Rubles in exchange for gas exports

In this interview with CNBC Arabia, Dr Carole Nakhle, CEO of Crystol Energy, discusses the implications of Russia halting its gas exports to Bulgaria and Poland.

Dr Nakhle says that the Russian move did not come as a major shock since the European Union (EU) has factored in such a scenario as Russia seeks retaliation to the sanctions imposed on it. In addition, Russia announced that it would take payments in ruble only already a month ago, a condition that Poland and Bulgaria refused to adhere to, though their position is not unanimously shared by other EU countries. The EU remains divided on the procedure of paying for gas imports from Russia in rubles.

Halting gas exports to the EU will have a profound impact on EU members as no immediate alternatives are readily available to Russian gas. However, efforts to decrease the reliance on Russian gas have been taking place for a while. Poland, for instance, has been working on building its gas storage even before the war in Ukraine started. If Poland and Bulgaria weren’t prepared for a gas escalation from Russia, they wouldn’t have abstained from paying for gas in rubles. In addition to its gas storage and potential supplies from elsewhere, Poland still highly relies on coal for the generation of electricity, thus it is less susceptible to a disruption in gas supplies. Not to forget that the heating season is over in Europe, thereby easing demand for gas.

In the longer term, Russia will be the biggest loser as the European market is still considered the biggest market for Russian gas.