Russia Cuts Gas Supplies To Poland, Bulgaria (See Why)

The cut-offs are the first since Russian President Vladimir Putin’s announcement last month that “unfriendly foreign buyers” would have to transact with Gazprom in roubles instead of United States dollars and euros. The demand was a response to international sanctions over its war in Ukraine.

But only Hungary has agreed to do so, with other EU countries rejecting the demand as rewriting contracts that called for payment in euros.

Gazprom said both Poland and Bulgaria had been told of Wednesday’s suspension in advance.

“Payments for gas supplied from April 1 must be made in roubles using the new payment details, about which the counterparties were informed in a timely manner,” it said.

The two countries, however, accused Gazprom of breach of contract, while the Polish gas company threatened to take legal action.

“Despite the fulfilment of all obligations under the Yamal contract by PGNiG, on April 27 this year, Gazprom has stopped delivering natural gas,” the Polish group said in a statement.

“The limitation of natural gas supplies is a breach of the Yamal contract. PGNiG reserves the right to pursue claims in connection with the suspension of deliveries and will use all contractual rights vested in the company and rights under the law.”

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Poland, which imports some 50 percent of its gas from Russia, has previously said it was ready to face any supply disruptions. Prime Minister Mateusz Morawiecki said on Tuesday that the country’s gas storage facilities were 76 percent full, while Climate Minister Anna Moskwa has declared that “there will be no shortage of gas in Polish homes”.

In Bulgaria on Wednesday, Prime Minister Kiril Petkov called the Russian demand to change its payment scheme a grave breach of a current contract.

He said Bulgaria, which relies on Russia for nearly 90 percent of its gas needs, was currently reviewing all of its contracts with Gazprom, including for transit of Russian gas to Serbia and Hungary, because “one-sided blackmail was not acceptable”.

Bulgarian Energy Minister Alexander Nikolov told reporters that his country can meet the needs of users for at least one month, and that gas was still flowing as he spoke.

“Alternative supplies are available, and Bulgaria hopes that alternative routes and supplies will also be secured at EU level,” Nikolov said.

“Obviously gas is used as a political tool,” he added. “As long as I am minister, Bulgaria will not negotiate under pressure, Bulgaria is not for sale and does not succumb to any trade counterpart.”

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Before the invasion of Ukraine on February 24, Europe received about 40 percent of its gas from Russia, mainly for residential heating, electrical generation and the fuel industry, with Germany particularly dependent on it. The imports have continued despite the war.

Approximately 60 percent of imports are paid in euros, and the rest in dollars. Putin’s demand was apparently intended to help bolster the Russian currency against Western sanctions.

Poland receives its Russian gas through the Yamal-Europe pipeline from Russia’s huge gasfields in the Arctic far north, which continues west to supply Germany and other European countries. Bulgaria is supplied through pipes over Turkey. Gazprom also warned the two countries on Wednesday that if they siphon gas intended for other European customers, the deliveries to Europe will be reduced to that amount.

In response to Gazprom’s decision, EU began emergency talks on Wednesday, with European Commission President Ursula von der Leyen calling Gazprom’s announcement “yet another attempt by Russia to use gas as an instrument of blackmail”.

She said the region’s 27 countries were prepared to weather Russia’s cutoffs.

“Member states have put in place contingency plans for just such a scenario and we worked with them in coordination and solidarity,” she said. “We are mapping out our coordinated EU response. We will also continue working with international partners to secure alternative flows.”

In London, British Deputy Prime Minister Dominic Raab said Russia’s moves will only add to its status as an economic and political pariah.

“It [halting gas supply] will have a … very damaging effect on Russia as well because it is becoming further and further, more and more, not just a political pariah, but an economic pariah,” Raab told Sky News.

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