“Gazprom has completely suspended gas supplies to Bulgargaz (Bulgaria) and PGNiG (Poland) due to non-payment in rubles, the Russian company said.

“As of the end of the working day on April 26, Gazprom Export had not received payments for gas supplies in April from these companies Bulgargaz (Bulgaria) and PGNiG (Poland) in rubles, in accordance with Russian Presidential Decree No. 172 of 31.03.2022. Payments for gas supplied from April 1 should be made in rubles using new details, of which the counterparties were timely informed,” the statement said.

In this regard, Gazprom Export notified Bulgargaz and PGNiG to suspend gas supplies starting April 27 and until payment is made in accordance with the procedure established by the decree.

“Bulgaria and Poland are transit states. In case of unauthorized withdrawal of Russian gas from transit volumes to third countries, supplies for transit will be reduced by this volume,” Gazprom reminded.

The bid to pump Russian gas to Europe through Ukraine fell on Wednesday due to the absence of deliveries to Poland in the plans. Warsaw has refused to pay for Russian gas in rubles and deliveries to the country are halted. Gas to Poland is delivered not only through Belarus, but also through Ukraine – via the Drozdovichi delivery point.

PGNiG believes that the decree is not binding for it, and there are no grounds for termination of supplies under the “Yamal contract”, as PGNiG has no outstanding debts to Gazprom (MCX:GAZP) and fulfills all payment obligations in a timely manner. PGNiG believes that the suspension of supplies “is a breach of contract and the company will take appropriate steps to restore natural gas supplies” and “reserves the right to file claims in connection with the above suspension of natural gas supplies and will use all its contractual rights for this purpose”.

According to the data of the “Operator of the Ukrainian GTS”, the nomination for Russian gas pumping to the region on April 27 is 49.8 million cubic meters, the application for April 26 was 55.9 million cubic meters.

The Yamal-Europe gas pipeline between Germany and Poland continues to operate in reverse mode. However, on Wednesday, the flow of gas from Germany to Poland increased sixfold to 1.2 million cubic meters per hour, according to data from gas transportation operator Gascade. If we recalculate this volume for a year (10 billion cubic meters), it corresponds exactly to the volume of the annual contract with Russia.

News about Poland’s decision to trigger a cutoff of Russian gas supplies has already caused gas prices to rise in Europe. The day-ahead contract at the TTF hub rose 3% to $1078 per thousand cubic meters at the end of the day. By refusing supplies from the East, such players will drive up the price on the spot market in Europe. Thus, the price of gas for all buyers will rise.

Bulgaria also announced its refusal to pay Gazprom for gas in rubles, and they also expect to stop supplies from Wednesday. The Republic receives gas through the Turkish Stream pipeline via the Black Sea and Turkey.

The situation with electricity generation from renewable sources in Europe is getting worse by the day. Last week (from April 18 to April 24) wind turbines provided an average of 17% of electricity generation across the EU, on Monday this figure fell to 9.5%, and on Tuesday – to 8.4%, according to data from the association WindEurope. Little to no wind or calm weather is expected in Europe until at least the end of next week, offering little chance of a correction.

Europe has opened the season for pumping gas into underground storage. Reserves are currently at 31.78%, up 0.25 percentage points over the last day. The current level of reserves in Europe’s UGS facilities is 6.2 percentage points behind the five-year average. In April, pumping is constrained by high imported gas prices.

As reported, on March 31, the Russian president signed Decree No. 172 “On a special procedure for foreign buyers to fulfill their obligations to Russian natural gas suppliers.” According to the document, payments for Russian pipeline gas supplied after April 1, 2022 to foreign counterparties specified in the decree must be made exclusively in rubles.

For this purpose, special K-type ruble and foreign currency accounts are opened for foreign buyers with an authorized financial institution – Gazprombank. These accounts may not be subject to suspension of transactions, seizure or write-off of funds as part of the fulfillment of the foreign buyer’s obligations not related to payment under the natural gas supply contract. The foreign buyer pays for gas in the contract currency, GPB sells it on the Moscow Exchange and transfers rubles to Gazprom. It is at this point that the obligation to pay for the natural resource is deemed to have been fulfilled.

If this condition is not fulfilled, supplies are terminated. Further gas deliveries are prohibited if the payment deadline for gas delivered under the contract has come and the foreign buyer has not made payment or has made payment in foreign currency, not in full, or not to an account in an authorized bank.