Russia warns Poland and Bulgaria against cutting gas supplies on Wednesday 2022-04-26 17:33:00


  • Russia demands “unfriendly” countries pay for gas in rubles
  • Russia has threatened to cut off gas unless demand is met
  • The Kremlin says Gazprom is working on the scheme
  • Only a few agreed to the gas-to-ruble scheme

WARSAW (Reuters) – Russian energy giant Gazprom (GAZP.MM) Poland and Bulgaria said they would halt gas supplies from Wednesday, in a major escalation of the broader dispute between Russia and the West over its invasion of Ukraine.

Poland and Bulgaria will be the first two countries to have gas cut off by Europe’s main supplier since Moscow launched what it calls a military operation in Ukraine on February 24. The move to cut off supplies also came on the heels of sanctions imposed by Warsaw against Russian personnel and individuals. Comp.

Russian President Vladimir Putin has called on countries he describes as “unfriendly” to agree to a plan to open accounts in Gazprombank and make payments for Russian gas imports in euros or dollars that can be converted into rubles.

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The European Commission said last week that EU companies might be able to get around Russia’s demand to receive gas payments in rubles without violating sanctions if they paid in euros or dollars and then switched to Russian currency. Read more

Poland is a strong political opponent of Moscow. Polish gas company PGNiG (PGN.WA)It said, whose gas deal with Russia expires at the end of this year, said it would not comply with the new payment plan and would not extend the contract.

It also did not extend the gas transportation agreement with Gazprom in 2020. Since then, the Russian gas provider has had to participate in auctions of pipeline capacity via the Yamal-Europe pipeline from Belarus to Poland.

Poland’s gas supply contract with Gazprom is 10.2 billion cubic meters per year, covering about 50% of national consumption.

Earlier, data from the European Union Network of Gas Transport Operators showed that physical gas flows through the Yamal-Europe route had stopped, but resumed later on Tuesday.

Poland’s climate ministry said Poland’s energy supply is safe, adding that there is no need to draw from gas reserves and that gas for consumers will not be interrupted.

The Energy Ministry said Gazprom had also told Bulgaria’s state gas company that it would halt gas supplies from Wednesday. Bulgaria also had a contract due to expire at the end of the year. It meets more than 90% of its gas needs with Gazprom imports around 3 billion cubic meters per year. Read more

“This is a seismic warning given by Russia,” said Tom Marzik Manser, head of gas analytics at data intelligence firm ICIS.

“Poland has had an anti-Russian and anti-Gazprom stance for several years, and this is not the case for Bulgaria, so the isolation of Bulgaria is also a development in itself,” he added.

Poland said it could get gas through two links with Germany, including a backflow on the Yamal pipeline, a link with Lithuania with an annual capacity of 2.5 billion cubic meters that will open on May 1 and via a link line with the Czech Republic for up to 1.5 billion cubic meters. . .

Another 5-6 billion cubic meters could be shipped via a link with Slovakia that will open later this year.

In addition, PGNiG can import up to 6 billion cubic meters of gas annually via the LNG terminal at Swinoujscie on the Baltic Sea, and produces more than 3 billion cubic meters of gas annually locally in Poland. In October, a pipeline will open, allowing the flow of up to 10 billion cubic meters of gas annually between Poland and Norway.

Government officials have said Poland’s gas stockpile of 3.5 billion cubic meters is 76% full and will not have to cut off supplies to customers to deal with Gazprom’s supply disruptions.

Meanwhile, Bulgaria said it has taken steps to find alternative gas supplies and there is no need for restrictions on gas consumption for the time being.

Analysts at investment bank Jefferies said the halt warning raises the risk of an early termination of other European contracts due to expire by the end of the year, amounting to nearly 12 billion cubic meters per year.

Only a few Russian gas buyers, such as Hungary and Uniper (UN01.DE)Germany, the main importer of Russian gas, said it would be possible to pay for future supplies under the scheme announced by Moscow without breaching EU sanctions.

Germany’s network regulator said it was monitoring the status of gas delivery from Russia after Polish supplies were threatened, adding that supplies to Germany were guaranteed for now. Read more

PGNiG said on Tuesday that it would take steps to restore gas flow in accordance with Yamal’s contract and that any stoppage of supplies was in violation of that contract, adding that it had the right to pursue compensation for breach of contract.

Earlier on Tuesday, Poland announced a list of 50 Russian referees and companies, including Gazprom, that would be subject to sanctions under a law passed earlier this month allowing their assets to be frozen. The law is separate from penalties imposed jointly by EU countries.

Gas traders said the Dutch gas market, the European benchmark, rose near the end of trading on Tuesday. The Dutch gas contract for the nearest month settled up 5.4% at €98.20/MWh.

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(Reporting by Alan Sharlish, Joanna Plochinska, Marek Strzelecki, Marwa Rashad, Nora Polly, Christoph Stitz, Tsvetilia Tsolova, Stephen Geox; Writing by Nina Chestney in London; Editing by Rosalba O’Brien and Margarita Choi

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