Analysts say Russia’s shutdown of gas supplies to Poland and Bulgaria should be manageable.

Credit…Newspaper/Reuters Agency

Analysts say Gazprom’s announcement Tuesday to suspend natural gas supplies to Poland and Bulgaria is unlikely to have a major impact on the common European gas market. But it’s a warning that as the war in Ukraine continues, further, more severe disruptions to Russia’s fuel supplies are not far off.

The move “increases the risk of other early terminations of other European contracts,” Giacomo Romeo, an analyst at investment bank Jefferies, wrote in a comment.

The shutdown is the first suspension of supplies to European countries since the start of the war in Ukraine in late February. Gazprom, the Russian gas monopoly, said in a statement that it was acting because Bulgarian and Polish gas companies had failed to comply with President Vladimir Putin’s demands to pay in Russian rubles for gas delivered since April 1.

For Europe, the shutdown of gas supply occurs on time, if such a thing is possible at all. The weather becomes warmer in spring and gas consumption, which rises sharply in winter, is reduced, which eases the pressure that has kept prices high for several months.

In a note to clients on Tuesday, analysts at Goldman Sachs said they expect the Russian shutdowns to have “only a modest physical impact” on the balance of supply and demand in the key northwest European market.

Despite such assurances, Russia’s actions sent European natural gas futures prices skyrocketing on Wednesday, opening more than 20 percent higher on the Dutch TTF exchange to 125 euros (about $133) per MWh. Prices dropped closer to the morning.

Poland will likely be safe from a Russian shutdown in the coming months. It receives only modest amounts of gas from Russia via the Yamal gas pipeline, which Gazprom is shutting down this year. Indeed, the pipeline often ran in reverse, bringing gas from a storage facility in Germany to Poland.

Unlike some other European countries, Poland has been working for at least a decade to ensure that Moscow does not demand a ransom from it because of energy resources. This preparation means Warsaw has other gas options, including an LNG terminal that the country has built to reduce its dependence on gas from Russia. The facility allows Poland to import fuel from suppliers such as Qatar and the United States. In addition, a new pipeline is expected to be put into operation later this year, bringing gas from Norway under the Baltic Sea.

Poland also supplies gas to storage facilities that are currently over 75 percent full, more than double the European average.

In a statement on Wednesday, PGNiG, Poland’s dominant energy company, said it had “various opportunities to obtain” gas, including from Germany and the Czech Republic.

PGNiG said that by stopping gas flows, Gazprom violated its contract. The Polish company said it “after a thorough review” decided that payment in rubles did not meet the terms of its contract.

Bulgaria also maintains that it has met its legal obligations and that the gas is being used “rather as a political and economic weapon in the current war,” said Energy Minister Aleksandr Nikolov. Even though Bulgaria is heavily dependent on Russian gas, analysts say it remains a minor item in terms of Europe’s fuel consumption.

The shutdown could herald other, more damaging fuel shutdowns if the war continues and if clients like Germany, Russia’s biggest gas importer, don’t agree to settle the Kremlin’s demands for ruble payments.

“It is in the interests of both the EU and Russia to find a solution,” Goldman analysts wrote, warning that a wider gas shutdown could lead to “significant economic losses.”