EUROPE GAS-Prices jump as Russia says will require gas payment in roubles

·2 min read

(Adds closing prices, analyst comment)

LONDON, March 23 (Reuters) - British and Dutch wholesale gas prices jumped on Wednesday's close after Russia said it would start selling gas to "unfriendly" countries in roubles, while the European Union proposed legislation on minimum gas storage levels.

The spike came after President Vladimir Putin said Russia would start selling gas to "unfriendly" countries in roubles, with the British price for day-ahead delivery jumping by 11.8% to close at 246.00 pence per therm, while the winter 2022 price rose by 11% to 264.01 p/therm.

In the Dutch gas market, the front-month contract was 14.1% higher and closed at 113.00 euros per megawatt hour (MWh) while the Q2 price jumped by 15.3% to 113.00 euros/MWh.

"Russia will continue, of course, to supply natural gas in accordance with volumes and prices...fixed in previously concluded contracts," Putin said during a televised meeting with top government ministers.

"The changes will only affect the currency of payment, which will be changed to Russian roubles," he said.

As of Jan. 27, Gazprom's sales of natural gas to Europe and other countries were primarily settled in euros, at around 58%.

European governments were not immediately available to comment on the Russian announcement.

Nearly all Russian gas purchase contracts into Europe are denominated in euros or dollars.

"What is clear however, is that this has added another element of uncertainty to the already chaotic European gas market by complicating gas purchases that many countries have been reluctant to cut," said Vinicius Romano, senior analyst at Rystad Energy.

Separately, the European Commission proposed legislation requiring EU countries to fill their gas storage to at least 90% by Nov. 1 each year from 2023, and 80% this year.

That move will need approval from EU countries and the European Parliament and traders said the target will be tough to meet even in periods when demand is lower.

In the European carbon market, the benchmark contract was 5.3% lower to close at 76.43 euros a tonne. (Reporting by Nina Chestney; Editing by Alexander Smith and Bernadette Baum)