Russia’s Gazprom Cuts Gas Exports to Poland, Bulgaria After They ‘Failed to Pay in Roubles’

Gas pipelines are pictured at the Atamanskaya compressor station, facility of Gazprom's Power Of Siberia project outside the far eastern town of Svobodny, in Amur region, Russia, on Nov. 29, 2019. Maxim Shemetov/Reuters

Poland and Bulgaria have had their gas supplies cut off by Russia’s energy giant Gazprom after the two E.U. countries did not pay in roubles, the state-owned company announced on Wednesday.

“As of the end of the working day on 26 April, Gazprom Export had not received rouble payments for gas deliveries in April from the companies ‘Bulgargaz’ (Bulgaria) and PGNiG (Poland),” the company said in a statement.

The Saint Petersburg-headquartered company noted that “payments for gas delivered since 1 April must be made in roubles,” and that both companies had been notified of this “in a timely manner.”

The move makes Poland and Bulgaria the first countries to have their gas cut off by Russia since President Vladimir Putin’s “special military operation” began in Ukraine on Feb. 24.

Russia is one of the world’s largest producers of oil and natural gas, accounting for 17 percent of the world’s natural gas and 12 percent of its oil, and is also Europe’s biggest oil supplier, providing slightly more than a quarter, or 26 percent, of E.U. oil imports in 2020, according to data from the bloc’s statistics office Eurostat.

Natural gas prices surged in Europe Wednesday morning following the move by Gazprom, with the Dutch wholesale gas contract for the day-ahead, which serves as a benchmark for Europe, rising 24.2 percent to 115.75 euros per megawatt hour.

Polish state-owned PGNiG PGN.WA confirmed its supplies from Gazprom had been cut but said that the move had had no impact on its current deliveries to customers who are “receiving the fuel according to their demand.”

“Although PGNiG has duly met all its obligations under the Yamal contract, on April 27th, 2022 Gazprom halted natural gas supplies it is obliged to deliver according to the contract and PGNiG’s nominations,” the Polish company said.

Russia covers about 55 percent of Poland’s gas needs, which are delivered via the 4,107-kilometer (2,552-mile) Yamal pipeline that runs from Russian natural gas fields in the Yamal Peninsula and Western Siberia to Poland and Germany, via Belarus.

“PGNiG considers the halt of natural gas supplies a breach of the Yamal contract. PGNiG reserves the right to raise claims in connection with the halt and will use all of its contractual rights and rights under applicable provisions of law,” the statement continued.

Meanwhile, Polish Prime Minister Mateusz Morawiecki called Gazprom’s decision “a direct attack on Poland” and “revenge for the sanctions we imposed,” referring to penalties levied against the Kremlin over its invasion of Ukraine.

The executive director of Bulgarian gas network operator Bulgartransgaz told Reuters that supplies to Bulgaria were still flowing for now. Hungary and Austria also said gas supplies were normal.

Poland and Bulgaria, both NATO and E.U. members, had said earlier that Moscow would stop supplying gas to them on Wednesday as tensions continue to run high over Russia’s invasion.

European Commission President Ursula von der Leyen condemned Gazprom’s move on Wednesday, calling it “another attempt by Russia to blackmail us with gas.”

And it shows once again the unreliability of Russia as a gas supplier. We are prepared for this scenario. We are in close contact with all Member States,” she said.

Von der Leyen added that the commission has been in “close contact with all Member States” and is “working to ensure alternative deliveries and the best possible storage levels across the E.U.”

“Member States have put in place contingency plans for just such a scenario and we worked with them in coordination and solidarity,” she said.

Putin warned back in March that “unfriendly” countries would have to start paying for Russian energy with roubles while also promising to “continue supplying natural gas” and “respect all the obligations and the pricing under the contracts that we have signed.”

However, the European Commission has said companies should continue to pay Gazprom in the currency agreed in their contracts, the majority of which are in euros and dollars.