Europe accuses Russia of blackmail by turning off gas supplies in row

‘It’s blackmail’: European leaders accuse Russia of holding governments to ransom by turning off gas supplies in row over payments in roubles

• Russia has stopped supplying gas to Bulgaria and Poland over a payment dispute
• They have been accused of blackmail for demanding they pay for gas in roubles 
• European Commission President Ursula von der Leyen said it was ‘unacceptable’

Russia was accused of blackmailing governments and millions of families across Europe by turning off the gas taps yesterday.

The state-owned gas giant Gazprom blocked supplies to Poland and Bulgaria, which initially sent wholesale prices in Europe soaring by up to 20 per cent.

The decision represents a dangerous escalation in the economic war with the West, triggered by the Kremlin’s illegal invasion of its neighbour.

Moscow claimed the halt of natural gas supplies via the Yamal-Europe pipeline, which runs through Belarus, was a result of ‘unfriendly’ actions towards Russia.

Putin’s spokesman Dmitry Peskov said both countries had refused Russian demands to pay in roubles, a move designed to prop up the heavily sanctioned currency.

He warned that other European customers may also see the taps turned off if they too refuse to pay in roubles next time payment is due.

Gazprom (pictured) has completely suspended gas supplies to the Bulgarian company Bulgargaz and the Polish PGNiG, due to their failure to pay in roubles in time

European leaders have condemned Russia actions, deeming it blackmail (pictured: Pipes at a gas transmission point near Warsaw)

As a result, a number of countries have drawn up plans to ration supplies, which could see major industry and manufacturers ordered to shut down to protect gas for homes and prevent blackouts.

The Russian move is forcing governments across Europe to speed up a switch to alternative supplies. Western officials say that this represents a major strategic failure for Moscow.

One UK official said: ‘This will be one of the major strategic developments from this campaign and it will be a failure for Russia because it will reduce its income and also compromise its offensive capability.

‘This is one of the costs we are inflicting on Russia. Long-term sanctions will have the same effect. The Prime Minister has said Russia must be seen to have failed.’

Britain’s Deputy Prime Minister Dominic Raab slammed Russia’s decision, saying it will add to its status as an ‘economic and political pariah’.

EU Commission President Ursula von der Leyen called Russia’s decision to stop gas going to Poland and Bulgaria ‘unacceptable’

President of the European Commission Ursula von der Leyen said Russia’s attempts at ‘blackmail’ were doomed to fail. She called it ‘unjustified and unacceptable’ and said it pointed to Russia being an unreliable gas supplier.

The EU was prepared for this scenario and contingency plans are in place to get gas from alternative sources and maintain maximum gas storage levels. Poland and Bulgaria are already receiving gas via their EU neighbours, including Greece.

Polish prime minister Mateusz Morawiecki was applauded by MPs in parliament when he said the ‘blackmail’ would have no effect. Bulgarian prime minister Kiril Petkov said that it was a ‘gross violation’. And despite Bulgaria taking nearly 80 per cent of its gas from Russia, he added: ‘We won’t give in to such racketeering.’

While there was a 20 per cent price hike in European wholesale gas prices in early trading, much of this fell away later in the day.

But despite many countries in Europe rallying together, four major gas trading companies have bowed to pressure to pay for Russian supplies in roubles through back channels, a report by Bloomberg claimed yesterday.

The names of the buyers and countries have not been revealed. However Slovakia, which is heavily reliant on Russian gas, previously suggested it may be forced to comply with demands to pay in roubles.

But Mrs von der Leyen warned that this would breach sanctions and weaken the collective Western response.

Q&A 

Who relies on Russian gas?

Before the invasion of Ukraine, much of Europe ran their homes and factories on Russian gas. Some smaller nations, such as Bosnia and Herzegovina, Moldova and North Macedonia, got all their gas from Russia. The figure for Bulgaria was 77 per cent with 40 per cent for Poland. Even Germany got 49 per cent of its gas from Russia with Italy at 46 per cent. The UK, by contrast, gets very little gas from Russia – around 3-5 per cent.

What happens if more countries are cut off?

Russia’s economy would go into meltdown as a result of lost income from any block on gas sales. At the same time, Germany would be unable to find alternative sources to meet all of its demand. Germany – along with other nations – has drawn up plans to cope, however. These include the option to shut down some heavy industries to protect supplies to homes and keep the lights on.

Who else can supply gas?

Europe has been racing to find alternatives in recent months. These include supplies from Norway and Azerbaijan via pipeline, and shipments of liquefied natural gas (LNG) from the Middle East, US, Africa and Caribbean. A number of countries, including Poland, have been building terminals at their ports in order to accept LNG cargo ships.

What about our bills?

The UK is relatively flush with gas at the moment, thanks to supplies from the North Sea and Norway along with shipments of LNG. As a result, British wholesale prices fell slightly yesterday, despite the turmoil in Europe. However, the figure still remains around 200 per cent higher than a year ago. The price cap on energy tariffs rose by 54 per cent on April 1, adding around £700 to annual bills which are now just under £2,000 for those on default tariffs. Based on the current market, this figure is set to jump to around £2,600 from October 1 when the cap is revised for the winter. 

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