On 2022-04-27, the Russian state-owned energy company Gazprom has ceased gas deliveries to Poland and Bulgaria, after they refused to henceforth pay for the gas in ruble rather than the currency stated in the contract. Other EU countries and customers in those countries have also refused to pay for gas deliveries in ruble. For example, 97% of gas payments in the EU are in euro or dollar. Is there any factual difference that would explain why gas deliveries were stopped to (customers in) Poland and Bulgaria, but not to other EU customers? Or is this purely a political decision based on (semi-)opaque political considerations from the Russian Federation leadership?
Bulgaria is a good target for a political pressure right now.
(Disclaimer: I am Bulgarian citizen and resident)
The current Bulgarian government is elected by an unstable, complex and heterogeneous coalition with a strong internal tension in regard to the Russia/Ukraine subject.
The current government already gets the political burden of the rising global energy prices and the general inflation.
Political parties with the traditional pro-Russian rhetoric advertise proposed advantages of a position closer to Russia as cheaper gas. Higher energy prices work for them.
Bulgaria gets (on average) like 70% of its natural gas from Russia. It is better now because the weather gets favorable, but to an extent. Options for getting gas from other sources are limited and have been actively sabotaged by the previous governments. The Bulgaria/Greece pipeline interconnector that could bring gas from the liquefied gas terminals in Greece is few weeks from starting operation (if everything goes well).
In short, pressuring Bulgaria right now has the potential to bring a government better for Russia rather quickly.
Edit: A day later, suspictiously quickly organized protests from at least two professional organizations started. They protest against "government actions that provoked Russia to stop the gas and rising gas prices".
The natural gas price in Bulgaria is regulated by a government agency and did not change so far. There is no immediate shortage either.
German Minister of economics Robert Habeck today elaborated in a press conference that Germany accepted the two-accounts approach (payments by the customers in Euro/Dollar to one account at Gazprombank, and the bank changes the payment to Rubel and transfers it to a second account, still assigned to the customer), but Poland decided to not accept. He could not confirm the same for Bulgaria. Video from 26:45.
Das ist der Weg, der mit Europa, der mit der Europäischen Kommission so geeint ist...und an den sich die allermeisten europäischen Länder halten. Polen wiederum...sagen, wir fürchten kein Embargo, und wir machen das so, wie wir es wollen. Für mich ist nur wichtig, dass Deutschland nicht in Rubel bezahlt..., und in der Europäischen Gemeinsamkeit reagiert...und das tun wir. Für Bulgarien kann ich das nicht bestätigen, weil ich nicht genau weiß, ob es da andere Probleme mit der Transferierung gegeben hat.
This is the way that has been agreed on by Europe, by the European commission, and that the vast majority of European countries accept. Poland, in contrast, says they do not fear an embargo and will do it their own way. For me it is only important that Germany is not paying in Rubel and maintains the European commonality, and that is what we do. For Bulgaria, I cannot confirm, because I don't know if there have been other problems with the transfer.
At a later point, he also notes that Bulgaria seems to be able to fulfill its needs by importing via Turkey and Greece (using existing LNG port terminals). Poland would be able to profit from a new gas pipeline from Norway to Denmark and Poland, to be opened in autumn. He added that since Norway will not expand its exploitation rate, the gas routed to these two countries would then not be available for German consumers.
Bloomberg wrote today about four customers that have paid in rubles for gas and ten companies that have opened accounts in Gazprombank
This may explain the difference, but we will need to wait to find out if the information gets confirmed.
No, there is no obvious difference between Poland/Bulgaria and other EU customers in regard to the payment and the delivered product (they all pay in the same currency and all obtain the same gas).
The only difference is that Poland/Bulgaria are mid-sized customers (larger than say Estonia but smaller than say Germany), and that they get a relatively large fraction of their gas imports from Russia. So the impact might be locally limited but still relatively strong. Still these are probably rather political considerations. As a side note: it might also be a breach of contract.
Some differences between Poland and Bulgaria and the other EU countries:
- Both Poland and Bulgaria were once part of the Soviet sphere when they were all members of the Warsaw Pact. Russia may see them as easier targets to push.
- Poland is not particularly friendly towards Russia because of historical events: the Soviet invasion of eastern Poland in 1939, days after the invasion of western Poland by Nazi Germany; the Katyn Massacre and decades of Soviet occupation.
- The gas supply contracts for both Poland and Bulgaria are due to expire at the end of the 2022.
- Both countries refuse to pay for gas in roubles.
- Gas pipelines for Russian gas to other parts or Europe, particularly Germany, Hungary and Serbia are in Poland and Bulgaria. Serbia and Hungary are friendlier towards Russia. Germany is a major customer of Russian gas and until the invasion of Ukraine was friendlier towards Russia. Also, it would be easy for Russia to accuse Poland and Bulgaria of "stealing" gas the same way it did regarding Ukraine in 2009, that could then "justify" terminating supplies to the rest of Europe.
According to the Russian media source RBC ("РБК"), the difference between Bulgaria and Poland vs other EU countries is that they were the first countries to refuse to pay for gas in rubles:
Bulgaria and Poland were the first European Union countries that refused to pay for the Russian gas according to the new terms - in rubles. As a result, "Gazprom" [Russian gas monopoly] stopped gas deliveries there.
On March 23rd, President Putin ordered to change to rubles the payments for Russian gas from unfriendly [sic] countries (the list includes all EU countries, USA, Great Britain and a number of other countries), which introduced sanctions against Russia in response to the start of the special military operation in Ukraine. The new scheme started operating on April 1st.
RBC, "Bulgaria and Poland refused to pay for gas in rubles. What is important to know." April 27, 2022: https://www.rbc.ru/business/27/04/2022/6268f9409a79476544ffd47f
Thus, one can expect that certain other countries that are considered "unfriendly" by the Russians and that refuse to pay in rubles will get similar treatment from Russia.
If Putin cuts off the gas, he can frame it as a victory. If the receiving country cuts it off, it will be framed as a sanction against Russia.
With that in mind, consider that Bulgaria will soon have a pipeline to supply them with natural gas from alternative sources via Greece, due to be finished in July.
Poland will have a gas pipeline capable of replacing the Russian gas imports ready in October.
So on the one hand Putin needs to cut off their supply before they cut it off for him. On the other hand Poland and Bulgaria are under less pressure to accept unfavourable terms for gas deliveries than other EU countries.
In conclusion, this move makes perfect sense.