The Energy Game Intensifies: Russia Warns Poland Of Gas Supply Cuts From Today

Russian energy giant Gazprom has told Poland's PGNiG it will halt gas supplies from Wednesday morning, the Polish state-controlled oil and gas company said in a statement on Tuesday, in a major escalation of Russia's broader row with the West over its invasion of Ukraine.

Poland would be the first country to have its gas cut off by Europe's main supplier since Moscow started what it calls a military operation in Ukraine on Feb. 24. The move to cut off supplies also followed sanctions imposed by Warsaw against Russian individuals and companies.

Russian President Vladimir Putin has demanded that countries he terms "unfriendly" agree to implement a scheme under which they would open accounts at Gazprombank and make payments for Russian gas imports in euros or dollars that would be converted into roubles, following what Moscow calls a "special military operation" in Ukraine.

He had threatened to cut gas supplies in case the demands would not be fully met.

Poland, a staunch Moscow's political opponent, whose gas deal with Russia expires at the end of this year, has repeatedly said it would not comply with the new scheme of gas payments. It has also said it would not extend the contract.

It also did not extend its gas transit deal with Gazprom in 2020. Since then, the Russian gas provider had to take part in auctions for pipeline capacity via the Yamal-Europe pipeline from Belarus to Poland.

Russian President Vladimir Putin has demanded that countries he terms "unfriendly" agree to implement a scheme under which they would open accounts at Gazprombank and make payments for Russian gas imports in euros or dollars that would be converted into roubles, following what Moscow calls a "special military operation" in Ukraine.

He had threatened to cut gas supplies in case the demands would not be fully met.

Poland, a staunch Moscow's political opponent, whose gas deal with Russia expires at the end of this year, has repeatedly said it would not comply with the new scheme of gas payments. It has also said it would not extend the contract.

It also did not extend its gas transit deal with Gazprom in 2020. Since then, the Russian gas provider had to take part in auctions for pipeline capacity via the Yamal-Europe pipeline from Belarus to Poland.

Gazprom said on Tuesday that Poland would need to begin making payments under a new scheme as of Tuesday. It did not elaborate and did not comment on PGNiG's statement about the possible gas supply stoppage. 

Only a few Russian gas buyers, such as Hungary and Uniper, Germany's main importer of Russian gas, have said it would be possible to pay for future supplies under the scheme announced by Moscow without breaching European Union sanctions.

The Kremlin said Gazprom was implementing the presidential decree on enforcing payment for gas supplies in roubles. 

PGNiG said on Tuesday it would take steps to reinstate the flow of gas according to the Yamal contract and that any halt of supplies was a breach of that contract.

It added it has the right to pursue damages over breach of contract.

Earlier Tuesday, Poland announced a list of 50 Russian oligarchs and companies, including Gazprom, that would be subject to sanctions under a law passed earlier this month allowing their assets to be frozen. The law is separate from sanctions imposed jointly by EU countries.

(Reuters)