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.

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.