Gazprom halts gas supplies to Bulgaria, Poland — Analysis

Russia’s state-owned energy corporation has put it down to Sofia and Warsaw’s failure to pay for the fuel in rubles

Gazprom, Russia’s main natural gas supplier, has announced a complete halt in gas exports to Bulgaria and Poland on Wednesday after the two countries refused to make payments in rubles. A company statement stated that supplies would not resume until Sofia or Warsaw adhere to the terms.

Russian energy giant Russia warned that if Bulgaria or Poland started syphoning Russian gas meant for other countries, this would reduce supply by the illegal amounts Sofia and Warsaw withheld.

In a statement early on Wednesday, Gazprom explained that “as of the end of the working day on 26 April, Gazprom Export had not received ruble payments for gas deliveries in April from the companies ‘Bulgargaz’ (Bulgaria) and PGNiG (Poland),” as required under President Vladimir Putin’s decree dated 31 March. The Russian energy giant noted that “All payments made for gas purchased after April 1st must be paid in rubles,” and that both companies were notified of this “In a timely fashion.”

Ruble payment mechanism in effect – Kremlin

Russia’s President Putin demanded that countries which have placed sanctions against Russia but are still buying its gas be paid in rubles. Several buyers have signalled a willingness to accept Moscow’s demands. On Monday Uniper, Germany’s largest importer of Russian gas, said it would be possible to pay for future supplies without breaching Western sanctions.

Uniper revealed on Monday that there was a way to walk the thin line between complying with EU sanctions and meeting Russia’s requirement for ruble payments. A company representative said in an e-mailed statement that “We still believe that a future compliant payment processing is possible based on an initial, but not binding assessment..”

Poland confirms Russian gas supply to be halted

Poland rejected this approach and sanctioned Gazprom Tuesday with a 48% stake. Gazprom is the Polish company which co-owns Yamal-Europe’s gas pipeline. It transports gas along a 4,000km stretch from Yamal Peninsula in western Siberia, to Germany via Belarus.

Speaking to Poland’s RMF radio station on Wednesday, Petr Naimsky, a Polish government official overseeing the country’s strategic energy infrastructure, said Warsaw would no longer buy gas from Russia.

While Bulgaria’s current 10-year contract with Gazprom was set to expire at the end of this year, the ministry’s statement said that Bulgargaz would not finish the contract if it had to pay in rubles, stating that the setup “poses significant risks to Bulgaria.” Bulgaria was dependent on Russia approximately 90% for its gas supplies, the rest coming from Azerbaijan. 

Last month, a spokesman for state energy firm Bulgargaz told reporters that, as of this summer, Azerbaijan will provide the country’s entire supply, albeit at a higher price. Further ahead, Bulgaria’s government plans to connect the country to a yet-unfinished Liquefied Natural Gas (LNG) terminal in Greece, where gas will be imported by ship, likely from the US.

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