Poland, Bulgaria say Russia cutting gas supply over refusal to pay in rubles

Officials in Poland and Bulgaria say Russia is suspending their countries' natural gas deliveries starting on Wednesday.

Putin decreed 'unfriendly' foreign buyers cannot pay for gas in dollars or euros

A worker is seen next to Russia's TurkStream gas pipeline in Letnitsa, Bulgaria, in June 2020. Poland and Bulgaria said Tuesday that Gazprom informed them it was halting gas supplies. (Stoyan Nenov/Reuters)

Polish and Bulgarian officials said Tuesday that Moscow is cutting off natural gas deliveries to their countries due to their refusal to pay in Russian rubles, a demand made by President Vladimir Putin after sanctions were levied against his nation over the invasion of Ukraine.

Russian state-owned energy giant Gazprom informed the two EU and NATO member nations that gas supplies will be suspended starting Wednesday, their governments said.

The suspensions would be the first since Putin's announcement last month that "unfriendly" foreign buyers of Russian gas would have to transact with Gazprom in rubles instead of dollars and euros.

Only Hungary has agreed to do so, with other countries rejecting the demand as an unacceptable, one-sided breach of contracts and a violation of sanctions.

If deliveries are halted to other countries as well, it could cause economic pain in Europe, driving natural gas prices up and possibly leading to rationing — but it would also deal a blow to Russia's own economy.

Wednesday's cutoffs will affect deliveries of Russian gas to Poland through the Yamal-Europe pipeline, according to Polish state gas company PGNiG, and to Bulgaria via the TurkStream pipeline, that country's Energy Ministry said.

The Yamal-Europe pipeline carries natural gas from Russia to Poland and Germany through Belarus. Poland has been receiving some nine billion cubic metres of Russian gas annually, fulfilling some 45 per cent of the country's needs.

PGNiG said it was considering legal action over Moscow's payment demand, which would alter the terms of its long-term contract to supply gas to Poland. EU countries that buy Russian gas have generally done so through contracts that can last as long as 10 to 15 years but have been trying to shift away from long-term contracts.

The bulk of Russia's natural gas exports goes to Europe.

But Climate Minister Anna Moskwa said Poland is prepared to make do after having worked to reduce its reliance on Russian energy sources. Several years ago, the country opened its first terminal for liquefied natural gas, or LNG, in Swinoujscie, on the Baltic Sea coast, and later this year a pipeline from Norway is to become operational.

A map of the pipeline network that carries natural gas from the gas fields in Russia's Yamal Peninsula and Western Siberia to Europe. (CBC)

"There will be no shortage of gas in Polish homes," Moskwa tweeted.

Bulgaria said it was working with state gas companies to find alternative sources and no restrictions on domestic consumption would be imposed for now, even though the Balkan country of 6.5 million people meets over 90 per cent of its gas needs with Russian imports.

Poland has been a strong supporter of neighbouring Ukraine during the Russian invasion and has acted as a transit point for weapons the United States and other Western nations have provided to Kyiv.

Warsaw said this week that it, too, was sending weaponry to Ukraine's army, in the form of tanks. On Tuesday, it announced sanctions targeting 50 Russian oligarchs and companies, including Gazprom.

Bulgaria, once one of Moscow's closest allies, cut many of the old ties with Russia after a new, liberal government took the reins in the fall and also in the wake of the invasion. It has supported sanctions against Russia and sent humanitarian aid to Ukraine.

Bulgaria has been hesitant to provide military aid to Ukraine, but Prime Minister Kiril Petkov and members of his coalition government were expected in Kyiv on Wednesday for talks about further assistance.

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Europe buys large amounts of Russian natural gas for residential heating, electrical generation and the fuel industry, with Germany particularly dependent on it. The imports have continued despite the war.

About 60 per cent of imports are paid in euros, and the rest in dollars. Putin's demand was apparently intended to help bolster the Russian currency against Western sanctions.

In Washington, White House press secretary Jen Psaki said the U.S. had been preparing for such a cutoff by Russia.

"Some of that has been asking some countries in Asia who have excess supply to provide that to Europe," she said. "We've done that in some cases, and it's been an ongoing effort."