Russia cuts gas supplies to Poland and Bulgaria

Transcript

ROB SCHMITZ, HOST:

Much of Europe's natural gas comes from fields in Siberia, traveling thousands of miles across Russia in pipelines. But now, Russia's state-run gas company, Gazprom, has cut supplies to two countries in Eastern Europe - Poland and Bulgaria. At the heart of this move, the war in Ukraine, the sanctions imposed by the West, and Russia's attempts to try and wriggle free of them.

We're joined by two correspondents who have been following all of this closely for months now. From Lviv in Ukraine, NPR's Joanna Kakissis, and from Moscow, NPR's Charles Maynes - welcome to you both.

CHARLES MAYNES, BYLINE: Hi there.

JOANNA KAKISSIS, BYLINE: Hi, Rob.

SCHMITZ: Charles, we'll start with you. Why has Gazprom done this?

MAYNES: Well, last month, President Vladimir Putin ordered countries deemed unfriendly to Moscow to shift their payments to rubles. It was payback, really, for the sanctions they've imposed on Russia over its actions in Ukraine. And Gazprom is, in effect, implementing Putin's orders. You know, another issue, though, is what the move to ruble payments actually accomplishes. You know, the immediate intent seemed to be to pump up the value of the currency, the ruble.

But I spoke with Sergei Pikin from the Energy Development Fund here in Moscow, and he argues the other objective was to protect Gazprom's revenues from Western sanctions. Let's listen in.

SERGEI PIKIN: (Speaking Russian).

MAYNES: So the goal, Pikin says, was to ensure payments to Gazprom went to banks under Russian jurisdiction so the money wouldn't be subject to seizure - simple as that. Now, the problem is these contracts are in euros and dollars, so Pikin says Gazprom worked out a compromise of sorts. You know, Europe can pay in euros to, say, Gazprom's own banks. Gazprom transfers the payments into rubles, and that pleases the Kremlin. But, of course, that only applies to those who decide to play ball, which, of course, Poland and Bulgaria refused.

SCHMITZ: Aha. So let's pivot to Joanna. Why did these countries refuse?

KAKISSIS: Both Poland and Bulgaria don't want to accommodate a country that has started an unprovoked war against a sovereign nation, Ukraine. They are also challenging the Russian stoppage. They say Gazprom can't change the terms of contracts that were signed years ago. But both the Polish and Bulgarian government say they are also prepared to go without Russian fuel. They've assured their citizens that everything will be fine, that the countries have alternative fuel sources, as well as fuel in storage and access to the EU energy market.

I spoke about all this with Polish energy analyst Agata Loskot-Strachota. She says Poland and Bulgaria are sounding the alarm about Gazprom.

AGATA LOSKOT-STRACHOTA: Unfortunately, Russia will be playing its games with gas supplies to Europe, and we cannot really avoid that. Everyone in Europe is actually preparing for disruption in Russian gas flows. And the key issue here is to stay united.

KAKISSIS: And she says Russia is trying to divide the EU by using energy as a weapon.

SCHMITZ: So Charles, this has long been a fear, that Russia would cut supplies to Europe. But isn't this a risky move on the part of the Russian government?

MAYNES: Well, yeah. I mean, keep in mind that throughout the late Soviet period, at the height of the Cold War, you know, Europe and Moscow managed to have a pretty good business relationship with gas despite all the political tensions. And, you know, Putin, when he came to power, essentially followed that pattern, not always so convincingly, though, I think, to a lot of people.

You know, today's decision, it certainly gives ammunition, as Joanna is pointing out, to these voices in Europe who've long argued that their reliance on Russian oil and gas undermines their security and leaves, you know, EU countries open to Russian blackmail. You know, to them, it looks political because it is political. You know, today we heard from the Kremlin spokesman, Dmitry Peskov, who said that that's not the case. He says that, you know, essentially for those European countries who are willing to pay in rubles - and there are some who seem to indicate that they are willing - that it's business as usual, that essentially nothing's changed. But, of course, a lot of Europeans aren't, you know, blind to the optics of giving Putin what he wants.

Now, the problem is, what happens if Europe doesn't want to pay gas? You know, Russia says it'll take its gas elsewhere, to buyers like China or India. But the hard truth is that you can't just redirect these supplies. I mean, there are literally physical pipelines connecting these countries together, and moving away from that is going to take time.

SCHMITZ: Joanna, does this mean that the lights are going to go off in Poland and Bulgaria?

KAKISSIS: No. The lights are going to stay on, at least for now.

SCHMITZ: Good to hear.

KAKISSIS: (Laughter) Yes. It's spring, so, you know, you don't need to burn fuel to keep people warm. That's a big plus. And it will be warm for the next few months, so there is some breathing room. But in the long term, you know, Bulgaria is in the more precarious position. It's a small country. It's not very rich. Much of its fuel until now came from Russia. Bulgaria has some options, including importing gas from neighboring countries like Turkey or Greece. Greece has already offered, actually, to export gas to Bulgaria.

Poland, meanwhile, has been moving for years to cut itself from Russian fuel imports. Earlier this month, the Polish government declared that it was phasing out all Russian imports by the end of the year, and they're looking to the U.S., to Qatar and to Norway to fill the gap, to fill - for new fuel resources.

SCHMITZ: So Joanna, it looks like Poland is trying to figure things out, but EU-wide, what are the alternatives?

KAKISSIS: Well, you know, the EU has been thinking about life after Gazprom for some time. There is a plan to drastically cut Russian gas imports by 2030. In the short term, though, you know, LNG, liquefied natural gas, is an option, though supplies are limited. There's also coal, and that's another short-term solution because it's very unpopular with environmentalists, and the EU is trying to cut its carbon emissions.

And I talked this all over with Julian Popov, who's a former environment minister from Bulgaria, and he sees this crisis as an opportunity to speed up getting renewable energy sources online finally at the EU. And he says that this is going to take a while, so in the meantime, expect pain because this is a war, an energy war with Moscow, and that the EU must accept that.

SCHMITZ: Aha. So expect pain. That's NPR's Joanna Kakissis and Charles Maynes. Thanks to you both.

MAYNES: Thank you.

KAKISSIS: Thanks for having us, Rob. Transcript provided by NPR, Copyright NPR.