Poland Said Would Stop Russian Gas Imports by Year-End, Gazprom Said ‘Why Not Today?’

Editor’s note: Poland said it would end Russian gas imports at the end of 2022 but then sanctioned Gazprom and didn’t settle its bill (the payment for which Russia requested be wired to a Gazprombank account in their name to be converted to rubles).

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

Moscow appears to be making good on a threat to halt gas supplies to countries that refuse President Vladimir Putin’s new demand to pay for the crucial fuel in rubles. [It’s not really in rubles but Poland is too proud even for that.] Europe has said that doing so would breach sanctions and strengthen Russia’s hand. Poland has been particularly vociferous in its criticism of Russia and has refused to comply with the new terms.

Poland’s main gas supplier PGNiG said it’s been told that all flows will stop from Wednesday. Minutes earlier, Russian gas giant Gazprom PJSC issued a warning that Poland must pay up for its gas supplies — on Tuesday and in the Russian currency.

“I can confirm we’ve received such threats from Gazprom which are linked among other things to the means of payment,” Prime Minister Mateusz Morawiecki told reporters in Berlin. “Poland is sticking to the arrangements and maybe Russia will try to punish Poland” by cutting deliveries.

European gas prices surged as much as 17% as traders calculated the risk of other European countries being hit next. The threat of cutoffs has been looming for weeks, but there was an indication last week that the European Union was suggesting a potential way out of the standoff.

Late April and May is when the first payments in rubles fall due — and European governments and energy company executives are in many cases still trying to figure out how best to respond. Europe is hugely dependent on Russian gas, and has so far mostly shielded energy from sanctions.

“The possible cut may set a precedent for additional curtailments following Russia’s request for payment in rubles,” Patricio Alvarez, an analyst at Bloomberg Intelligence said.

The focus now turns to other European capitals, particularly Germany, which is heavily dependent on Russian gas.

Poland says it’s fully prepared for a cutoff of all energy supplies and has been outlining plans to live without Russian gas even before the war. The country’s long-term gas contract with Russia expires at the end of this year and the government had repeatedly said it didn’t plan to extend it. It has lined up LNG supplies and plans to start a pipeline from Norway in October.

The government said on Tuesday it has enough fuel in storage. Customers won’t be affected, and the government plans to keep filling storage up to 90%.

“This is a turning point that has been accelerated by Russia today,” Piotr Naimski, the country’s official in charge of strategic energy infrastructure, told reporters.

Gazprom had no immediate comment.

There won’t be an immediate impact on the gas that transits Poland via the Yamal link to Germany. The link hasn’t delivered gas into Germany since April 7 and has been sporadic in the previous months, too. Gas is currently flowing in reverse direction, from Germany to Poland and those shipments are set to surge on Wednesday, data from operator Gascade show.

Earlier today Warsaw opted to “freeze” (nationalize) Gazprom’s assets in Poland:

Poland is imposing sanctions on 50 Russian oligarchs and companies, the interior minister said on Tuesday, as it seeks to increase pressure on Moscow over its invasion of Ukraine. Poland this month passed a law allowing it to freeze the assets of Russian entities and ban imports of coal from Russia, above and beyond sanctions imposed jointly by European Union countries.

Companies on the list released by the interior ministry include the energy giant Gazprom and the chemicals and fertiliser manufacturer Akron, as well as the coal trading companies SUEK Polska and KTK Polska. Gazprom has a minority stake in EuRoPol Gaz, an entity that owns the Polish section of the Yamal pipeline that carries Russian gas to Europe.

The sanctions include the freezing of assets and, for the individuals named, a ban on entering Poland.

Poland has consistently argued for tougher sanctions against Russia and has previously said it stop importing Russian coal by May and stop using Russian oil by the end of 2022.