German Economy Minister Robert Habeck on Monday said the Group of Seven (G7) major economies dismissed Russian President Vladimir Putin's demand to pay for gas in rubles.
Putin had said "unfriendly" countries would have to pay for Russian gas in Russia's own currency.
"All G7 [energy] ministers agreed that this is a unilateral and clear breach of the existing agreements," said Habeck, whose country holds the G7 presidency.
"Payment in rubles is not acceptable and ... we call on the companies concerned not to comply with Putin's demand," Habeck said.
Habeck added that Putin had his "back against the wall" to make such demand.
German Chancellor Olaf Scholz also insisted that "the contracts we know lay down the euro as payment currency and the companies will pay according to the contracts they have signed."
So far, European states and companies have paid for gas supplies in euros and US dollars.
Earlier on Monday, reporters asked Kremlin spokesman Dmitry Peskov if Russia could cut natural gas supplies to European customers if they rejected the demand. "We clearly aren't going to supply gas for free," Peskov said.
"In our situation, it's hardly possible and feasible to engage in charity for Europe,'' Peskov said.
Russia will take decisions in due course should European countries refuse to pay in the Russian currency, he said before Habeck's statement.
Russian news agency RIA quoted Russian lawmaker Ivan Abramov as saying a refusal by the G7 to pay for Russian gas in rubles would lead to an unequivocal halt in supplies.
Besides the apparent tit-for-tat after the West imposed a massive trove of sanctions on Russia, Moscow's demand for rubles is also seen as a bid to save its economy.
Economists believe that the decision could help the struggling Russian currency, which has fallen massively in value following news of the Russian invasion of Ukraine, followed by Western sanctions.
With Europe getting 40% of its gas and 25% of its oil from Russia, European countries have been racing to reduce their reliance on Russian energy imports in light of the war in Ukraine.
Germany, which is particularly heavily reliant on Russian gas, has to find alternatives "in order not to strengthen the regime," Habeck said.
Although Germany was quick to suspend the massive Nord Stream 2 gas pipeline project in response to Putin's war in Ukraine, the German government has so far resisted calls to boycott Russian oil and gas altogether.
On Friday, the US and the EU announced a new partnership to make Europe less reliant on Russian gas. Under the deal, the US would supply 15 billion cubic meters of liquefied natural gas (LNG) to the EU this year.
