The G7 countries want to limit the price of Russian gas, and Russia could change the supply contracts in response. Kremlin spokesman Peskov leaves it open exactly how exactly – the plans of the G7 are not yet known. What is clear, however, is that Russia needs the money to plug holes in the budget.
If the G7 states set a price cap for Russian gas, Russia could have the gas supply contracts amended by the energy company Gazprom. “It depends on the direction, on the decision Gazprom makes. The question will probably be raised whether to change the terms of existing contracts or the price,” said Kremlin spokesman Dmitry Peskov.
The heads of state and government of the G7 countries had previously agreed to examine possible price caps for Russian oil and gas. This was intended to limit the Russian government’s ability to finance its invasion of Ukraine.
Peskow did not elaborate on whether the changes could be an adjustment of the contracts to the proposed caps or a complete overhaul of the contract terms. Gazprom could not immediately be reached for comment, nor could the finance ministry. When asked how the G7 proposals to cap prices could affect the state budget, Peskov said: “We don’t know what it is yet.”
Despite Russia earning more than before invading Ukraine amid soaring energy prices, the country expects a budget deficit of 2 percent of gross domestic product this year as it increases social and economic support to offset sanctions. According to Natalia Orlova, chief economist at Alfa-Bank, even with this projected budget deficit, Russia needs an oil price of $100 a barrel this year to balance its budget.
