Russia Will 'Entirely Suspend' Gas Exports to Poland, Bulgaria After Refusal To Pay in Rubles

(Photo : Photo by Sean Gallup/Getty Images)
Russian energy plant Gazprom will "entirely suspect" gas supply to Poland and Bulgaria after the countries refused to pay in rubles for the transactions. The situation comes as Moscow is struggling to contend with Western sanctions over its invasion of Ukraine.

Russian energy plant Gazprom announced that the country would no longer supply gas exports to Poland and Bulgaria after the two nations refused to pay for the products in rubles amid Western sanctions.

The Polish company said the Russian plant would "entirely suspend" its supply along the Yamal pipeline starting on Wednesday morning. Poland's state-run gas firm PGNiG said in a statement that on Apr. 26, Gazprom informed them of its intentions that would be effective on Apr. 27.

Suspension of Gas Imports

The announcement forced U.S. natural gas futures to increase by about 3% on Tuesday, a cause for concern among already struggling Americans. The Russian energy plant did not confirm that the supply of gas to Poland has been stopped, said the country's state news agency TASS, citing the company's spokesperson Sergey Kupriyanov.

However, the official emphasized that Poland is required to pay in rubles if it wants access to Russia's gas supply, which is a demand that Warsaw refused. Last month, Moscow authorities delivered an ultimatum that "unfriendly" nations will be required to pay for energy supply in rubles starting on Apr. 1 or risk being cut off completely, as per CNN.

Europe heavily relies on Russia for large amounts of gas imports to heat homes, generate electricity, and provide gas to the fuel industry. Despite Moscow's unprovoked war on Ukraine, its gas supplies continued to flow out to other countries.

Roughly 60% of all Russian gas imports are paid for in euros while the rest are bought using dollars. Despite the demand to pay in rubles, European leaders announced that they had no plans to comply with the payment method, arguing that the requirement for them to use rubles violated the terms of contracts and their sanctions against Russia.

According to CNBC, the Bulgarian government said that the "Russian proposal for a two-step payment procedure is in violation with the current contract and bears considerable risks for Bulgaria, including making payments without receiving any gas deliveries from Russia."

Effects of Russia's Invasion of Ukraine

The plan for Gazprom to suspend gas supply to other countries could cause economic pain within Europe. The situation could result in gas prices rising higher than they already are and it could also lead to rationing of supply within the region.

Germany is particularly vulnerable because of its heavy reliance on Russian gas imports but the cutoffs would also affect the latter's economy. During Moscow's invasion, Poland has been a strong supporter of Ukraine. It has become a transit for weapons that the United States and other Western nations have provided to the country.

This week, the Polish government confirmed that it was planning to send tanks to support Ukraine's army in fighting against Russian forces. They also announced on Tuesday a sanctions list that targeted 50 Russian oligarchs and companies, including Gazprom.

On the other hand, Bulgaria was once one of Moscow's closest allies but has not cut many of its old ties with Russia after a new liberal government took control last fall. The situation happened when the Russian President's Military invaded the neighboring country of Ukraine. Bulgaria has supported sanctions against the aggressor and has provided humanitarian aid to Ukraine, the Associated Press reported.