By Marwa Rashad

LONDON (Reuters – Russian gas poured into Europe on Friday. European prices for gas continued to climb as European companies grappled with Vladimir Putin’s threats to block supplies if they don’t pay in roubles.

The main three pipelines carrying Russian gas to Europe were operating normally. Nord Stream 1 was running across the Baltic Sea, and Nord Stream 1 ran into Slovakia.

This meant that gas was flowing through Poland from Germany via the Yamal Europe route. However, this isn’t a common switch.

Putin’s decree states that foreign buyers of Russian gaz must open Gazprombank accounts worth roubles from Friday. This will allow them to exchange foreign currency for Russian gas.

Analysts believe that the plan which places Gazprom (MCX) in the center of trade was more about protecting it against future sanctions than denying Europe gas.

“This is less of standoff, and more of standdown. This is Putin’s warning to not tighten the financial sanctions any further”, said Jeffrey Schott of Peterson Institute of International Economics.

Putin uses energy exports as his most potent weapon to counter the severe Western sanctions on Russian companies, banks, and businessmen. These were imposed in response to Russia’s incursion into Ukraine. Moscow refers to this invasion as “special military operations”.

Russia has no alternative market, and therefore it cannot stop flow of income.

Putin’s move to make rouble payments has helped to boost the Russian currency after it fell to historical lows following the February 24th invasion. Since then, the rouble has made great gains.

European buyers are still prepared to buy gas under existing contracts and have so far largely spared Russia’s gas exports to Europe from sanctions, Rystad Energy analysts said.

Gazprombank is still exempted from the SWIFT messaging ban for Russian banks. However, Britain did place a freeze on its assets last week. However, Britain only receives 4% of its natural gas from Russia, compared with 40% for Germany, and one third for the whole region.

OMV Austria has reached out to Gazprom in initial contacts regarding gas purchases in Russian roubles, according to a spokesperson. The company still needs written information.

European gas prices rose as a result. British and Dutch prices for gas have gone up between 7% to 10% and more since Putin’s announcement. But they still remain well below the record-setting highs of earlier this year.

European prices rose once again Friday. Prices in the Netherlands for May delivery were at 9.15. However, it cut its gains and the British next-day contract was up 7%, to 305 pence per thermo by 0739 GMT.

Vinicius Romano, Rystad senior analyst, stated that if buyers continue to follow the existing contract rules, it could result in a unilateral stoppage of Russian flows. Buyers may trigger the Failure To Deliver clause which opens up the possibility for Gazprom to impose penalties.

Greece claimed its next payment for Russian Gas was due April 20, however it did not consider there to be any supply problem, even if Moscow stops flows. However, it could activate a contingency planning.