Putin says Russian gas must be paid for in roubles from Friday

Demand leaves Europe facing the prospect of losing more than a third of its gas supply

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Russian President Vladimir Putin on Thursday said he had signed a decree saying foreign buyers must pay in roubles for Russian gas from April 1.

Contracts would be halted if these payments were not made, he said.

Mr Putin’s move leaves Europe facing the prospect of losing more than a third of its gas supply. Germany, the nation most heavily reliant on Russian gas, has already activated an emergency plan that could lead to rationing in Europe's biggest economy.

"In order to purchase Russian natural gas, they must open rouble accounts in Russian banks. It is from these accounts that payments will be made for gas delivered starting from tomorrow," Mr Putin said.

"If such payments are not made, we will consider this a default on the part of buyers, with all the ensuing consequences. Nobody sells us anything for free, and we are not going to do charity either - that is, existing contracts will be stopped."

Energy exports are Mr Putin's most powerful lever as he tries to hit back against sweeping western sanctions imposed on Russian banks, companies, businessmen and associates of the Kremlin in response to Russia's invasion of Ukraine. Moscow calls its Ukraine action a "special military operation".

It was not immediately clear whether in practice there might still be a way to continue payment without using roubles, which the European Union and G7 group of states have ruled out.

His decision to enforce rouble payments has boosted the Russian currency, which fell to historic lows after the February 24 invasion. The rouble has since recovered much lost ground.

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  A gas station on fire in Kharkiv after Russian ttack on the northern city. AFP

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  A medieval suit of armour 'stands guard' at a a Ukrainian checkpoint, on the outskirts of the capital Kyiv. AP Photo

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  Ukrainian refugees wait in line to cross the border into Poland at Shehyni. Reuters

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  Destroyed Russian armoured vehicles on the outskirts of Kyiv. AP Photo

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  A resident passes apartment buildings destroyed by Russian attacks in the besieged southern port city of Mariupol, Ukraine. Reuters

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  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

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  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

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  A destroyed Russian tank in the village of Lukianivka near Kyiv. AFP

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  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

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  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

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  A Ukrainian soldier shoots at the Russian positions not far from the capital Kyiv. EPA

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  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

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  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

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  A soldier poses for the picture in Kyiv, Ukraine, while standing guard amid the destruction caused after shelling of a shopping center. AP Photo

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  A Ukrainian serviceman stands near a destroyed Russian tank in the north-eastern city of Trostianets. AFP

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  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

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  This satellite image provided by Maxar Technologies shows damaged apartment buildings and homes in Mariupol. AP

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  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

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  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

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  A Ukrainian army vehicle carries a Russian tank in Trostyanets. AFP

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  Ukrainian soldiers carry a coffin during the funeral ceremony of a comrade in Odesa. EPA

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  A man walks with his dog near an apartment building damaged by shelling from fighting on the outskirts of Mariupol. AP Photo

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  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

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  A satellite image shows crowds outside a Metro grocery store in Mariupol. Reuters

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  Turkish President Recep Tayyip Erdogan opens Ukrainian-Russian talks in Istanbul. President Erdogan told the delegations that "both parties have legitimate concerns." AFP

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  Members of the Ukrainian Volunteer Corps fire a howitzer at a position in the Zaporizhzhia region. Reuters

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  Ukrainian refugees are helped by volunteers upon their arrival at Amsterdam Central station by train from Berlin. AFP

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  Ukrainian soldiers ride an armoured people carrier through the town of Trostsyanets, about 400 kilometres east of Kyiv. AP Photo

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  Firefighters work amid the debris of residential houses that were destroyed by Russian shelling in a settlement outside Kharkiv. Reuters

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  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

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  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

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  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

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  A pro-Russian troop service member walks near a destroyed apartment building in the besieged southern port city of Mariupol. Reuters

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  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

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  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

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  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

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  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

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  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

Western companies and governments have rejected any move to change their gas supply contracts to change the payment currency. Most European buyers use euros. Executives say it would take months or longer to renegotiate terms.

Payment in roubles would also blunt the impact of Western curbs on Moscow's access to its foreign exchange reserves.

Meanwhile, European states have been racing to secure alternative supplies, but with the global market already tight, they have few options. The US has offered more of its liquefied natural gas but not enough to replace Russian supplies.

Germany's Economy Minister Robert Habeck said Russia had not been able to divide Europe and said western allies were determined to not be "blackmailed".

Berlin said it would continue paying for Russian energy imports in euros.