Russia-Ukraine war: Gazprom cuts gas supplies to Poland, Bulgaria

Poland and Bulgaria accuse Gazprom of breaching contracts after it cuts off gas, demands payments in Russian roubles.

Russia’s Gazprom has suspended gas deliveries to Poland and Bulgaria, citing the two countries’ refusal to pay in Russian roubles, a demand made by President Vladimir Putin after the West sanctioned Moscow over its war in Ukraine.

In a statement on Wednesday, the Russian energy giant said it has “completely suspended gas supplies” to Poland’s PGNiG and Bulgaria’s Bulgargaz “due to absence of payments in roubles”.

The cut offs are the first since Putin’s announcement last month that “unfriendly foreign buyers” would have to transact with Gazprom in roubles instead of United States dollars and euros. Only Hungary has agreed to do so, with other countries rejecting the demand as an unacceptable one-sided breach of contracts and a violation of sanctions.

If deliveries were halted to other countries as well, it could cause economic pain in Europe, driving natural gas prices up and possibly leading to rationing. But it would also deal a major blow to Russia’s own economy.

Gazprom said Poland and Bulgaria had both been warned of the suspension in advance.

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

Both Poland and Bulgaria accused Gazprom of breach of contract, and the Polish gas company threatened to take legal action.

“Cutting gas supplies is a breach of contract and PGNiG reserves the right to seek compensation and will use all available contractual and legal means to do so,” it said in a statement.

In Bulgaria, the country’s Energy Minister Alexander Nikolov told reporters that Sofia has paid for Russian gas deliveries for April.

“Because all trade and legal obligations are being observed, it is clear that at the moment the natural gas is being used more as a political and economic weapon in the current war,” the minister said.

‘No shortage in Polish homes’

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.

Wednesday’s cutoffs will affect deliveries of Russian gas to Poland through the Yamal-Europe pipeline, according to PGNiG, and to Bulgaria via the TurkStream pipeline, that country’s energy ministry said.

The Yamal-Europe pipeline carries gas from Russia to Poland and Germany, via Belarus. Poland has been receiving some 9 billion cubic metres annually, fulfilling some 45 percent of the country’s needs.

In its Wednesday statement, Gazprom also warned Poland and Bulgaria that if they siphon gas intended for other European customers, the deliveries to Europe will be reduced to that amount.

Polish Prime Minister Mateusz Morawiecki has previously said his country is prepared to make do, noting that its gas storage facilities were 76 percent full. He added that Poland was ready to obtain necessary supplies from sources other than the Yamal pipeline.

Polish Climate Minister Anna Moskwa said “there will be no shortage of gas in Polish homes” as her government has worked to reduce its reliance on Russian energy sources previously.

Several years ago, Poland opened its first terminal for liquefied natural gas (LNG) in Swinoujscie on the Baltic Sea coast, and later this year, a pipeline from Norway is to become operational.

Bulgaria, which imports 90 percent of its gas from Russia, said it was working with Bulgargaz and another state-owned operator Bulgartransgaz to find alternative sources and that no restrictions on domestic consumption would be imposed for now.

Poland has been a strong supporter of neighboring Ukraine during the Russian invasion and has acted as a transit point for weapons the US and other Western nations have provided to Kyiv.

Warsaw said this week that it too was sending weaponry to Ukraine’s army in the form of tanks. On Tuesday, it announced sanctions focusing on 50 Russian oligarchs and companies, including Gazprom.

Bulgaria, once one of Moscow’s closest allies, has cut many of its ties with Russia after a new liberal government took the reins last December and also in the wake of the invasion. It has supported sanctions against Russia and sent humanitarian aid to Ukraine but has been hesitant to provide military aid.

However, Prime Minister Kiril Petkov and members of his coalition government were expected in Kyiv on Wednesday for talks about further assistance.