Russian energy giant Gazprom has reportedly halted gas supplies to Poland and Bulgaria after they failed to make their payments in Rubles. After a wide array of Western sanctions against Ukraine, Russia’s demand for gas payments in Roubles had come as a retaliation.
Russian energy giant Gazprom halts gas supplies to Bulgaria and Poland for failing to pay in roubles, the Kremlin’s toughest response yet to the sanctions imposed by the West https://t.co/5FsnACyULg pic.twitter.com/jPJ27aIj8s
— Reuters (@Reuters) April 27, 2022
Gazprom has issued a statement declaring suspension of gas supplies to Bulgarian company Bulgargaz and Polish company PGNiG (PGN.WA). However, both Poland and Bulgaria have called the action a breach of contract by Gazprom, the world’s biggest natural gas company.
As per reports, Gazprom in its statement has said, “Gazprom Export has notified Bulgargaz and PGNiG of the suspension of gas supplies from April 27 until the payments are made according to the procedure outlined in the Decree.” As reported by Russian news agency TASS, the companies were supposed to make their payments for gas supplied in April in Rubles as notified by Russian President Putin’s orders on March 31, 2022.
The company that provides Europe 40% of its total gas needs, has warned that the Yamal-Europe pipeline that passes through both of these countries and further supplies gas to Germany, Hungary and Serbia, would be shut down if gas was siphoned off illegally. “In case of unauthorized offtake of Russian gas from the volumes intended for transit into third countries, the transited supplies will be reduced by the volume that was off taken,” the company statement said.
Following the news from Russia, the price of gas increased by as far as 21% in Europe, about $1,370 per 1,000 cubic meters at a certain time. The European market continues to be concerned over the supply of natural gas after Russia’s military action in Ukraine and subsequent sanctions by EU and NATO nations.
President Vladimir Putin has been firm about the payment for energy in Roubles. The action on Bulgarian and Polish companies is a result of their failure to make the payments in Rubles on time. The decision has been lauded by Kremlin with Vyacheslav Volodin, the speaker of Russia’s lower house of parliament saying, “The same should be done with regard to other countries that are unfriendly to us.”
EU trying to find a way to keep gas flowing
Media reports have now suggested that the European Union is already trying to increase its gas purchases in Rubles to help Poland and Bulgaria. Russian media agency TASS has reported that the European Union would be temporarily increasing its gas purchases from Russia through countries which are ready to do their payments in Russia Rubbles to compensate for the demand of Poland and Bulgaria.
EU WILL TEMPORARILY INCREASE GAS PURCHASES FROM THE RUSSIAN FEDERATION THROUGH COUNTRIES READY TO PAY IN RUBLES TO COMPENSATE FOR THE CESSATION OF SUPPLIES TO POLAND AND BULGARIA – TASS SOURCE
— zerohedge (@zerohedge) April 27, 2022
According to reports, at least ten European companies buying Russian natural gas have already opened accounts at Gazprombank to make their payments in Rubles. Bloomberg has reported that four European companies have already made their payments in Rubles, as required by the Russian Federation. The opening of bank accounts in the state-controlled Gazprombank by the companies stands as a tricky task in itself as the activity violates sanctions against Russia.
Russia supplies Natural gas to 23 European countries. With the halting of natural gas to Bulgarian and Polish companies, The EU now looks forward to helping the countries bu buying natural grass from other countries. However, doing so involves opening accounts in Russian banks and Euro-Ruble transfers which violates their self-imposed sanctions against Russia.
The Russian thrust on Europe however has not motivated Europe to take over the negotiating terms. Poland alongside Bulgaria has decided not to hold talks to renew its Gazprom deal for the next year. Poland’s contract with Gazprom is for 10.2 billion cubic meters of gas per year, covering about 50% of its demand. Bulgaria too relies on Russia for about 90% of its gas imports.
Ursula von der Leyen, the European Commission President who was in India to preside over the inauguration of the Raisina Dialogue, said that Russia’s ‘blackmail’ is unjustified and unacceptable and the EU would seek alternative supplies to fulfil its needs. Last month, the EU struck a deal with the US for importing Liquified Natural Gas (LNG) to meet the urgent energy demands.
