Russia Suspends Gas Supply to Poland and Bulgaria

by Kim Minyoung

Published 27 Apr.2022 17:55(KST)

[Image source=Yonhap News]

[Asia Economy Reporter Kim Min-young] Russia has cut off gas supplies to Poland and Bulgaria.

According to Reuters and Bloomberg, Russian state-owned gas company Gazprom completely stopped natural gas supplies to Poland and Bulgaria on the 27th (local time).

Gazprom emphasized that it will continue the supply suspension until the two countries agree to pay for gas in rubles, Russia's currency, as they did not make payments in rubles. It also added that if Poland and Bulgaria illegally extract gas destined for other countries from pipelines passing through their territories, supplies to these countries will also be halted.

Poland has the Yamal-Europe gas pipeline heading to Germany, and Bulgaria has pipelines going to Serbia and Hungary.

Both Poland and Bulgaria immediately protested Russia's move as a "breach of contract." Both countries are highly dependent on Russian gas. Depending on statistics, as of 2020, the proportion of Russian gas in total gas imports was about 40% for Poland and about 77% for Bulgaria.

Polish gas company PGNiG stated in a press release, "We have the right to compensation for breach of contract," and "We will pursue compensation using all legal means."

Piotr Naimski, Poland's Minister of Energy Security, announced, "We will advance the plan originally scheduled for completion in 2027 and complete the liquefied natural gas (LNG) terminal by 2025." This strategy aims to secure an alternative to Russian gas supply by utilizing the terminal for LNG transportation.

Bulgaria's Minister of Energy, Alexander Nikolov, also pointed out Gazprom's breach of contract, stating, "We have paid all gas fees for April."

Meanwhile, Austria and Hungary, which have opposed energy sanctions against Russia, are reportedly receiving Russian gas supplies smoothly.

Bloomberg reported that European gas prices surged more than 20% due to this measure. On the 27th, energy-related stocks also rose sharply in the domestic stock market.