SOFIA/WARSAW (REUTERS, AFP) - Russian energy giant Gazprom on Wednesday (April 27) halted gas supplies to Poland and Bulgaria for failing to pay for gas in roubles, the Kremlin’s toughest response yet to the crippling sanctions imposed by the West for the invasion of Ukraine.
Poland and Bulgaria are the first countries to have their gas cut off by Europe’s main supplier since the Feb 24 invasion of Ukraine that has killed thousands of people, displaced millions more and raised fears of a broader conflict.
Gazprom, which supplies around 40 per cent of European gas, also warned that transit via Poland and Bulgaria – which host pipelines supplying Germany, Hungary and Serbia – would be cut if gas was siphoned off illegally.
Russian President Vladimir Putin’s demand for rouble payments for gas is the centrepiece of Russia’s response to the West’s sanctions which include the freezing of hundreds of billions of dollars of Russian assets.
Mr Putin casts the sanctions as an act of economic war but cutting off supplies to Poland and Bulgaria is one of Moscow’s most significant steps in the gas market since the Soviets built gas pipelines to Europe from Siberia in the early 1970s.
Despite objections from the United States that Europe’s biggest economies were making themselves too dependent on Soviet – and then Russian – gas, Moscow sought for five decades to cast itself as a reliable energy supplier for Germany’s economy.
The war in Ukraine has changed assumptions about Europe’s post-Cold War relationship with Russia – including over oil and gas supplies.
Mr Putin demanded that “unfriendly” countries agree to a scheme under which they would open accounts at Gazprombank and make payments for Russian gas imports in euros or dollars that would be converted into roubles. Most European companies had initially rejected the rouble payment scheme.
Only a few Russian gas buyers, such as Hungary and Germany’s Uniper, the country’s main importer of Russian gas, have said it would be possible to pay for future supplies under the scheme announced by Moscow without breaching European Union sanctions.
In a sign that Gazprom’s halt to supply could soon be expanded to other countries, one of the Kremlin’s most loyal lawmakers lauded the move and said other unfriendly countries should be cut off too.
“Gazprom’s announcement is another attempt by Russia to blackmail us with gas. We are prepared for this scenario. We are mapping out our coordinated EU response,” European Commission chief Ursula von der Leyen said on Twitter.
“Europeans can trust that we stand united and in solidarity with the member states impacted.”
Poland, for centuries a rival of Moscow, has repeatedly said it will not pay for Russian gas in roubles and has planned not to extend its gas contract with Gazprom after it expires in the end of this year.
There are few immediate alternatives.
Bulgaria, where annual gas consumption is about 3 bcm, has sealed a deal to receive 1 bcm of Azeri gas but can only fully tap the contract after a new gas pipeline with Greece becomes operational later this year.
The Yamal-Europe pipeline across Poland supplies Russian gas to Germany, although it has mostly been working in a reverse mode this year, supplying gas eastward from Germany. Bulgaria is a transit country for gas supplies to Serbia and Hungary.