# Russia halts gas to Poland, Bulgaria, taking aim at European economies
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-04-27
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Russia Halts Gas Supplies to Bulgaria and Poland for Rouble
Meta Description: Russia stops gas shipments to Bulgaria and Poland over demand for payment in roubles, escalating tensions in response to international sanctions over Ukraine war.
URL: https://financedigest.com/russia-halts-gas-to-poland-bulgaria-taking-aim-at-european-economieshtml

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By Marek Strzelecki, Tsvetelia Tsolova and Pavel Polityuk

WARSAW/SOFIA/KYIV (Reuters) -Russia halted gas supplies to Bulgaria and Poland on Wednesday for rejecting its demand for payment in roubles, taking direct aim at European economies in its toughest retaliation so far against international sanctions over the war in Ukraine.

The step was denounced by European leaders as “blackmail”, and comes as European countries have joined the United States in ramping up arms shipments to help Ukraine fend off a new Russian assault in the east.

Ukraine [reported on Wednesday that Russian](https://www.financedigest.com/russian-threat-to-baltic-security-rising-estonian-intelligence-report.html "Russian threat to Baltic security rising – Estonian intelligence report") troops had made gains in several villages there. Russia reported a number of blasts on its side of the border, and a blaze at an arms depot. Kyiv called the explosions “karma”.

Despite the collapse in ties between Russia and the West, Moscow and Washington carried out a prisoner swap. The United States freed Russian pilot Konstantin Yaroshenko, jailed on drug trafficking charges. Russia released former U.S. marine Trevor Reed, accused of fighting with police.

Moscow [says the gas cut-off is to enforce its demand](https://www.financedigest.com/heathrow-airport-says-return-to-pre-pandemic-demand-years-away.html "Heathrow Airport says return to pre-pandemic demand years away") for payment in roubles, which would help to soften the effect of sanctions on its economy. Kremlin spokesperson Dmitry Peskov said Russia was a reliable [energy supplier](https://www.financedigest.com/french-energy-suppliers-will-let-struggling-bakers-renegotiate-contracts-le-maire.html "French energy suppliers will let struggling bakers renegotiate contracts – Le Maire") and denied it was engaging in blackmail.

Gazprom, the Russian gas export monopoly, said it had “completely suspended gas supplies” to the Polish and Bulgarian gas companies “due to absence of payments in roubles”.

Polish President Andrzej Duda said the move violated “basic legal principles”. Bulgarian Energy Minister Alexander Nikolov said gas was being used as a [“political and economic](https://www.financedigest.com/uae-plans-long-term-economic-ties-with-israel-despite-political-strains.html "UAE plans long-term economic ties with Israel despite political strains") weapon.

Russian President Vladimir Putin issued a decree last month ordering Gazprom to [cut off buyers](https://www.financedigest.com/ford-to-make-call-on-europe-job-cuts-by-mid-feb-as-buyers-circle-german-site.html "Ford to make call on Europe job cuts by mid-Feb as buyers circle German site") from “unfriendly” countries who fail to pay in roubles. The European Union [says contracts stipulate payment in euros](https://www.financedigest.com/digital-euro-will-be-free-but-limited-in-scope-ecb-says.html "Digital euro will be free but limited in scope, ECB says"), and that paying in roubles could violate its sanctions.

[European Commission](https://www.financedigest.com/german-economy-expected-to-grow-modestly-in-2023-european-commission.html "German economy expected to grow modestly in 2023 – European Commission") President Ursula von der Leyen called the cut-off “yet another attempt by Russia to use gas as an instrument of blackmail.

ENERGY LOOPHOLE

Poland and Bulgaria are both former Soviet-era satellites of Moscow that have since [joined the EU and NATO](https://www.financedigest.com/finland-will-join-nato-on-tuesday-stoltenberg.html "Finland will join NATO on Tuesday – Stoltenberg"). Poland has been one of the Kremlin’s most vocal opponents over the war.

Bulgaria has long had warmer relations with Russia, but Prime Minister Kirill Petkov, an anti-corruption campaigner who took office last year, has denounced the [invasion of Ukraine](https://www.financedigest.com/ukraine-asks-for-south-korea-cybersecurity-aid-amid-russia-invasion.html "Ukraine asks for South Korea cybersecurity aid amid Russia invasion"). Petkov was due in Kyiv on Wednesday to meet President Volodymyr Zelenskiy.

The cut-off comes as the weather [turns warmer and the need for gas heating](https://www.financedigest.com/scientists-in-germany-turn-up-heat-on-seagrass-in-climate-change-fight.html "Scientists in Germany turn up heat on seagrass in climate change fight") dwindles, and so is unlikely to lead to immediate supply cuts to consumers. Poland says it has ample gas in storage, and Bulgaria, a comparatively small consumer, is seeking [alternative supplies](https://www.financedigest.com/europes-alternatives-if-russia-shuts-off-gas-supply.html "Europe’s alternatives if Russia shuts off gas supply") from Greece and Turkey.

Unlike many European neighbours, the two countries use mainly [coal rather than gas to generate power](https://www.financedigest.com/back-to-black-germanys-coal-power-plan-hits-hurdles.html "Back to black? Germany’s coal power plan hits hurdles"). Companies with manufacturing [operations in both countries said they did not anticipate problems](https://www.financedigest.com/australias-qantas-apologises-to-customers-for-operational-problems.html "Australia’s Qantas apologises to customers for operational problems") yet.

But if the cut-off lasts for many months or spreads to other countries, it could cause havoc for a continent that relies on plentiful and cheap Russian gas to heat homes, [power factories](https://www.financedigest.com/younger-chinese-are-spurning-factory-jobs-that-power-the-economy.html "Younger Chinese are spurning factory jobs that power the economy") and generate electricity.

Russia’s energy exports had until now continued largely unhindered [since the war](https://www.financedigest.com/euro-zone-economy-sentiment-rises-in-dec-first-time-since-start-of-ukraine-war.html "Euro zone economy sentiment rises in Dec, first time since start of Ukraine war") began, the main loophole in sanctions that otherwise cut off Moscow from much of its global trade.

Poland receives its Russian gas through the Yamal-Europe pipeline from Russia’s huge gas fields in the Arctic far north, which [continues west to supply Germany](https://www.financedigest.com/scholz-if-germany-continues-to-adapt-we-will-make-it-through-winter.html "Scholz: if Germany continues to adapt, we will make it through winter") and other European countries. [Bulgaria is supplied](https://www.financedigest.com/bulgaria-tenders-for-gas-supplies-to-ride-out-energy-crisis.html "Bulgaria tenders for gas supplies to ride out energy crisis") through pipes that cross Turkey.

[Supplies from Gazprom](https://www.financedigest.com/germanys-uniper-to-restart-coal-fired-power-plant-as-gazprom-halts-supply-to-europe.html "Germany’s Uniper to restart coal-fired power plant as Gazprom halts supply to Europe") cover about half of Poland’s consumption and 90% of Bulgaria’s.

Kyiv has long called on Europe to stop [funding Moscow’s war effort by halting imports that bring Russia hundreds of millions](https://www.financedigest.com/british-ev-startup-arrival-gets-300-million-funding-aims-to-slow-cash-burn.html "British EV startup Arrival gets 0 million funding, aims to slow cash-burn") of dollars a day. Germany, the biggest buyer of Russian energy, has said it [hopes to stop importing Russian oil](https://www.financedigest.com/oil-prices-slide-as-hopes-for-china-demand-rebound-fade.html "Oil prices slide as hopes for China demand rebound fade") within days, but weaning itself off Russian gas is a far bigger challenge.

‘KARMA IS CRUEL’

[Since the Russian invasion force was driven back at the outskirts of Kyiv last month](https://www.financedigest.com/uk-factories-suffer-worst-month-since-may-2020-as-economy-stumbles-pmi.html "UK factories suffer worst month since May 2020 as economy stumbles – PMI"), Moscow has refocused its operation on eastern Ukraine, starting a new offensive from several directions to fully capture two provinces known as the Donbas.

Ukraine’s general staff acknowledged [Russia had made gains in the east](https://www.financedigest.com/russia-sharply-scales-back-far-east-war-games-with-china.html "Russia sharply scales back Far East war games with China"), capturing the town of Zavody and some outskirts of the town of Velyka Komyshuvakha on one front, and the Zarichne and Novoshtokivske settlements in the Donetsk region.

Blasts were heard early on Wednesday in three [Russian provinces bordering Ukraine](https://www.financedigest.com/eastern-ukraine-town-empties-as-residents-fear-new-russian-assault.html "Eastern Ukraine town empties as residents fear new Russian assault"), authorities said, and an ammunition depot in the Belgorod province caught fire.

[Russia this month accused Ukraine](https://www.financedigest.com/analysis-action-wanes-at-u-n-to-isolate-russia-almost-six-months-into-ukraine-war.html "Analysis: Action wanes at U.N. to isolate Russia almost six months into Ukraine war") of attacking a fuel depot in Belgorod with helicopters and opening fire on several villages in the province. A huge fire also broke out this week at a fuel depot in nearby Bryansk.

Kyiv has not confirmed responsibility for such incidents but described them as payback. Karma is a cruel thing,” Ukrainian presidential advisor Mikhaylo Podolyak wrote on [social media](https://www.financedigest.com/saudi-snitching-app-turns-citizens-into-social-media-police.html "Saudi snitching app turns citizens into social media police").

An aide to the mayor of the ruined port city of Mariupol said Russian forces had renewed their attacks on the Azovstal steel plant, where [fighters and some civilians](https://www.financedigest.com/ukraine-says-first-civilians-killed-in-lviv-fighters-cling-on-in-mariupol.html "Ukraine says first civilians killed in Lviv, fighters cling on in Mariupol") are holed up. No agreements had been reached on trying to [evacuate civilians from Mariupol](https://www.financedigest.com/the-man-who-evacuated-200-people-from-mariupol-in-a-battered-red-van.html "The man who evacuated 200 people from Mariupol in a battered red van") on Wednesday.

Concern has increased in recent days over the prospect of the conflict widening to neighbouring Moldova, where pro-Russian separatists have blamed Ukraine for reported attacks this week in their region, occupied since the 1990s by Russian troops.

Authorities in Transdniestria said there had been firing across the border from Ukraine on Wednesday. Kyiv calls such accusations a provocation and Moldova’s pro-Western [government accuses the separatists of trying](https://www.financedigest.com/factbox-how-governments-are-trying-to-ease-inflation-pain.html "Factbox-How governments are trying to ease inflation pain") to stir conflict.

The invasion of [Ukraine has left thousands dead](https://www.financedigest.com/putin-says-peace-talks-with-ukraine-are-at-dead-end-goads-the-west.html "Putin says peace talks with Ukraine are at dead end, goads the West") or injured, reduced towns and cities to rubble, and forced more than 5 million people to flee abroad. Moscow [calls it a “special](https://www.financedigest.com/four-european-countries-call-for-special-treatment-of-defence-in-eu-debt-rules-document.html "Four European countries call for special treatment of defence in EU debt rules – document") operation” to disarm Ukraine; Kyiv and its allies call the war an unprovoked act of aggression.

(Additional reporting by Reuters journalists; Writing by Peter Graff; Editing by Angus MacSwan and Jon Boyle)


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