Russia Isn’t Playing Games: Poland, Bulgaria Have Gas Supplies Cut for Failing to Pay in Rubles

It turns out Russia was serious about receiving payments for energy shipments in rubles from hostile nations. Now, both Poland and Bulgaria are left with no other choice but to expedite other imports of energy after the Kremlin cut their natural gas shipments.

Making an example out of Poland and Bulgaria, Moscow slashed gas supplies to the two NATO members, threatening to do the same to other unfriendly countries in yet another tit-for-tat measure in Russia’s standoff with the West over the conflict in Ukraine. In a statement on Wednesday, Gazprom confirmed that all gas shipments to Poland’s gas company PGNiG and Bulgarian-owned Bulgargaz were completely cut off, after the two European nations failed to pay in rubles as per Moscow’s demands last month.

The disruption in gas supplies came one day after the West and its allies unilaterally agreed to boost military spending and send more weapons to Ukraine, with Poland this week agreeing to send the country tanks. Bulgaria, which just last year elected a new liberal government, has been fully supportive of the West’s sanctions against Moscow, and even went as far as to host fighter jets at its new NATO outpost on the Black Sea.

Russia’s retaliation tactic comes as a warning to other NATO members reliant on the country’s energy supplies should they not play nice with Moscow’s requests. The move sent European natural gas prices up nearly 25% Wednesday morning, while US natural gas futures rose nearly 3% on Tuesday. Although the gas stoppage did not cause immediate disruptions given that Poland has an abundance of natural gas reserves and predominantly uses coal, it did cast concerns among the EU’s 27-nation bloc.

“It comes as no surprise that the Kremlin uses fossil fuels to try to blackmail us,” said Ursula von der Leyen, president of the EU Commission. “Today, the Kremlin failed once again in his attempt to sow division amongst member states. The era of Russian fossil fuel in Europe is coming to an end.” Still, Russia can sell its natural gas to other importers such as China or India, and thus make up for the lost revenue. “The move that Russia did today is basically a move where Russia hurts itself. The Kremlin is hurting the Russian economy because they are cutting off themselves from important revenues,” added con de Leyen.

However, the EU’s stubborn stance may prove to be more counterproductive than bureaucrats are expecting. Two-fifths of the natural gas burned by EU countries last year came from Russia, while more than 25% of the bloc’s crude imports came from the country as well. Germany, which is heavily reliant on Moscow’s energy supplies given that it has access to very little substitutes, has been telling citizens to put on an extra sweater if they are cold, while the country’s auto club ADAC told its 21 million-some members to help reduce Germany’s oil demand by driving less and taking their foot of the gas pedal.

Information for this briefing was found via Reuters, CNN, and the EIA. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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