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Gas prices have risen by 24% in Europe after Russia stopped deliveries to Poland and Bulgaria

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Gas prices in Europe rose sharply after Russia cut off supplies to Poland and Bulgaria, further exacerbating tensions in the region, a threat to the continent’s energy security and signaling that Moscow is willing to reduce and even to stop energy imports if European countries do not pay in rubles for Russian fuels, informs Bloomberg.

Gazprom has announced that it has suspended gas supplies to Bulgaria and Poland because gas exports have not been paid in rubles. Following the announcement of the Russian gas producer and distributor, futures quotations in the Netherlands rose by 24% to 127.50 euros per MWh-hour, the highest level since April 1.

Gas prices in Europe had already risen by as much as 17% after Russia announced on Tuesday that it had cut off gas supplies to Poland.

Moscow and the European Union have been embroiled in a dispute for weeks, with President Vladimir Putin ordering payments in Russian currency from “unfriendly” buyers, while the EU says the requirement violates sanctions.

European gas prices have risen after Russia cut off supplies to Poland and Bulgaria

Russia’s move is creating additional demand, as Poland and Bulgaria will have to buy gas to replace Russian gas flows, according to Jefferies Group LLC. Gas orders flowing from Germany to Poland via the Yamal-Europe pipeline rose on Wednesday, according to data from network operator Gascade.

Stopping Russian flows to the two countries should have a “modest physical impact” on the gas balance in northwestern Europe, according to analysts at Goldman Sachs Group Inc. led by Samantha Dart.

However, he raised the stakes for the EU “if the new gas payment system violates sanctions and therefore is likely to keep market volatility high,” they said. A complete halt in Russian flows to Germany could raise European gas prices to more than 200 euros this summer, although the scenario is “very unlikely,” the bank added.

European focus

Attention is now turning to other EU nations as the bloc struggles to reduce its energy dependence on Russia. Payments for gas supplies this month – which are affected by Putin’s demand – are due in late April and May.

The transit of gas to Hungary is going according to plan, and the country has found a way to pay Gazprom for this, Foreign Minister Peter Szijjarto said in a video message on social networks. Austrian oil and gas company OMV AG said imports were not disrupted by the shutdown in Poland and Bulgaria.

Russian gas orders through Ukraine have been stopped again, although Gazprom said the flows are in line with customer requests.

The Polish government said on Tuesday it had enough fuel in storage to withstand the supply disruption. Bulgaria has been providing gas for at least a month, according to the energy minister.

Poland will lose 7 billion cubic meters of gas for the rest of the year, and Bulgaria 2-3 billion, according to German company Uniper SE. It should be possible to replace these streams with liquefied natural gas and other sources without too much impact, said commercial director Niek den Hollander.

On the other hand, the capacity of the giant Troll gas field in Norway is scheduled to be lower in early May than previously planned, according to network operator Gassco AS. Interconnector pipelines between the United Kingdom and Belgium were closed on Sunday due to work.

The end of the heating season in Europe this month has also reduced the need for an immediate supply, although buyers are now starting to fill storage areas for next winter.

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