Russia halts gas supplies to Poland and Bulgaria

Apr 27, 2022: Russia halted gas supplies to Bulgaria and Poland on Wednesday for rejecting its demand for payment in roubles, taking direct aim at European economies in a move that also exposed divisions in the EU on how to respond to Moscow’s invasion of Ukraine.

The decision, denounced by European leaders as “blackmail”, comes as Russia’s own economy wilts under sweeping international sanctions and as Western countries ramp up arms shipments to help Ukraine fend off a new Russian assault in the east.

Gazprom (GAZP.MM), Russia’s gas export monopoly, said it had “completely suspended gas supplies” to the Polish and Bulgarian gas companies “due to absence of payments in roubles”, as stipulated in a decree from President Vladimir Putin that aims to soften the impact of sanctions on the Russian economy.

Polish President Andrzej Duda said the move violated “basic legal principles”. Bulgarian Energy Minister Alexander Nikolov said gas was being used as a “political and economic weapon”.

Kremlin spokesperson Dmitry Peskov said Russia remained a reliable energy supplier and denied it was engaging in blackmail.

He declined to say how many countries had agreed to switch to paying for gas in roubles but other European customers said gas supplies were flowing normally.

European Commission President Ursula von der Leyen called the cut-off “yet another attempt by Russia to use gas as an instrument of blackmail”.

Russia’s new gas payment system, involving opening accounts at Gazprombank, where payments in euros or dollars can be converted to roubles, offers wiggle room that could see some countries continue to buy Russian gas, fraying the EU’s united front against Moscow.

The Commission has said that if buyers of Russian gas confirm payment was complete once they had deposited euros, as opposed to later when the euros have been converted to roubles, that will not breach sanctions. Germany, Austria and Hungary are among countries taking that route.

Bulgaria and Poland are the only two European countries with Gazprom contracts due to expire at the end of this year, which meant their search for alternative supplies was well under way.

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