The energy war between Russia and the European Union entered a new and more intense phase Wednesday after Russian gas giant Gazprom announced it shut off supplies to customers in Poland and Bulgaria.
Gazprom said the shut-off will continue “until the payments are made” with the Russian ruble, a condition for purchases that Russian President Vladimir Putin introduced in the last month to force the hand of “unfriendly” nations of the West. It is the first such shut-off since Russia’s invasion tanked relations between the interdependent fossil fuel producer and the EU.
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Both European Commission President Ursula von der Leyen and Bulgarian Prime Minister Kiril Petkov described the shut-off as “blackmail,” with others describing it as a “weaponization” of energy supplies.
Von der Leyen said further that Russia “failed once again in this attempt to sow division between Europeans” by cutting off gas and welcomed the advent of a future era when Europe no longer used Russian fuels.
“The era of Russian fossil fuels in Europe will come to an end,” she said in a statement.
The EU has been seeking out alternatives to Russian gas for several months, something it began doing before Russia invaded Ukraine, having judged the likelihood of a disruption or outright stopping of supplies to be likely in the shadow of war.
That planning yielded a commitment by the Biden administration to provide additional U.S.-produced liquefied natural gas to Europe to the tune of tens of billions of cubic feet through at least 2030.
Von der Leyen, as well as Polish gas company PGNiG and Bulgaria’s Bulgargaz, said Wednesday in response to Gazprom’s decision that the two countries are supplementing their gas supplies from other sources and suggested they could manage the shut-off.
Samantha Gross, director of the Brookings Institution’s Energy Security and Climate Initiative, said Gazprom’s move was not especially surprising considering the volatility of the war but emphasized there’s “no question that it’s an escalation.”
“It’s going to take some time to figure out how big of a deal this is and how prepared those countries are to weather events,” she told the Washington Examiner.
Gross said the shut-off also has “a lot of symbolic value more than market value” due to Poland’s and Bulgaria’s being smaller markets relative to heavyweight customers of Russian gas such as Germany and Italy.
“But the symbolism is pretty serious,” she said. “It’s the first time during this conflict that they have cut off EU members’ gas supply, and that is not nothing.”
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European gas futures prices shot up Wednesday morning on news of the shut-off to near $40 per metric million British thermal unit, almost six times the already unusually high U.S. benchmark, but analysts with research firm Rystad Energy said in a note the market had already priced in such an escalation.
The difference-maker will be how Gazprom decides to treat Germany and Italy, where leaders of both have said they will not pay for gas in rubles and called Putin’s demand a breach of contract terms.
“Poland and Bulgaria together losing access to Russian gas has not had a big impact on the total European market,” Rystad senior analysts Kaushal Ramesh and Nikoline Bromander said, “but a more severe consequence is likely if other large countries or individual buyers are being cut off such as Germany and Italy.”
