Russia's Gazprom suspends gas supplies to Poland and Bulgaria

Energy giant says the two EU countries failed to pay for fossil fuel imports in roubles

A Belarusian worker at a gas compressor station of the Yamal-Europe pipeline from Russia, near Nesvizh. Poland normally receives its gas through the pipeline. AP

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Russia on Wednesday suspended gas exports to Poland and Bulgaria, in its first such move since the war in Ukraine triggered a stand-off over Europe's energy supplies.

Energy giant Gazprom said it was stopping exports because the two countries had failed to pay for gas in roubles, a demand made by the Kremlin which has widely been rejected by Ukraine’s allies.

It said any attempt by Poland and Bulgaria to siphon off gas that flows through their territory to other countries would lead to Gazprom reducing its exports accordingly.

The two countries sought to reassure consumers that they had alternative supplies, while the European Union said their neighbours were supplying gas. But it condemned the move against two of its member states as an attempt by Russia to use energy as an “instrument of blackmail".

“This is unjustified and unacceptable. And it shows once again the unreliability of Russia as a gas supplier,” said European Commission President Ursula von der Leyen.

Kremlin spokesman Dmitry Peskov rejected the charge of blackmail and said the rouble demand was necessary because of "unprecedented unfriendly steps" by western nations that weakened Russia's currency.

European gas prices spiked by as much as 24 per cent on Wednesday's news, while the rouble strengthened against the euro and US dollar.

But Poland, one of the most vocal allies of Ukraine during the two-month war, said it was well prepared after years of striving to reduce its energy reliance on Russia.

“There will be gas in Polish homes,” said Climate Minister Anna Moskwa, who said warehouses were well stocked despite gas flows through the Yamal pipeline being cut off.

Poland has led calls for the EU to cut off all fossil fuel exports from Russia, which Ukraine and many of its allies regard as effectively financing the invasion.

But many European countries rely on Russian gas to heat homes and generate electricity. The EU has agreed to an embargo on coal imports and is discussing a potential oil ban but has not yet moved to cut off gas supplies. Ms von der Leyen month struck an agreement with the US to import liquefied natural gas from American suppliers instead.

It was not clear why Poland and Bulgaria in particular had been targeted. Hungary and Germany both said they too were paying in euros or dollars rather than roubles.

Germany, which is holding out against an immediate embargo but racing to purge Russian energy from its grid, said its own gas imports were stable and that storage tanks had started filling up again since March.

In Sofia, Bulgarian Energy Minister Alexander Nikolov said the country had secured uninterrupted supplies for at least a month and accused Russia of using gas as a “political and economic weapon”.

“Bulgaria won’t hold negotiations under pressure and with its head low,” said Mr Nikolov, who said he hoped alternative routes and supplies will be agreed at EU level.

The Bulgarian government said it was working with state gas companies to find alternative sources to replace the supplies it gets from Russia through the TurkStream pipeline to Turkey.

The government said no restrictions on domestic gas use would be imposed for now, even though the country of 6.5 million people meets more than 90 per cent of its gas needs with Russian imports.

Hungary, which receives Russian gas via Bulgaria, said Gazprom's move was worrying but that supplies to the Hungarian grid had not been stopped. Foreign Minister Peter Szijarto said Hungary had agreed with Russia to deposit money with Gazprombank in euros which would then be converted to roubles

Poland’s state gas company PGNiG said it was notified by Gazprom that deliveries through the Yamal-Europe pipeline would stop on Wednesday. It came a day after Poland announced sanctions on Gazprom and dozens of other Russian oligarchs and companies.

The Yamal pipeline carries natural gas from Russia to Poland and Germany, through Belarus. Poland has been receiving about 9 billion cubic metres of Russian gas a year.

Data from the European Network of Transmission System Operators for Gas showed drastic drops of flows at entry points in Kondratki, a town in eastern Poland, and Vysokaye, which is in Belarus.

The suspensions are the first since Russian President Vladimir Putin said last month that “unfriendly” foreign buyers would have to pay the state-owned Gazprom in roubles instead of US dollars or euros.

The EU and other western powers regard Russia’s rouble demand as a breach of contract and an attempt to protect its currency from sanctions. Mr Nikolov said Bulgaria had paid its gas invoices in dollars.

In Britain, Deputy Prime Minister Dominic Raab said Mr Putin’s regime was only adding to its “pariah status” by shutting off gas supplies and threatening its neighbours.

Fatih Birol, the head of the International Energy Agency, said his organisation “stands firmly with Poland” over the dispute.

“Gazprom’s move to completely shut off gas supplies to Poland is yet another sign of Russia’s politicisation of existing agreements and will only accelerate European efforts to move away from Russian energy supplies,” he said.

Updated: April 27, 2022, 12:56 PM
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