EU 'prepared' for Russian gas halt, says EC President, as prices surge

European Commission President Ursula von der Leyen said April 27 the EU was working on a coordinated response to the cut-off of Russian gas deliveries to Bulgaria and Poland, adding that the EU was "prepared" for such a scenario as prices surged on the disruption.

Gazprom said earlier April 27 it had fully suspended gas deliveries to Bulgaria and Poland due to non-payment in rubles.

The move saw the TTF front-month price surge by 28% in early trade to as high as Eur125/MWh. The contract was last assessed on April 26 by S&P Global Commodity Insights at Eur98.03/MWh.

In a statement, von der Leyen said the latest move by Gazprom showed the unreliability of Russia as a gas supplier.

"The announcement by Gazprom that it is unilaterally stopping delivery of gas to customers in Europe is yet another attempt by Russia to use gas as an instrument of blackmail," she said. "This is unjustified and unacceptable."

Von der Leyen said member states had put in place contingency plans for such a scenario.

"We are prepared for this scenario. We are in close contact with all member states. We have been working to ensure alternative deliveries and the best possible storage levels across the EU," she said.

Von der Leyen added that a meeting of the gas coordination group was taking place "right now."

"We are mapping out our coordinated EU response. We will also continue working with international partners to secure alternative flows," she said.

"And I will continue working with European and world leaders to ensure the security of energy supply in Europe," she said.

"Europeans can trust that we stand united and in full solidarity with the member states impacted in the face of this new challenge. Europeans can count on our full support."

PGNiG confirmation

Poland's state-controlled PGNiG confirmed the halt in supplies under its long-term Yamal contract April 27.

"PGNIG announces that gas supplies by Gazprom under the Yamal contract have been completely suspended. Currently, the situation does not affect the current supplies of PGNiG's customers who are receiving fuel in accordance with their demand," it said.

PGNiG repeated that it considered the halt in supplies to be a breach of its Yamal contract.

"PGNiG reserves the right to pursue claims in connection with the suspension of deliveries and will use all contractual rights vested in the company and its rights under law," it said.

The company said it had rejected Gazprom's demand to pay for gas in Russian rubles because that, in its view, was a breach of contract.

PGNiG said it had alternative gas supply sources and its storage was currently about 80% full.

Sanctions reaction

Polish Prime Minister Mateusz Morawiecki said April 27 that Russia's decision to cut gas supplies was an attack on his country and retaliation for Polish sanctions imposed April 26 against Moscow.

On April 26, Poland placed sanctions on 50 Russian individuals and companies, including measures related to Gazprom's stake in Polish pipeline operator EuroPolGaz.

"This time Russia has moved the border of imperialism and gas imperialism one step further. It is a direct attack on Poland," Morawiecki said at the Polish parliament.

Morawiecki said Poland's annual gas consumption was around 20-21 Bcm and that Russian deliveries of some 9 Bcm/year could be replaced by increased LNG supplies, a new 10 Bcm/year pipeline from Norway and continued domestic output of around 4 Bcm/year.