EU labels Russian gas as ‘blackmail’ and is working on a response

On Wednesday, the EU’s chief executive criticized Gazprom’s decision to stop supplies to some European customers as “blackmail”. However, he said that the bloc was working to coordinate its response to Moscow’s escalation.

Gazprom stated that it had stopped supplies to Poland, and Bulgaria because they failed to pay gas in roubles. This is Moscow’s most severe response to the West’s sanctions on the conflict in Ukraine.

Ursula von der Leyen, President of the European Commission, stated that Gazprom’s unilateral announcement of a halt to gas deliveries to European customers was yet another attempt to blackmail Russia.

“This is unacceptable and unjustified. She stated that the statement demonstrates once more Russia’s unreliability as a supplier of gas.

Von der Leyen stated that the EU was ready for such a scenario and would continue to work to ensure alternate supplies of gas and that gas storage is fully stocked. EU regulations require that all countries have a contingency plan in place to deal with a shock to gas supplies. Currently, EU gas storage is 32% full.

Von der Leyen stated that the EU was working to coordinate its response to Russia’s escalated aggression. The bloc’s “gas coordination team” comprised representatives from the national governments and the industry.

The climate ministry of Poland stated Tuesday that its energy supplies are secure and that there is no need to restrict supply to consumers.

After Moscow issued a March decree requesting that Russian energy buyers open Gazprombank accounts to make payments in dollars or euros, Brussels sought to get a united response from EU nations to Russia’s demand to pay roubles.

The Commission stated that companies should continue to pay Gazprom in the currency they have agreed to in their contracts – 97% are in dollars or euros – and that paying in Russian rubles could be a violation of EU sanctions against Russia.

Brussels however has stated that EU companies may be allowed to legally pay for gas under Russia’s decree if they can prove that their contractual obligations have been fulfilled when they deposit euros at Gazprombank. This is in contrast to later after Russia converts the payment into rubles.

On Wednesday, Karl Nehammer, Austria’s Chancellor, stated that Bulgaria and Poland had rejected the Russian payment system – which allows them to deposit euros through Gazprombank.

Analysts believe that the roubles payment issue could lead to a split in the bloc’s front against Russia over the invasion of Ukraine. If some countries are willing to pay roubles, analysts say.

It wasn’t clear, however, if Gazprombank had confirmed that the deposit of euros received by companies for conversion to roubles was valid, as suggested by the EU.

Phuc Vinh Nguyen, energy specialist at the Jacques Delors Institute said that “the EU needs to collectively refuse to play Russia’s game.” He also stated that if one country sends roubles, other countries may follow to try to avoid a cut-off in gas supply.

Simone Tagliapietra is a senior researcher at Bruegel, a Brussels-based think tank. “The greatest risk I see right now is EU fragmentation.”

Nguyen stated that European countries should take urgent steps to reduce gas consumption, such as reducing heating and cooling, in order to preserve supplies before winter.

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