END of DOLLAR’s HEGEMONY: Russian oil giant now using yuan and rubles for export settlements

END of DOLLAR’s HEGEMONY: Russian oil giant now using yuan and rubles for export settlements

By Belle Carter

Russian oil producer Gazprom Neft, a subsidiary of energy giant Gazprom is now conducting crude trade with foreign partners with the Chinese yuan and Russian rubles – a significant step in reducing reliance on the U.S. dollar and euro, which both became unreliable following the Western sanctions imposed on the Eurasian nation.

The company's CEO Aleksandr Dyukov revealed this information on the sidelines of the TNF Energy forum, which was held in the oil-rich Tyumen Region in Siberia.

The conventional practice of conducting international trade used to be done using major global currencies like the dollar and euro. This decision increasingly reflected a strategic move to align its trade practices more closely with the economic and geopolitical interests of Russia, as well as its significant energy ties with China.

According to Dyukov, the company has not experienced any problems withdrawing its export earnings in foreign currency since it started trading with the said currencies. It also receives its revenue from oil and petroleum products sales at short notice.

Also, Russia is not the only one moving to dethrone the USD. The China National Petroleum Corporation (CNPC) has agreed to switch payments for gas supplies to rubles (RUB) and renminbi (RMB) instead of dollars. According to Simon Watkins, former senior FX trader, financial journalist, and best-selling author, in the first phase of the new payments system, this will apply to Russian gas supplies to China via the 'Power of Siberia' eastern pipeline route that totals at minimum 38 billion cubic meters of gas per year (bcm/y).

"After that, further expansion of the new payments scheme will be rolled out. It is apposite to note at this point that although ongoing international sanctions against Russia over its invasion of Ukraine in February have provided the final impetus for this crucial change in payment methodology, it has been a core strategy of China's from at least 2010 to challenge the U.S. dollar's position as the world's de facto reserve currency," he said in an article he wrote on OilPrice.com.

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