On Wednesday, in a significant development, Russia halted gas supplies to Poland and Bulgaria after both countries rejected Moscow’s demand to pay for Russian gas in Rubles.
The development comes in the wake of massive sanctions by Western countries against Russia which have frozen the bulk of financial assets. Western countries are also ramping up arms shipments to Ukraine to help it fend off new Russian assault in Eastern Kiev where Moscow has made several gains.
Russia has justified its move to cut gas supplies saying it is aimed at enforcing its demand for paying for its gas in roubles, which is required for shielding its economy from sanctions.
Poland has confirmed the cut in LNG supplies while Bulgaria said it would find out soon. Both countries have accused Gazprom of breaching longstanding supply contracts.
“Because all trade and legal obligations are being observed, it is clear that at the moment the natural gas is being used more as a political and economic weapon in the current war,” said Bulgarian Energy Minister Alexander Nikolov.
In a statement Gazprom said, it had “completely suspended gas supplies to Bulgargaz and PGNiG due to absence of payments in roubles”.
“The announcement by Gazprom that it is unilaterally stopping delivery of gas to customers in Europe is yet another attempt by Russia to use gas as an instrument of blackmail,” said European Commission President Ursula von der Leyen. “This is unjustified and unacceptable. And it shows once again the unreliability of Russia as a gas supplier”.
Germany, Europe’s biggest buyer of Russian gas, did not report any cuts.
“Cutting gas supplies is a breach of contract and PGNiG reserves the right to seek compensation and will use all available contractual and legal means to do so,” said the company.
LNG supplies from Gazprom cover around 50% of Poland’s consumption and around 90% of Bulgaria’s.
According to Poland, it does not need to draw on reserves and its gas storage was full at 76%. Bulgaria said, it is trying to import gas through Turkey and Greece.
Until now, Russian energy exports to clients was unhindered for decades, until the beginning of the war.
Earlier this week, Germany said it hopes to stop importing Russian oil within days, but doing so risks fuelling inflation.
Weaning Europe off cheap and abundant Russian natural gas, which heats its houses, fuels its factories and drives its electric power plants, would be a far more disruptive prospect.
Russia has termed its invasion of Ukraine as a “special operation” to eliminate neo-Nazis from Ukraine and disarm it.
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