Russia Cuts Off Gas To Poland Danger For EU

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The News

On April 27, Russian energy company Gazprom has stopped gas supplies to Bulgaria and Poland.
In a statement on April 27, Gazprom has announced that it has “completely suspended gas supplies” to Poland’s PGNiG and Bulgaria’s Bulgargaz.

Russian President Vladimir Putin had signed a decree that from April 1, “unfriendly foreign buyers” would have to pay for gas supplies in roubles nad those who default their contracts would be suspended.
Meanwhile, Poland and Bulgaria have accused Russia of breach of contract, according to which payments were to be made in euros and dollars only.

Is it just Rouble payment?
- Poland has been a major gateway for supply of military hardware to Ukraine. Recently, Poland has confirmed it will be sending tanks to Ukraine. It has also announced a fresh set of sanctions against Gazprom & other Russian businesses and oligarchs.
- Bulgaria got a new liberal government in December 2021 which has cut many of its old ties with Moscow. It has also supported the West’s sanctions against Russia. Moreover, Bulgaria has also hosted Western fighter jets at a new NATO outpost on its Black Sea coast.

The gas cuts do not immediately put the two countries in any dire trouble. Russian gas deliveries to both Poland and Bulgaria were anyway expected to end later this year.
Poland
- Poland, which gets 40% of its natural gas from Russia, has been working on alternatives for many years. In the immediate scenario, it will lose 5 billion cubic metres of gas which it was set to get from Gazprom.
- Polish sources said its underground gas storage was almost 80% full and it also has alternative supply sources, including a liquefied natural gas (LNG) terminal in Swinoujscie.
- In May, a new gas pipeline connection with Lithuania is due to open that will give Poland access to gas from Lithuania’s LNG terminal.
- And a new pipeline delivering gas from Norway, known as the “Baltic Pipe”, comes online in October. It should reach full capacity by the end of the year and could replace all Russian deliveries.

The gas cuts do not immediately put the two countries in any dire trouble. Russian gas deliveries to both Poland and Bulgaria were anyway expected to end later this year.
Bulgaria
- Bulgaria, which gets 77% of its natural gas from Russia, has a bigger problem. While its energy minister has said that the country has enough reserves for another month.
- Bulgarian energy minister Alexander Nikolov said they had paid for Russian gas deliveries for April and claimed supplier Gazprom will be in breach of its current contract if it halts the flow.
- Bulgaria, which relies on Gazprom for more than 90% of its gas supply, said it had taken steps to find alternative sources (From Greece) but as of now there will be no restrictions on gas consumption.

Russia supplies gas via pipelines to 23 countries in Europe.
Among EU members, so far, only Hungary has officially agreed to make rouble payments.
Even if no other country agrees to Russia’s rouble payment mechanism, there won’t be any further cuts in supplies at least until the second half of May, which is when the next tranche of payments are due.
Note: There are reports of more than 10 European companies opening accounts with Gazprombank to make rouble payments.

Europe’s natural gas comes mainly from three sources: Russia, Norway and Algeria.
Dependence on Russian gas varies from country to country — ranging from 100% for North Macedonia to 11% for the Netherlands.
Europe is looking for alternatives to Russian gas but in the short run there will impacts of disruption.