Poland and Bulgaria braced for halt to Russian gas supplies

Russia is to halt the flow of gas to Poland and Bulgaria from Wednesday, according to authorities in both EU nations, as Moscow steps up its efforts to weaponise energy supplies over the invasion of Ukraine.

PGNiG, the Polish state-controlled gas group, stated on Tuesday that Russian supplier Gazprom had informed it of a “complete suspension of supplies” under its Yamal contract effective from 8am Polish time on April 27.

And late on Tuesday, Bulgaria’s energy ministry said Gazprom had told its state gas company, Bulgargaz, that it would halt gas supplies as of Wednesday as well.

Sofia said it had taken steps to find alternative arrangements for the supply of natural gas and to deal with the situation.

In late March, Russia’s president Vladimir Putin issued a decree stating that all “unfriendly” countries had to pay for Russian gas supplies in roubles, warning Moscow could cut off flows to Europe if buyers failed to comply.

PGNiG on Tuesday said it had refused on April 12 to comply with the Kremlin’s decree because it was not legally binding on the group and would violate the supply deal. It added that suspending the deliveries of natural gas would be a breach of contract.

On Friday, the EU issued guidance suggesting that agreeing to Moscow’s request could comply with the bloc’s sanctions, though with the caveat that the procedure for payment had yet to be made sufficiently clear. In most cases, invoices for April deliveries of gas were expected to be issued in early May.

The spat between PGNiG and Gazprom is the first test in the stand-off between Europe and Russia over rouble payments, suggesting a willingness in Moscow to cut supplies that have helped to bring in billions of dollars of revenue since the war began.

“This is a warning shot to the rest of Europe,” said Laurent Ruseckas, an energy analyst at S&P Global, who added that drawing in alternative supplies from Germany to Poland would put further pressure on European gas prices.

Front-month future contracts tied to the TTF, Europe’s benchmark natural gas price, spiked as much as 15 per cent on Tuesday following local media reports on Russia’s plans to suspend gas flows to Warsaw.

Europe received about 40 per cent of its gas from Russia before the invasion of Ukraine and while the EU aims to reduce that reliance by two-thirds by the end of the year, member states would struggle to sustain economic activity with a prolonged cut-off of Russian supplies.

Officials in Poland, which has been working to wean itself off Russian gas in recent years, moved to reassure citizens that the latest move would not affect gas supplies.

Anna Moskwa, Poland’s climate minister, said the country was “prepared for a complete cutting-off of Russian [energy] resources”, including coal, gas and oil.

She added that Polish gas storage facilities were 76 per cent full, and that, as a result of investments made to cut dependence on Russian gas, the country could “feel safe”.

The flow of gas to Poland from Russia, which comes through Belarus and Ukraine, plummeted on Monday to almost a tenth of levels three days earlier, according to data from the European Network of Transmission System Operators for Gas (ENTSOG).

Gazprom denied gas supplies to Poland had been stopped. “Today Poland has to pay for gas supplies according to the new payment procedure,” said spokesperson Sergei Kupriyanov.

Piotr Naimski, the official responsible for Polish energy security, said the country had been planning to stop purchasing Russian gas at the end of the year when the Yamal contract was due to expire. He said it could obtain gas from various other sources, such as its LNG terminal in Swinoujscie on the Baltic, and from Germany and the Czech Republic if needed. A pipeline linking Poland to Norway’s gasfields is also due to open in October.

“Of course, this is a turning point . . . But of course we planned to cut ourselves off from Russian [gas] supplies at the end of December with the end of the Yamal contract. The Russians are accelerating this. We will cope,” he said.

Earlier in the day, Warsaw added 50 Russian oligarchs and companies — including Gazprom — to its sanctions list. The Russian gas giant has a 48 per cent stake in Europol Gaz, which owns the Polish section of the Yamal pipeline.