A worker checks pipes at a gas compressor station on the Yamal-Europe pipeline near Nesvizh, some 130 km (81 miles) southwest of Minsk, December 29, 2006.REUTERS/Vasily Fedosenko/File Photo
- Russia requires “unfriendly” countries to pay for gas in rubles
- Russia has threatened to shut down gas if demand is not met
- Kremlin says Gazprom is working on the plan
- Few agreed on the gas-for-ruble system
WARSAW, April 26 – Russian energy giant Gazprom (GAZP.MM) has told Poland’s PGNiG (PGN.WA) that it will halt gas supplies from Wednesday morning, the state-controlled Polish oil and gas company said in a statement on Tuesday , in a major escalation of Russia’s broader dispute with the West over its invasion of Ukraine.
Poland would be the first country to have its gas cut off from Europe’s main supplier since Moscow launched a so-called military operation in Ukraine on February 24. The move to halt supplies also followed sanctions Warsaw imposed on Russian individuals and companies.
Russian President Vladimir Putin has demanded that countries he describes as “unfriendly” agree to implement a system under which they would open accounts with Gazprombank and make payments for Russian gas imports in euros or dollars, which would be converted into rubles what Moscow called a ” special military operation” in Ukraine.
He had threatened to halt gas supplies if demand was not fully met.
Poland, a staunch political opponent of Moscow whose gas deal with Russia expires at the end of this year, has repeatedly said it will not comply with the new system of gas payments. It has also said it would not renew the contract.
The gas transit contract with Gazprom was also not renewed in 2020. Since then, the Russian gas supplier has had to participate in auctions for pipeline capacity via the Yamal-Europe pipeline from Belarus to Poland.
Poland’s gas supply contract with Gazprom is 10.2 billion cubic meters (bcm) per year and covers about 50% of the national consumption.
Earlier on, data from the European Union Gas Transmission Operators Network showed that physical gas flows across the Yamal-Europe route had been halted but resumed later on Tuesday.
Poland’s energy supply is secure, Poland’s climate ministry said on Tuesday, adding that there is no need to draw from gas reserves and gas for consumers will not be cut.
With a gas storage facility of 3.5 billion cubic meters that is 76% full and several alternative supply routes available, Poland will not have to cut supplies to customers to cope with Gazprom’s supply halt, government officials said.
The country can get gas through two connections with Germany, including a reverse flow via the Yamal pipeline, a connection with Lithuania with an annual capacity of 2.5 bcm that will open on May 1, and an interconnector with the Czech Republic Republic for up to 1.5 billion m3.
Another 5-6 billion cubic meters could be shipped via a connection with Slovakia, which will open later this year.
In addition, PGNiG can import up to 6 billion cubic meters per year via the LNG terminal in Świnoujście on the Baltic Sea and produces more than 3 billion cubic meters of gas per year locally in Poland. A pipeline will be opened in October that will allow up to 10 billion cubic meters of gas per year to flow between Poland and Norway.
Gazprom said on Tuesday that Poland would have to make payments under a new system from Tuesday. She did not elaborate and did not comment on PGNiG’s statement about the possible stoppage of gas supplies.
Few Russian gas buyers, such as Hungary and Uniper (UN01.DE), Germany’s main importer of Russian gas, have said it is possible to pay for future supplies under the system announced by Moscow without violating European Union sanctions .
The Kremlin said Gazprom is implementing the presidential decree enforcing payment for gas supplies in rubles. Continue reading
PGNiG said Tuesday it would take steps to restore gas flow under the Yamal Treaty and that any disruption to supplies would be a violation of that treaty.
It added it had the right to seek damages for breach of contract.
Poland earlier on Tuesday announced a list of 50 Russian oligarchs and companies, including Gazprom, who would be subject to sanctions under a law passed earlier this month allowing their assets to be frozen. The law is separate from sanctions imposed jointly by EU countries.
Reporting by Alan Charlish, Joanna Plucinska, Marek Strzelecki, Marwa Rashad and Nora Buli, editing by Rosalba O’Brien and Marguerita Choy