said.
Despite the fact that Gazprom did not provide further details on the scheme or say when payments would switch from dollars into roubles and yuan, the change is part of a push to reduce Russia’s reliance on the US dollar, euro and other hard currencies, which was accelerated by Western sanctions in response to the war in Ukraine.
Recently, Russia has been working on building closer economic ties with China and other non-Western countries.
Earlier this year Russian President Vladimir Putin forced European customers to open rouble bank accounts with Gazprombank and pay in Russian currency if they wanted to continue receiving Russian gas.
Supplies were cut off to some companies and countries that refused the terms of the deal, causing energy prices to soar.
The Kremlin has said that Russian gas supplies to Europe will not resume until Western sanctions against Moscow are lifted.
Russia has since signed a landmark $37.5bn extension to its deal to supply gas to China on the eve of the invasion.
Russia started pumping gas to China through the 3,000-km (1,865-mile) Power of Siberia gas pipeline in late 2019.