Russia to Cut Gas to Poland and Bulgaria, Making Energy a Weapon
- Focus now turns to how other European capitals will respond
- Moscow demands gas be paid for in rubles after new decree
By
Maciej Onoszko,
Maciej Martewicz, and
Slav Okov
April 26, 2022, 11:20 PM GMT+8Updated onApril 27, 2022, 4:18 AM GMT+8
Russia will cut off the gas to Poland and Bulgaria on Wednesday in a major escalation in the standoff between Moscow and Europe over energy supplies and the war in Ukraine.
Moscow is making good on a threat to halt gas flows to countries that refuse President Vladimir Putin’s new demand to pay for the fuel in rubles.
The European Union has rejected the move in principle but now payment deadlines are starting to fall due, governments across Europe need to decide whether to accept Putin’s terms or lose crucial supplies -- and face the prospect of energy rationing.
European gas prices surged as much as 17% as traders calculated the risk of other European countries being hit next.
“This is a turning point that has been accelerated by Russia today,” said Piotr Naimski, Poland’s top official for strategic energy infrastructure.
Share of natural gas imports coming from Russia, 2020
Sources: Eurostat, U.S. Energy Information Administration, Austria's Ministry of Climate Protection
Note: Data for 2020 are not available for the U.K. and Bosnia-Herzegovina, 2019 data are shown in those countries. Norway imported 10 million cubic meters of gas from Russia in 2020, but as a net exporter is not dependent on Russian imports.
The threat of cutoffs has been looming for weeks, but there was an indication last week that the EU was suggesting a potential way out of the standoff. The move against bloc members Poland and Bulgaria probably makes some kind of compromise less likely. It also removes from the EU’s toolkit the option of sanctioning Russian gas.
“The decision of Russia to stop gas supplies to Poland and Bulgaria represents an historical turning point in the bilateral energy relationship and might well represent the preview of similar moves coming up vis-a-vis other European countries in coming weeks,” said Simone Tagliapietra, a researcher at the Bruegel think tank. “European governments now need to deploy all emergency measures they have at their disposal, both on the supply and demand side to ensure security of supply.”
Payment Schedules
The first ruble payments are due in late April and May, though companies’ individual payment schedules have not been disclosed. Polish news outlet Onet.pl reported earlier that the deadline for Poland’s main gas company PGNiG’s fell on Friday, and Gazprom said on Tuesday the payment was due immediately.
Other companies have more time and European governments and executives are in many cases still trying to figure out how best to respond. The EU last week suggested that companies continue to pay in euros, and seek possible exemptions from Moscow to the decree.
The decree demands companies set up two accounts, one in a foreign currency and one in rubles, with Gazprombank. The Russian bank would convert the foreign currency payments into rubles before transferring the payment to Gazprom PJSC, the state-owned gas company.
“The Polish example suggests that those buyers that will not accept the new mechanism or will not secure an exemption from it are likely to see their supplies cut as well if no payment has reached Gazprom’s account when it is due,” Yafimava said.
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