Russia escalates in conflict with WEstonia and no longer supplies gas to Poland and Bulgaria. What does that mean for Germany? ntv.de answers the most important questions about the Kremlin’s decision.
What actually happened?
Russia cuts off gas to Poland and Bulgaria. As of today, the Kremlin-controlled energy giant Gazprom has stopped delivering gas ordered by the two EU countries.
With what reason?
According to Gazprom, the importers did not pay the bills in rubles, as requested by the Russians. The background: Russia’s President Vladimir Putin ordered at the end of March that “unfriendly countries” – i.e. countries that have imposed sanctions against Russia because of the aggressive war in Ukraine – have to pay for deliveries in rubles from April 1st. If you don’t do that, you won’t get it anymore.
is this legal
It is a breach of valid contracts, in which payment in euros or dollars was agreed. Clauses cannot simply be changed by one of the contracting parties. The European Commission has asked gas importers in the EU to continue paying in the contracted currency. In 97 percent of the cases it is the euro or the dollar.
Why does Russia want to be paid in rubles?
In order to save the ruble from collapsing. The Russian central bank cannot draw on much of its foreign exchange hoard to support the ruble because of the sanctions. The main reason why the Russian currency has not collapsed despite the sanctions is that Russian exporters have to step in for the central bank. They have to convert most of their foreign exchange earnings into rubles, which creates a lot of demand – which supports the exchange rate. This is currently done via Russian banks, which are not sanctioned. With the new regulation, the Kremlin ensures that this exchange takes place directly. The West is unlikely to sanction Gazprom Bank – because it wants to continue sourcing gas from Russia, at least for the foreseeable future.
What is the ruble rate doing?
After a rapid fall after the attack on Ukraine, the ruble is now worth what it was before the attack.
Are there any other reasons for the required ruble payments?
This is probably also a domestic political message. The Kremlin is also likely to want the EU countries to circumvent their own sanctions.
Do they?
According to the EU Commission, EU companies can continue to pay for Russian gas without breaking the sanctions. The decree imposed by Putin does not exclude a payment procedure that is in line with EU sanctions. The German importer Uniper, Gazprom’s largest foreign customer, believes that “compliant future payment processing is still feasible”. This means that gas deliveries will continue to be paid for in euros or dollars and only then exchanged for rubles.
What exactly is the Kremlin asking for?
At the center is Gazprom Bank, which handles Gazprom’s business. It should act as a mediator. It works like this: Foreign gas buyers have to transfer foreign currency to a special so-called K account. Gazprom Bank then buys rubles on behalf of the client and transfers them to another K account. From there they are transferred to Gazprom. Gazprom Bank can open the necessary accounts without consultation or an order from the foreign gas buyer.
And how does this change compared to previous practice?
Not much. Importers continue to transfer in euros, Gazprom Bank exchanges them for rubles, which go to Gazprom. Western companies and governments can indicate that they pay in euros. And the Kremlin can assure the Russians that Gazprom will be paid in rubles. The main difference is the mandatory account at Gazprom Bank.
Poland and Bulgaria didn’t stick to that?
The governments in Warsaw and Sofia say they have kept all agreements. All payments required by the contract were made on time. According to the Bulgarian online portal Mediapool, the gas payment of April 18 for May was made in the usual way and not as requested by Gazprom through two newly opened accounts at Gazprom Bank – in dollars and in rubles. Poland had announced that it would not use this account solution to pay for natural gas in rubles, as requested by Russia.
How is Poland reacting?
Poland’s Prime Minister Mateusz Morawiecki described the cessation of Russian gas supplies as a “direct attack” on his country. “This time Russia has pushed the border of imperialism, gas imperialism, one step further,” he said. With this step, Russia wants to take revenge for the fact that Poland has imposed sanctions on a number of oligarchs and companies, including the state-owned company Gazprom.
What does the gas stop mean for Poland?
Poland wants to become independent of Russian gas. The state company PGNiG has long-term contracts with Gazprom, which the Poles are letting expire this year. The responsible ministry in Warsaw said that the country’s energy supply was secured. There is no need to tap into gas reserves or limit consumer supplies. According to government circles, the gas storage facilities are 76 percent full and there are various ways of getting gas via other lines – including two connections in Germany.
And Bulgaria?
In contrast to Poland, Bulgaria is almost completely dependent on natural gas supplies from Russia. A connection to the gas network of neighboring Greece should be ready in June. In this way, the EU country wants to diversify its gas supply sources and also obtain gas from other countries. According to information from the beginning of April, a gas storage facility near Chiren in northwestern Bulgaria is said to be 20 percent full, the Bulgarian state radio reported. The Bulgarian Ministry of Energy announced that the state-owned gas companies Bulgargas and Bulgartransgas “have taken steps to reach alternative arrangements for natural gas supplies and deal with the current situation”. “At present there is no need to limit consumption,” the ministry added.
Is less gas now flowing to Germany?
So far this has not been the case. The Yamal pipeline is affected. Until now, gas has flowed thousands of kilometers from Russia via Belarus to Poland and to Mallnow in Brandenburg, where the gas was taken over and forwarded to Western Europe. However, the importance of the connection has decreased. According to figures from the German network agency, little or no gas has flowed through Yamal to Germany in recent weeks. The most important connection between Russia and Germany is the Nord Stream 1 Baltic Sea pipeline, which bypasses Poland and Belarus. Gas will flow through this pipeline as before.
Can the Russians turn off the gas for Germany too?
Yes. However, this would also mean that the Kremlin would lose an important source of income.
How about the inventories?
The German natural gas storage facilities are slowly filling up again. Yesterday, the filling level of all German storage was 33.4 percent, as the Federal Network Agency in Bonn reported in its management report on gas supply. It is currently being saved relatively constantly. According to an overview of European storage operators, the filling level has been increasing continuously since April 5th. For comparison: On March 18, the storage tanks were 24.2 percent full, the lowest value for the winter of 2021/22. “The gas supply in Germany is stable,” reported the authority. The gas network operators had not reported any special incidents. There were no impairments to gas deliveries to Germany.
What impact would a sudden stop on gas have on Germany?
According to the current status, Germany wants to purchase Russian gas until the year after next in order to ensure security of supply, for example for industry. According to economists, an immediate stop would trigger a severe recession.