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Western countries will need Russian bank accounts to pay for fossil fuel imports starting on Friday, President Vladimir Putin has said, but a Kremlin decree indicated they could still transfer the money in euros or dollars.
Mr Putin's announcement appeared to back down from the threat that gas supplies would be cut off if Europe did not raise the money in roubles.
Instead, the decree published on Thursday said the foreign currency would be deposited with a Gazprombank account, one of the few major banks not sanctioned by the West, and then converted to roubles.
European leaders suggested little would change after what Germany described as a failed attempt by Mr Putin to divide western powers on the sensitive issue of energy.
The new mechanism applies to what Moscow deems "unfriendly states", including all 27 members of the European Union who have imposed sanctions on Russia over the invasion of Ukraine.
Any failure to pay means existing contracts would be stopped, said Mr Putin, who said that "nobody sells anything for free... and we are not going to do charity work either".
It came after Germany and Italy said they had received assurances from the Kremlin that they would not have to pay in Russian currency upfront.
That prospect had prompted Germany to invoke emergency regulations and tell the public to use less energy in case Russia cut off gas exports. France also said it was preparing in case deliveries were stopped.
But German Chancellor Olaf Scholz said on Thursday that the country would keep paying for energy in euros or dollars as set out in delivery contracts.
Italian Prime Minister Mario Draghi said energy supplies were "not in danger" and suggested a "process of reflection" had led Russia to back down from the suggestion that only roubles would do.
The Group of Seven industrialised nations had refused to cave in to that demand and Mr Draghi, one of the G7 leaders, said his understanding was that the conversion into roubles was now an internal matter for Russia.
The call comes a week after Mr Putin first made the demand that countries start paying for natural gas in his country's currency, in what was seen as an attempt to get around western sanctions that had sharply devalued the rouble.
The move had prompted European companies to prop up his currency which fell after sanctions were placed on the Russian economy. Gas prices surged after the announcement.
Mr Putin said on Thursday made no sense for Russia to trade in dollars and euros when assets in those currencies were being frozen under the western sanctions. He said that meant Russia had effectively been providing energy for free.
But German Economy Minister Robert Habeck described the move as a failed attempt to divide the West and said allies would not be blackmailed by Russia. More than 50 per cent of Russia’s long-term contracts are settled in euros.
Europe gets about 40 per cent of its gas from Russia and is already dealing with fall-out from record prices this winter. EU leaders last week joined the G7 in rejecting the call for rouble payments.
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A Ukrainian soldier fires his rifle from a trench at the front east of Kharkiv in the north of Ukraine, which continues to be shelled by Russian forces. AFP -
A gas station on fire in Kharkiv after Russian ttack on the northern city. AFP -
A medieval suit of armour 'stands guard' at a a Ukrainian checkpoint, on the outskirts of the capital Kyiv. AP Photo -
Ukrainian refugees wait in line to cross the border into Poland at Shehyni. Reuters -
Destroyed Russian armoured vehicles on the outskirts of Kyiv. AP Photo -
A resident passes apartment buildings destroyed by Russian attacks in the besieged southern port city of Mariupol, Ukraine. Reuters -
Australian Prime Minister Scott Morrison, standing, welcomes Ukrainian President Volodymyr Zelenskyy to address the House of Representatives via video link at Parliament House in Canberra. Mr Zelenskyy appealed directly to Australian legislators for more help in the war against Russia, including armoured vehicles and tougher sanctions. AP -
Fire lights up the sky east of Kharkiv, where Ukrainian forces pushed back Russian troops from a motorway outside the country's second-largest city. AFP -
A destroyed Russian tank in the village of Lukianivka near Kyiv. AFP -
Passengers arriving from Moscow at Manas International Airport, Bishkek, Kyrgyrzstan. Hundreds of thousands of citizens of former Soviet countries in Central Asia are facing difficult choices: shrinking work opportunities in Russia and wages in the weakened rouble versus a return to the homeland where they have family homes, but even fewer job prospects. AFP -
Fire and smoke light up the sky east of Kharkiv as Ukrainian forces push back Russian troops from a motorway outside the country's second-largest city. AFP -
A Ukrainian soldier shoots at the Russian positions not far from the capital Kyiv. EPA -
A car marked with the English letter 'Z' is found destroyed at the central Ukrainian train station that was used as a Russian base in Trostyanets. Ukrainian forces said they had retaken the north-eastern town from the Russians. Getty Images -
Rescue workers at the site of the regional administration building hit by Russian cruise missiles, in Mykolaiv, Ukraine. Reuters -
A dog looks at cars passing by on the road near a house painted with the colors of the Ukrainian flag, on the outskirts of the capital Kyiv. AP Photo -
A soldier poses for the picture in Kyiv, Ukraine, while standing guard amid the destruction caused after shelling of a shopping center. AP Photo -
A Ukrainian serviceman stands near a destroyed Russian tank in the north-eastern city of Trostianets. AFP -
A worker pushes a cart past graves of Ukrainian soldiers who were killed in battle during Russia’s attack on Ukraine, at the Lychakiv cemetery in Lviv. Reuters -
This satellite image provided by Maxar Technologies shows damaged apartment buildings and homes in Mariupol. AP -
A resident takes photos of a destroyed Russian tank next to the railway station where the Russian forces were stationed, in Trostyanets, a town recaptured by the Ukrainian army. EPA -
A rescuer clears the rubble of a warehouse containing more than 50,000 tons of deep-frozen food in the town of Brovary, north of Ukrainian capital of Kyiv, after it was destroyed by Russian shelling. AFP -
A Ukrainian army vehicle carries a Russian tank in Trostyanets. AFP -
Ukrainian soldiers carry a coffin during the funeral ceremony of a comrade in Odesa. EPA -
A man walks with his dog near an apartment building damaged by shelling from fighting on the outskirts of Mariupol. AP Photo -
Members of the Danish Parliament attend the Ukrainian President, Volodymyr Zelensky's speech to the Danish Parliament via a video link, at the Christiansborg Castle in Copenhagen, Denmark. EPA -
A satellite image shows crowds outside a Metro grocery store in Mariupol. Reuters -
Turkish President Recep Tayyip Erdogan opens Ukrainian-Russian talks in Istanbul. President Erdogan told the delegations that "both parties have legitimate concerns." AFP -
Members of the Ukrainian Volunteer Corps fire a howitzer at a position in the Zaporizhzhia region. Reuters -
Ukrainian refugees are helped by volunteers upon their arrival at Amsterdam Central station by train from Berlin. AFP -
Ukrainian soldiers ride an armoured people carrier through the town of Trostsyanets, about 400 kilometres east of Kyiv. AP Photo -
Firefighters work amid the debris of residential houses that were destroyed by Russian shelling in a settlement outside Kharkiv. Reuters -
President Joe Biden said that he is not advocating for regime change in Moscow after saying Russian counterpart Vladimir Putin "cannot remain in power." AP Photo -
Firefighters work to extinguish a fire at a warehouse after it was hit by Russian shelling in Kharkiv, Ukraine. More than half of Kharkiv's 1.4 million people have fled the city since Russia's invasion on February 24. Getty Images -
Local residents pass by a destroyed Russian tank in the town of Trostyanets, east of capital Kyiv, Ukraine. The monument to the Second World War is seen in background. AP Photo -
A pro-Russian troop service member walks near a destroyed apartment building in the besieged southern port city of Mariupol. Reuters -
Mykhaylo, 8, who was taken away from his widowed mother along with his 9-year-old brother and 16-year-old sister, plays with a ball in the garden of a state shelter in Lviv. Reuters -
Halyna Falko, 52, talks to reporters while looking at the destruction caused after a Russian attack inside her house near Brovary, on the outskirts of Kyiv. AP Photo -
Curtains flutter in the wind at a building that was damaged by shelling in a neighbourhood that has been largely abandoned and left without water, gas and heating, as Russia's attack on Ukraine continues, in Kharkiv, Ukraine. Reuters -
People, mainly women and children, arrive at Przemysl on a train from Odesa in war-torn Ukraine in Przemysl, Poland. The Polish government has said it may spend €24 billion this year hosting refugees fleeing the war in Ukraine, and is seeking more support from the European Union. Getty Images -
A woman walks a dog past the so-called "people's installation to a Russian soldier" nicknamed the "polite people" created by residents in the backyard of their apartment building in the town of Podolsk, outside Moscow. AFP
