Poland ends deal to receive Russian gas after rouble dispute

By Marek Strzelecki

WARSAW (Reuters) - Poland said on Monday it had terminated its agreement with Russia to receive Russian gas via the Yamal pipeline, after Warsaw rejected a demand to pay for the fuel in roubles and Moscow responded by cutting off supplies in April.

Polish Climate Minister Anna Moskwa, who announced the decision on Twitter (NYSE:TWTR), told Poland's PAP news agency that Warsaw's move did not affect gas flows from Germany to Poland via the pipeline, which is operated by a Polish company.

Poland previously said it did not plan to extend the supply contract that had been due to expire at the end of 2022. Polish gas firm PGNiG had told Russian gas exporter Gazprom (MCX:GAZP) in 2019 that it would not renew the deal.

"Russia's aggression against Ukraine has confirmed the accuracy of the Polish government's determination to become completely independent from Russian gas. We always knew that Gazprom was not a reliable partner," Moskwa said.

Gazprom did not reply to Reuters request seeking a comment.

Warsaw has refused to comply with Russia's demand for European countries to pay for gas in roubles, even though most contracts are denominated in euros or dollars.

Moskwa said ending the deal was natural after she said Russia breached the contract by halting supplies.

Kremlin spokesman Dmitry Peskov said: "We can hardly talk about any contractual relations now. Poland has refused to pay for gas long ago and, in order for gas to be supplied, written agreements and payment are needed."

"We need to carefully analyse the possible consequences for the transit," Peskov told reporters on a conference call when speaking about Poland's move. He did not elaborate.

Poland has used the pipeline to receive gas from Germany by reversing the flows when gas has not flowed from Russia towards western Europe.

The Polish section of the Yamal pipeline that links Russia with western Europe is owned by a joint venture of Gazprom and PGNiG but it is operated by Poland's state-owned gas transmission company Gaz-System.

"Intergovernmental agreements with Russia, which are breaching the European law should not be in place any longer," Moskwa told PAP. "The Yamal pipeline is functioning in line with the European law, which allows it to be used for reverse supplies of gas from Germany to Poland without interruption."

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Piotr Naimski, Poland's minister in charge of energy security, told public radio on Monday the government adopted a resolution to terminate the Russian contract on May 13. He said an official notification would be sent on Monday.