Russia to Cut Gas to Poland and Bulgaria, Making Energy a Weapon

  • Focus now turns to how other European capitals will respond
  • Moscow demands gas be paid for in rubles after new decree

Russia will cut off the gas to Poland and Bulgaria on Wednesday in a major escalation in the standoff between Moscow and Europe over energy supplies and the war in Ukraine.

Moscow is making good on a threat to halt gas flows to countries that refuse President Vladimir Putin’s new demand to pay for the fuel in rubles. The European Union has rejected the move in principle but now payment deadlines are starting to fall due, governments across Europe need to decide whether to accept Putin’s terms or lose crucial supplies — and face the prospect of energy rationing.

European gas prices surged as much as 17% as traders calculated the risk of other European countries being hit next.

“This is a turning point that has been accelerated by Russia today,” said Piotr Naimski, Poland’s top official for strategic energy infrastructure.

Share of natural gas imports coming from Russia, 2020

Sources: Eurostat, U.S. Energy Information Administration, Austria’s Ministry of Climate Protection
Note: Data for 2020 are not available for the U.K. and Bosnia-Herzegovina, 2019 data are shown in those countries. Norway imported 10 million cubic meters of gas from Russia in 2020, but as a net exporter is not dependent on Russian imports.

The threat of cutoffs has been looming for weeks, but there was an indication last week that the EU was suggesting a potential way out of the standoff. The move against bloc members Poland and Bulgaria probably makes some kind of compromise less likely. It also removes from the EU’s toolkit the option of sanctioning Russian gas.

The focus now turns to other European capitals, particularly Germany, which is heavily dependent on Russian gas. There was no immediate reaction from Berlin.

“Any buyer rejecting the new payment procedure out of hand is running a very real risk of supplies being cut,” said Katja Yafimava, senior research fellow at the Oxford Institute for Energy Studies.

In Rome, the government is monitoring the situation, and the concern is that what is happening to Poland could now occur elsewhere, according to a person familiar with the situation. For now the assessment is that there is no immediate risks to cut off gas to Italy, the person said. Italy is also a major importer of Russian gas, though it’s taking steps to diversify its supply.