Shutterstock Save for later Print Download Share LinkedIn Twitter Following weeks of uncertainty, Russia has sent European buyers the message it is deadly serious about compliance with new gas payment rules. Gazprom cut supplies to Poland and Bulgaria on Apr. 27 after a payment deadline fell due and the two refused to pay in rubles. Both are relatively minor markets. But with Brussels continuing to insist that compliance would violate EU sanctions — but not coming up with an alternative that might satisfy the Kremlin — the question is what will happen when payments from bigger European customers start coming due in mid-May.RussiaThe Kremlin said in late March that "unfriendly countries" would have to start paying for gas in rubles to prop up its currency. Under a two-step payment system, companies would have to open two accounts at Gazprombank — one in euros or dollars and the other in rubles. The bank would convert the foreign currency into rubles, which is then used to pay Gazprom. European companies called the unilateral change in contract terms unacceptable, but Kremlin spokesman Dmitry Peskov said it was necessary because of the West's “unfriendly” steps, and that Russia had assessed the risks involved in cutting off more countries.Right now, it has little to worry about financially. The volumes involved are relatively small — Poland's PGNIG has a 10.2 billion cubic meter per year contract expiring at the end of the year and Bulgaria's Bulgargaz one for 2.9 Bcm/yr — and will be more than offset by high prices. In the first four months of 2022, Gazprom reckons its exports to Europe (including Turkey) and China tumbled 27% year on year to 50.1 billion cubic meters. But its earnings from sales to Europe (excluding Turkey) could be up to four times greater, at $400 million a day, Energy Intelligence calculates.PolandThe cutoff will affect Poland and Bulgaria differently.Poland is still getting Russian gas from Germany. Supply has averaged 30 million cubic meters per day since Apr. 26, up from 6 MMcm/d just before the halt. Of the 4.05 Bcm imported by PGNIG in the first quarter, 2.15 Bcm came from Russia, 5% less than a year earlier, while LNG imports jumped 34% to 1.07 Bcm.The country had already drawn up a strategy to replace Russian volumes with piped gas and LNG. From 2023, PGNIG will get as much as 5.5 million tons per year of US LNG (equivalent to 7.4 Bcm/yr) from Venture Global, meeting roughly a third of its forecast 20 Bcm demand. It intends to import 1.9 Bcm/yr of LNG from Cheniere and 2.7 Bcm/yr from Qatar, and will bring in Norwegian gas through the 10 Bcm/yr Baltic Pipe, which should open in October and reach capacity by January 2023.BulgariaBulgaria's refusal to pay Gazprom in rubles was a bigger surprise as Russian gas meets most of its 3 Bcm-4 Bcm/yr requirements. Energy Minister Alexander Nikolov told the Financial Times that Russia cut it off after rejecting its euro payment.Sofia is confident of replacing the Russian volumes. It will get 1 Bcm/yr of Azeri gas from the Trans Adriatic Pipeline and LNG from neighboring Greece once the Interconnector Greece-Bulgaria pipe finally opens by the end of June. The Bulgarian subsidiary of Switzerland's MET Trading has booked 11 slots at Greece's Revithoussa LNG terminal from May onward for a total of roughly 550,000 cubic meters, thought to be intended for Bulgaria. Bulgarian grid operator Bulgartransgaz is a shareholder in Gastrade, developer of a 5.5 Bcm/yr terminal at Alexandroupolis in northeast Greece expected on line next year. The European Commission and Bulgaria have now set up a regional taskforce as part of the EU’s joint energy purchasing platform to coordinate ways to reduce dependence on Russia and fill storage ahead of winter. The group will meet on May 5.Will Others Be Next?Right now, it's hard to say whether more buyers might get cut off. EU energy ministers reiterated at an emergency meeting on May 2 that compliance with the new Russian payments system would violate sanctions, but did not agree on any new measures to prevent further disruptions or cope with any that occur. Energy Commissioner Kadri Simson said Brussels would provide more "detailed guidance on what the companies could do within our sanctions framework."European buyers have meanwhile been clarifying or denying media reports about compliance. Italy’s Eni, which has contracts with Gazprom for around 19 Bcm/yr, said last week it has not opened a ruble account and has continued to receive invoices in euros. The head of Austria’s OMV, Alfred Stern, has not said whether his company has set up a ruble account but said it is developing a sanctions-compliant payment method. Germany’s Uniper said it believes it can comply with the new payment system without breaching sanctions and is coordinating with the government.