Poland and Bulgaria start life with no Russian gas

There's no Russian gas coming through pipelines in Poland and Bulgaria, but both countries say they'll do just fine without an energy link to Moscow.

“Poland is an energy-secure country, which does not have to and will not yield to gas blackmail by Russia,” Polish Climate and Environment Minister Anna Moskwa said on Wednesday. 

Bulgarian Energy Minister Alexander Nikolov also said that the loss of Russian gas won’t cause much disturbance. "It is clear that at the moment natural gas is being used more as a political and economic weapon in the current war."  

Poland uses about 20 billion cubic meters (bcm) of gas a year, 9.9 bcm of which come through the Yamal pipeline from Russia. But unlike Germany, which generates about 15 percent of its electricity from gas, Poland gets most of its power from coal, while gas is used by industry and for domestic purposes.

Poland's 1996 contract with Gazprom expires at the end of this year, and the country has long said it has no intention of renewing it. Instead, Warsaw has been working for years to diversify its supplies.

PGNiG, the Polish state-controlled oil and gas company, said its customers won't face any shortfalls in deliveries. “Currently, despite Gazprom's cessation of deliveries, PGNiG customers receive gas in accordance with their demand.”

“The existing entrances to the system … make it possible to balance the gas system without supplies from the eastern direction,” said Gaz-System, Poland's gas transmission system operator.

Poland's gas storage is almost 80 percent full, it has a liquefied natural gas terminal on the Baltic Sea, interconnectors with Germany and the Czech Republic, as well as a new pipeline link with Lithuania, which is supposed to kick in on Sunday. The Baltic Pipe connecting Poland with Norway's North Sea gas fields is due to start operating in October. 

“For now it seems there are no big supply risks,” said Robert Tomaszewski, senior energy analyst with Polityka Insight, a Polish think tank. However, Poland's situation would be more difficult if Russia turns off the taps to other EU countries like Germany, which gets the bulk of its Russian gas via the undersea Nord Stream pipeline.

“If it turns out that Berlin refuses [to pay in rubles] and the Russians turn off Nord Stream 1 then we have a bigger problem. It wouldn’t lead to breaks in gas supplies in Poland but the prices would skyrocket even more, increasing the costs to everyone: households, industry," he said.

Although Bulgaria's situation is more difficult than Poland's, it also had no plans to extend its Gazprom contract beyond this year.

The country imports almost 3 bcm of gas a year from Russia, or about 90 percent of its gas demand, almost all of it via the TurkStream pipeline running under the Black Sea from Russia to Turkey and then on to the EU. Its stores are at around 17 percent of capacity, which Nikolov said was enough for one month's consumption. 

“We have secured quantities [of gas] for the sufficiently foreseeable period. In the meantime, we will discuss supplies, transfer routes and further quantities with the European Commission,” Nikolov said.

Bulgaria also imported some 0.5 bcm of gas from Azerbaijan via the Southern Gas Corridor, and those supplies are expected to grow once the Interconnector Greece-Bulgaria becomes operational in July. Sofia is also eyeing potential LNG supplies from Greece and Turkey; a Greek energy ministry official said that Bulgaria has already booked some LNG cargoes to be delivered via the Revithoussa LNG terminal off Athens.

Like Poland, Bulgaria doesn't generate much electricity with gas, relying largely on nuclear, coal and renewables.

“In the short term, things should be fine,” said Atanas Pekanov, an economist at the Austrian Institute of Economic Research and a former Bulgarian deputy prime minister. “Yes, the industry will suffer from this but the government can always intervene … There will be economic losses ... but they should not be catastrophic.”

Although he predicted there would be no supply crunch, Pekanov did warn that the Russian cutoff could cause prices to spike. "It will definitely push prices even higher. I think it will be bad for households but again, it's not catastrophic.”

The key is for the interconnector with Greece now under construction to be completed on time.

"If that happens, things should be relatively fine. If that doesn't happen, next winter could turn out to be more difficult because then there might be even shortages,” Pekanov said.

Nektaria Stamouli contributed reporting.