Russia halts gas supplies to Poland, Bulgaria
Gazprom employees on Russia’s Yamal Peninsula.
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Russia’s supply of gas to Eastern Europe is in great doubt after its massive state-owned gas company. GazpromThe company informed Bulgaria and Poland that supplies would be halted.
Both countries have refused Moscow’s request to pay in rubles for their gas supplies. However, the move coincides with tensions rising between Russia and its allies as the war in Ukraine continues.
Early Wednesday morning, Gazprom released a statement saying it had halted supplies to both Poland and Bulgaria — both heavy consumers of Russian gas — due to payments not being made in the Russian currency. Gazprom stated that supplies will resume after these payments are made.
In the statementGazprom issued a warning to both countries about the danger of “unauthorized withdrawal” from gas supplies that were flowing through their territory.
Transit states are Bulgaria and Poland. This volume will reduce supplies to transit countries in the event of an unauthorized withdrawal from Russian gas transit volumes.
On Wednesday, natural gas prices in Europe soared. Wednesday morning saw a rise in natural gas prices across Europe. The benchmark European wholesale gas contract rose by 24.2%, to 115.75 euro per megawatt hour. Meanwhile, the U.K. natural gasoline price rose about 20pence to 222 pence per therm for June.
PGNiG, Poland’s oil and gas state company, said that Gazprom informed them on Tuesday that supplies to Poland via Yamal Pipeline would be halted starting Wednesday morning.
According to Reuters, however, gas prices dropped to zero on Wednesday and have since risen, as data from European Union gas transmission operators revealed. Poland however stated that the supply had been stopped.
While Bulgaria does not confirm that supplies were stopped, Kiril Petrov, the prime minister of Bulgaria, called it “blackmail” as he said there was no way to stop supplies. According to Reuters, Alexander Nikolov, Bulgaria’s Energy Minister said that supplies were assured for at least a month.
Russia’s move has been condemned by other business executives and officials.
The U.K.’s Deputy Prime Minister Dominic Raab said the move would add to Russia’s status as an “economic pariah” while James von Moltke, chief financial officer of Deutsche Bank, told CNBC Wednesday that it was a “worrying sign” and that while it won’t have an immediate economic impact, “it remains a risk for the overall outlook.”
Gazo supplies have been a matter of contention between Russia’s European neighbours and Russia itself since before the invasion. Russia was charged with using its energy resources, any restriction on markets prices having a significant impact dramatically on their price, to bolster geopolitical power.
Russia vehemently denied this, with Russian President Vladimir Putin calling the accusations “blather”The U.S. was accused of contributing to the global energy crisis that occurred last fall.
Russia’s latest gambit with European energy customers is allegedly after Russia’s demand for payment in rubles to purchase its gas was rejected by most importers, which included Poland and Bulgaria. While they claim the demand breaches a contract, analysts say the move is Russia’s attempt to raise the ruble in response to the international sanctions that were imposed on Ukraine after its unprovoked invasion.
In the meantime, eastern Europe’s gas supplies appear to be in flux, and under threat, as Western support for Ukraine — and pressure on Russia — only increases.
PGNiG, Poland’s largest gas company said in a statement TuesdayAccording to the company, it monitors the situation closely and has plans for different scenarios. It also intends to continue receiving gas from other sources. The company stated however that it has sufficient gas storage to supply the current needs.
According to EU data, Bulgaria imported 73% of its natural gasoline from Russia in 2020. Poland, however, imported 45% from Russia the same year. This is just below the EU average of 40%. It shows the EU’s dependence on Russian natural gas imports.
Moscow’s invasion of Ukraine caused the EU to accelerate a decrease in Russian energy imports. has caused the already-controversial Nord Stream 2 gas pipeline between Russia and Germany, another country heavily reliant on Russian gas, to be abandoned.
Russia did not demand that every country pay rubles to get gas.
Hungary — whose strongman leader Viktor Orban has friendlier ties with President Vladimir Putin — has broken ranks with its EU partners by agreeing to pay for Russian gas in rubles.
The country’s foreign minister stated Wednesday that it is currently receiving Russian gas under its Gazprom contract via Bulgaria and Serbia.
Peter Szijjarto, Foreign Minister of Bulgaria said that “I would like to assure everybody that non-delivery gas shipments to Bulgaria doesn’t mean a halt to transit shipments via Bulgaria.” said on his Facebook pageTranslated by Reuters.
He stated that Hungary’s next Russian-gas payment obligation will come due in May. Hungary will then transfer its euros payment to Gazprombank.