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Russia shuts off gas supplies to Poland and Bulgaria

<i>Omar Marques/Getty Images</i><br/>A view of giant tubes part of one of the physical exit points and compressor gas station of the Yamal--Europe gas pipeline on February 19
Getty Images
Omar Marques/Getty Images
A view of giant tubes part of one of the physical exit points and compressor gas station of the Yamal--Europe gas pipeline on February 19

By Sugam Pokharel and Mark Thompson, CNN Business

Russia has cut off natural gas supplies to Poland and Bulgaria, dramatically escalating its response to Western sanctions imposed on Moscow over the war in Ukraine.

Russian state energy giant Gazprom said in a statement Wednesday that it had fully halted supplies to Polish gas company PGNiG and Bulgaria’s Bulgargaz after they refused to meet a demand by Moscow to pay in rubles, rather than euros or dollars.

The European Commission described the decision to halt supplies as attempted “blackmail” and said it was coordinating a response among EU member states.

“Europeans can trust that we stand united and in full solidarity with the member states impacted in the face of this new challenge. Europeans can count on our full support,” European Commission President Ursula von der Leyen said in a statement.

PGNiG confirmed Wednesday that it was no longer receiving Russian gas through the Yamal pipeline and accused Gazprom of a breach of contract. It said that it was able to meet its customers’ demand for gas, despite the “cessation of deliveries.”

Bulgaria’s energy ministry said in a statement that paying in rubles was unacceptable and that Bulgargaz had “fully fulfilled its obligations and has made all payments required under this contract in a timely manner, diligently and in accordance with its provisions.”

The news sent US natural gas futures up about 3% Tuesday. European gas prices jumped more than 20% on Wednesday morning before dropping back.

Russia delivered an ultimatum last month to “unfriendly” nations that they must pay for their energy in rubles starting April 1 or risk being cut off from vital supplies. But the flow of gas had continued until Wednesday.

The Kremlin said payments for gas being delivered at the time of its announcement would be due toward the end of April or the beginning of May, which is why Russia didn’t immediately shut off the flow of gas to Europe.

President Vladimir Putin’s high-stakes threat sent shockwaves through Europe, which cannot keep its economy running for long without Russian energy. Moscow sent a clear signal that it could at some point reduce natural gas flows.

“The announcement by Gazprom that it is unilaterally stopping delivery of gas to customers in Europe is yet another attempt by Russia to use gas as an instrument of blackmail,” von der Leyen said. “This is unjustified and unacceptable.”

EU member states met Wednesday to coordinate their response. Von der Leyen said after the meeting that Poland and Bulgaria were now receiving gas from their EU neighbors. The European Union would continue its work to secure sufficient supplies and storage in the medium term, including liquified natural gas from the United States and other partners, she added.

“Today, the Kremlin failed once again in this attempt to sow division between Europeans. The era of Russian fossil fuels in Europe will come to an end,” she said.

No shortages yet

Poland and Bulgaria said they had been preparing for the possibility of Russian action, and that supplies to businesses and households were unaffected.

“At present, no restrictive measures have been imposed on gas consumption in Bulgaria,” the energy ministry added.

PGNiG said it had made preparations to obtain gas from various sources, including through gas connections on its western and southern borders and an LNG terminal in the northwest port city of Swinoujscie.

It also said its underground gas storage facilities were almost 80% full.

“The balance sheet is supplemented by domestic gas production and fuel reserves accumulated in underground gas storage facilities. Currently, the warehouse filling level is around 80 percent and is significantly higher than in the corresponding period in previous years,” it added.

Poland’s Climate Minister Anna Moskwa said Tuesday that there would be no shortage of gas in Poland despite the Russian halt of exports.

“Poland has the necessary gas reserves and sources of supply that protect our security — we have been effectively independent of Russia for years,” she said in a tweet.

“There will be no shortage of gas in Polish homes,” the minister wrote.

— CNN’s Anna Odzeniak, Amy Cassidy, James Frater, Uliana Pavlova, Josh Pennington and Angela Dewan contributed to this report

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