Russia’s “gas cut-off threat” has now reached the moment when it is regarding to be realized. This is a major escalation of the energy game between Russia and Europe, and the price of natural gas in Europe has soared.
The effect of Putin’s “breathing threat” is emerging. Since the new Russian gas payment rules came into effect on April 1, as the ruble payment date is regarding to expire, Poland and Bulgaria have become the first objects to be “cut off” by Russia.
Putin previously said that “unfriendly” countries and regions need to settle natural gas in rubles, otherwise Russia will stop supplying them.On April 26, Bulgaria and Poland were the first to announce that Russia would suspend the supply of natural gas to the two countries from April 27.
Faced with the looming Russian “gas cut-off day”, EU countries said last week that they would continue to pay for natural gas in euros, and they are trying to find alternatives to Russian natural gas.
Russia announces ‘stop breathing’ on Poland and Bulgaria
With the first ruble payment due to expire, the Bulgarian Energy Ministry said in a statement on April 26 that Russia had notified earlier in the day that it would suspend gas supplies from April 27. Bulgaria said that it has taken corresponding measures and currently does not need to take restrictive measures on natural gas consumption.
On the same day, the Polish Oil and Gas Company, which refused to pay for gas in rubles, issued a statement saying that it had received a notice from Gazprom to suspend gas supplies from April 27. Poland claims that it is connected to its western and southern neighbors with natural gas pipelines, and there is also a LNG terminal in the northwestern city of Swinoujście, which can guarantee the natural gas supply to Polish users.
Wall Street NewsAn earlier article mentioned that since the outbreak of the Russia-Ukraine conflict, the United States announced sanctions once morest Russia, and Poland has been the most active among the EU countries. The United States proposed an energy embargo, and Poland took the lead in banning Russian coal imports.
Poland said it was fully prepared for Russia to cut off all energy supplies, even before the Russian-Ukrainian conflict broke out. Poland’s long-term gas contract with Russia is due to expire at the end of this year, and the Polish government has repeatedly said it does not intend to extend the contract. In addition, the Polish government said on Tuesday that they have enough fuel reserves that users will not be affected, and the government plans to continue to keep storage space at 90% full.
In this regard, Bloomberg analysis said that Russia’s cut off natural gas supply to Poland and Bulgaria this time means a major escalation of tensions between Russia and Western countries on key energy supply issues. The market is assessing the risk that other European countries will also be “cut out” and more companies are expected to have to choose between paying rubles or losing gas supplies in the coming weeks.
Affected by Russia’s imminent fulfillment of the “threat of gas cessation”, European natural gas futures surged 17% during the session, and the May natural gas futures once surged to 102.005 euros/MWH.
How the rest of the EU will respond
As we all know, European countries mainly rely on imported supplies for their natural gas. Data show that among the natural gas imported by Finland, Latvia, Bosnia and Herzegovina, Moldova and other countries, Russian natural gas accounts for more than 90%. In addition, nearly 80% of Bulgaria’s natural gas, more than 40% of Poland, and nearly 25% of France’s natural gas are also imported from Russia.
With Russia announcing a “gas cut” for Poland and Bulgaria, the focus now turns to other European countries, especially Germany, which also relies heavily on Russian gas. European Union countries said last week that they would continue to pay for gas in euros, and they are looking for alternatives to Russian gas.
Bloomberg quoted Simone Tagliapietra, a researcher at think tank Bruegel, as saying:
Russia’s cessation of gas supplies to Poland and Bulgaria marks a historic turn in Russia’s bilateral energy relations with EU countries, which might mean similar actions for other European countries in the coming weeks. European governments need to mobilize all emergency measures that can be mobilized, both on the supply side and on the demand side, to ensure supply security.
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