Russian President Vladimir Putin has issued a decree stating that foreign buyers must pay for Russian gas in roubles starting on Friday or risk having their supplies cut. This move has been rejected by European capitals, with Berlin accusing Putin of blackmail. The decision leaves Europe facing the possibility of losing more than a third of its gas supply, with Germany already activating an emergency plan that could result in rationing. Putin is using energy exports as a powerful tool to retaliate against Western sanctions imposed on Russian banks, companies, businessmen, and associates of the Kremlin in response to Russia's invasion of Ukraine, which Moscow refers to as a "special military operation." In his televised address, Putin stated that purchasers of Russian gas must establish rouble accounts in Russian banks for payment, effective April 1. Failure to do so will be considered a default with serious consequences. Putin emphasized that existing contracts will be terminated if payments are not made in roubles, despite opposition from the European Union and G7 countries. His choice to require payment in roubles has increased the value of the Russian currency, which had plummeted to record lows following the February 24 invasion. The rouble has since regained a significant amount of lost value. Companies and governments in the West have refused to alter their gas supply contracts to accommodate the change in payment currency, with most European buyers currently using euros. Executives have stated that renegotiating these terms would be a lengthy process, taking months or even longer. Paying in roubles would help reduce the impact of Western restrictions on Moscow's access to foreign exchange reserves. European countries are scrambling to find alternative energy sources, but with limited options in the tight global market. The US has offered more liquefied natural gas, but it's not sufficient to replace Russia's supplies. Germany's Economy Minister stated that Russia's attempts to divide Europe have failed, and Western allies refuse to be manipulated. Berlin announced it will keep paying for Russian energy in euros. France's economy minister Bruno Le Maire mentioned that France and Germany are getting ready in case Russian gas supply is stopped. Le Maire did not provide any details about the technical aspects related to Russia's new requirement for payments in roubles. Putin's recent order allows for payments to be processed through special foreign currency and rouble accounts at Gazprombank, with foreign currency being exchanged for roubles through currency auctions on a Moscow exchange. Putin stated that this change would enhance Russia's independence because Western countries are using the financial system as a weapon, and it would be illogical for Russia to continue trading in dollars and euros when assets in those currencies are being frozen. "We have provided European customers with our resources, specifically gas, and they have paid us in euros which they then held onto. It is apparent that we have delivered some of the gas to Europe almost at no cost," he stated. Putin emphasized that this situation cannot persist and that Russia still holds its business reputation in high regard. "We will adhere to and will continue to honor all contractual obligations, including those related to gas contracts. We will maintain the supply of gas in the specified quantities, as outlined in our existing long-term contracts," he stated. Several European companies with contracts with Russia either had no immediate response or chose not to comment following Putin's announcement, causing further unease in the market. In recent months, European gas prices have surged due to escalating tensions with Russia, heightening the risk of a recession. The sharp increase in energy prices has already led to production cuts by companies in industries such as steel and chemicals. Poland's PGNiG, which has a long-standing contract with Russia's Gazprom that is set to expire at the end of the year, did not provide an immediate response." The Polish Ministry of Climate did not provide a comment right away. Poland's agreement with Gazprom is for 10.2 billion cubic meters of gas annually and is in dollars. Eni, an Italian energy company that is also a significant purchaser of Russian gas, did not comment either. Eni purchased approximately 22.5 billion cubic meters of Russian gas in 2020. Its contracts with Gazprom are set to expire in 2035. Buyers of Russian gas from Germany - Uniper, RWE, EnBW and VNG - did not provide a comment in response to requests.