The European bureaucracy has fallen into its own trap while aspiring to curb the export of Russian energy resources. Aiming to break off energy cooperation with Moscow, Brussels first was ambitious and assertive. They got truly inspired by the White House resolution (adopted in the first decade of March) restricting the right to import Russian energy carriers into the United States.
They ignored the "boomerang" effect the expert community was warning about. Now that the "sixth package" of sanctions is being prepared and representatives of local industrial holdings are openly criticizing the tangible shortage of gas and oil in the European Union, EU commissioners have started tempering the rhetoric about Russia’s harmful hydrocarbons – a refusal is out of question, it finally dawned on them. On closer inspection it turned out that basic Russian energy carriers have no alternative.
And even the US Treasury suddenly signaled to the EU that it should not hurry into introducing a centralized oil embargo at all, since it would "blow up" the black gold market and bring Vladimir Putin super profits from selling hydrocarbons to countries beyond the pool of those "unfriendly" to Moscow. Still, the US Treasury message’s underlying reason may be different – the financial regulator is primarily concerned about dollar inflation, accelerated by fuel prices at home that are definitely dependent on global oil barrel quotations. That is, the aggravation of economic problems within the United States started outweighing the White House’s traditional aspirations to zero out Russian energy exports to Europe.
Meanwhile, April is running out to bring European companies closer to the "deadline" of paying for gas exported by Gazprom without consequences, primarily physical restrictions on supplies. But not everyone heeded Vladimir Putin's March decree obliging unfriendly jurisdictions switch to ruble payments starting early April. Poland and Bulgaria have been left without Russian gas since April 27, as Gazprom has restricted the pumping over their refusal to pay under the new scheme. Exchange prices for gas in the EU increased by some 20% right away. The protest of Poland and Bulgaria is brought about by their well-known ideological bias with the United States, and cannot be called a rational move. The US authorities held consultations with Bulgaria and Poland over suspended gas supplies from the Russian Federation and criticized Moscow’s decision. This came in a statement by White House Press Secretary Jen Psaki at a briefing on April 27.
The fuss has intensified in Europe following this case – they have apparently woken up to the situation. On April 27, Bloomberg reported that ten European buyers had have already opened accounts at Gazprombank needed to meet Russia’s payment demands, and someone even effected their first payments.
Obviously, the EU should not expect a low-key approach from the Russian gas giant, with arguments by European politicians about its allegedly lost reputation being simply laughable given the collective West’s Russophobic decision to freeze Russian gold and foreign exchange reserves worth some $300 billion (a public assessment by Finance Minister Anton Siluanov of March 13) under the guise of sanctions, while explicitly ignoring the norms of international law. Moreover, Gazprom is absolutely legitimate in its actions – the contract provides for supply interruption to defaulters. It’s a different matter that companies in Poland and Bulgaria will now likely file lawsuits against the Russian giant as part of their planned vernal flaunt about replacing Russian gas. Yet Warsaw and Sofia prefer to stay mum about the fact that energy security of the "holdouts" has been seriously undermined.
By the way, Poland and Bulgaria’s demarche is a problem for all of the European Union. For instance, such heavy users of Russian gas as Germany and Italy will have to be paid a premium due to the increased exchange price of gas. Even a one-day speculative leap will affect the price contract formula and will result in a lump sum for large counterparties. Which is for the good of Gazprom that is well protected from the risks of export revenue declines thanks to its established market position – even the Polish-Bulgarian case-induced price surge partially compensates for the losses after their orders were gone. Apart from that, Poland now gets reverse gas supplies via the Yamal-Europe gas pipeline from Germany – that is, the latter will ask for more Russian gas via the Nord Stream to cover Poland's increased demand. Thus, the Poles waive ruble payments (dealing with German suppliers), but not Russian gas. As for the Bulgarians, Gazprom warned them that if gas is misappropriated, further transit supplies will be reduced by exactly the amount misappropriated. A clear message to Brussels to monitor the discipline, as Bulgaria is quite capable of undermining the entire EU’s energy security in its desire to promptly solve the gas shortage challenges.
The European Commission promises a detailed explanation of gas payment options, but no sooner than on May 2. Although the last days of April see tensions run high between Russia and Europe, there is speculative news that Gazprombank allegedly declines separate ruble payments from Germany and Austria. But these are rather technical and/or legal issues.
