Gazprom has suspended gas supplies to Bulgaria and Poland, which the Russian state-owned company will continue until the countries agree to demand that Moscow pay for the ruble. The market sees the decision as Russia’s toughest response to sanctions imposed by the West over the invasion of Ukraine, and natural gas prices have already risen more than 20% on Tuesday morning.
“Gazprom has completely suspended gas supplies to Bulgargaz (Bulgaria) and PGNiG (Poland) due to non-payment of ruble payments,” the Russian energy company said in a statement released on Tuesday, quoted by Reuters.
The decision is based on a demand made by Russia last month when Vladimir Putin announced that natural gas exports would be paid for in a group of 48 countries classified as “hostile” (including all European Union member states and the United States). should be done in rubles, not in euros or dollars. At the time, the Russian president warned that failure to comply with this requirement would be understood as a “breach of contract” by the buyers “with all the consequences thereof.”
The first consequences are now coming and Russia warns that more may be coming. Gazprom states in its statement that gas transportation through Poland and Bulgaria (two countries with German, Hungarian and Serbian pipelines) will also be cut off if the fuel is transported “illegally”. He adds: “Payments for gas delivered from 1 April must be made in rubles with new payment information, which was communicated to buyers in good time.”
The two countries targeted by the measure, for their part, claim that they do not intend to make payments in rubles and accuse Gazprom of violating existing agreements. “As all legal and commercial obligations are met, it is clear that natural gas is currently being used as an economic and political weapon in the ongoing war,” said Bulgarian Energy Minister Alexander Nikolov. Quoted by Reuters. Poland, on the other hand, is sticking to its intention not to renew the agreement with Gazprom, which expires at the end of this year.
gas prices are rising
As a result of Gazprom’s decision, the prices of natural gas, the European Union’s second most widely used fuel and Russia’s largest exporter of natural gas, have risen sharply on the international market.
On Tuesday morning, natural gas futures contracts traded on the Dutch market and serving as a benchmark for Europe rose by 24% to EUR 125 per megawatt hour in May.
However, the increase has slowed down and the price of natural gas so far is EUR 109.74 per megawatt hour, an increase of about 6%.