Gazprombank's Gazprombank order has led to a rouble rally and a reduction in the gas market

The rouble and European gas prices both fell on Friday. This was due to market speculation that Moscow's efforts to assist Gazprombank in bypassing U.S. sanctions would keep Russian gas exports flowing.

The decree was signed by Russian President Vladimir Putin on Thursday. It stated that the state-owned Gazprombank will only accept roubles for payment of gas exports.

The scheme, which was introduced in March 20,22, also prohibited the conversion of foreign currencies into roubles to pay for gas at the bank. It also allowed other parties or banks to sell the roubles at that time.

The updated scheme is not clear. European gas buyers have not yet commented.

The Russian rouble surpassed 100 against the U.S. Dollar, after trading at 99.90 on Friday. It has gained around 1.5% versus the U.S.

In a note, Renaissance Capital stated that the decree allows for a greater degree of flexibility in the settlements. This gives Gazprom, as well as buyers, more options for continuing supplies and paying for them.

Nearly all of the contracts that EU companies have signed with Gazprom in Russia are in dollars or euros. The sanctions require that companies close all transactions with Gazprombank before December 20.

Gazprom announced that it would send 42.4 millions cubic metres of natural gas to Europe through Ukraine on Friday. This volume is in line with the recent days.

Putin signed the decree on March 20, 2022, just a month after Russia had sent troops to Ukraine. The decree dealt with the payment for Russian gas and involved the conversion of foreign currencies into roubles by Gazprombank.

The European Commission announced a few weeks later that companies could purchase Russian gas, provided they paid in the currency specified in their contracts and declared transaction complete when the currency was paid.

At the time, several countries such as Poland or Finland refused to pay in Russian roubles for the Russian Gas.

The Dutch and British wholesale prices of gas fell on Friday in response to an expected milder weather forecast from mid-December as well Putin's decree.

"(The decision) should ease the anxiety of those European companies who continue to heavily rely upon Russian molecules," LSEG Analyst Yuriy onyshkiv wrote in a morning report. (Reporting and editing by Barbara Lewis; reporting by Vladimir Soldatkin)

(source: Reuters)