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Russia Suspends Gas Deliveries To Poland, Bulgaria

Russia's state gas major Gazprom has suspended the deliveries of natural gas to Poland and Bulgaria, according to Polish and Bulgarian sources.

Russia's Vedomosti reported that a source from Polish state energy company PGNiG had confirmed the suspension of deliveries.

Gazprom later confirmed the decision after a Reuters report said the flow of gas to Poland had only been suspended briefly and later restored. The same report had quoted the Bulgarian gas transport operator as saying the flow of gas had not been interrupted.

"Gazprom has completely suspended gas supplies to Bulgargaz (Bulgaria) and PGNiG  (Poland) due to absence of payments in roubles," the gas major said in a statement as quoted by Reuters.

Poland's PGNiG said it had received a notification that deliveries of natural gas via the Ukraine and Belarus will be suspended at 8 am Eastern European Time today. The company also said, according to Reuters, that its storage facilities were 76 percent full, and it did not need to tap reserves to compensate for the suspension of shipments.

Russian gas satisfies about half of Poland's gas demand, while Bulgaria's dependence on Russian gas imports is close to 100 percent. The country has been negotiating alternatives, and one of the more realistic ones is importing liquefied natural gas from overseas via Greece.

Both the Polish and the Bulgarian state energy companies have said that Russia's change of the terms of the gas contracts Gazprom has with countries classified as unfriendly by Moscow is in breach of these contracts.

According to Bulgargaz, the Bulgarian state gas operator, "the two-step payment procedure proposed by the Russian side does not comply with the contract that will be in effect until the end of the year and hides significant risks for the Bulgarian side, including the risk of making payments without receiving deliveries of gas from the Russian side."

Russia announced last month that it would only accept payments in rubles for its natural gas deliveries to the European Union, sparking confusion among member states, some of which depend heavily on these deliveries.

While initially opposed to the unilateral change in contract terms, later some importers agreed to switch from dollars and euros to rubles, Russia's Deputy Prime Minister Alexander Novak said this month.

By Irina Slav for Oilprice.com

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