EU Commission proposals aim for full elimination of natural gas imports from Russia
Strasbourg: EU's Gas showdown with Russia
By the end of 2027, the EU Commission has set its sights on cutting off all gas imports from Russia within the European Union. Despite dependencies, the commission plans to impose gas sanctions for the first time. On Tuesday, the EU Commission will present the concrete steps to achieve this. Here's a lowdown on the situation.
Why bust the gas pipeline with Russia?
The motivations stem from the ongoing Russian attack on Ukraine since February 2022. In response, the EU imposed sweeping sanctions on Russian energy carriers, such as coal and oil. However, gas imports have yet to face sanctions due to dependencies. As it stands, liquefied natural gas (LNG) and gas via the TurkStream pipeline are still being supplied. According to EU Commission data, Russia contributed to around 19% of all gas imports in 2024, amounting to €15.6 billion in 2022. Compared to gas imports from the USA worth €19.1 billion, Russia remains a significant player.
What's the game plan?
The EU Commission intends to phase out Russian gas imports completely by 2027, in stages. First off, the commission plans to halt the signing of new gas supply contracts with Russia and ban the purchase of spot market gas, effective by the end of the year. The commission also aims to prohibit the import of gas from Russia via existing long-term supply contracts, with a gradual phase-out due to larger quantities by the end of 2027.
The commission foresees minimal impact on prices and no supply shortages for consumers, according to EU Energy Commissioner Dan Jørgensen. He emphasized that they aim to ensure no member state faces supply security issues while keeping prices as low as possible.
How's it gonna happen legally?
It remains unclear how the commission plans to enforce the import ban. One possible method could be through the use of options under EU trade law. An import ban via sanctions, which requires a unanimous decision by EU states, appears unlikely. Hungary has consistently opposed such a move, and both Hungary and Slovakia abstained from a joint declaration by EU states regarding energy supply security.
Will German companies get a cold shoulder?
If the proposed import restrictions come into effect, German state-owned energy company Sefe could find itself in a precarious position. Sefe continues to import LNG from Russia based on an existing long-term contract. The company, formerly known as Gazprom Germania, could be affected by the restrictions. According to a report from the beginning of the year, Sefe imported over six times as much LNG into the EU last year as in 2023.
Sefe claims there is no legal basis for the suspension or cancellation of an existing long-term contract between a Russian supplier and the company. Even if Sefe fails to utilize the gas, the agreed-upon quantities must still be paid. Non-acceptance could result in the supplier reselling the quantities, supporting the Russian economy.
A new energy era
The EU's plan targets energy independence and reduced reliance on Russian energy. Companies will have to adapt to new regulations, such as shifting towards alternative suppliers and gradually phasing out existing long-term contracts with Russia. National diversification plans are in the works to ensure a smooth transition. Additional measures, such as enhanced transparency and emergency measures, will facilitate monitoring and enforcement of the ban. Despite energy security concerns expressed by some countries, the European Commission argues that the measures are crucial for the EU's energy independence and competitiveness.
- The European Union's intention to cut off all gas imports from Russia by the end of 2027 is primarily driven by the ongoing war-and-conflicts in Ukraine.
- The EU Commission plans to impose gas sanctions on Russia for the first time, as part of its policy-and-legislation aimed at reducing its dependence on Russian energy.
- The energy sector, including finance and politics, will be significantly impacted by the EU's decision, as companies will need to adapt to new suppliers and regulations.
- The EU's policy on gas imports from Russia is a part of a larger strategy to attain energy independence, thereby ensuring the EU's competitiveness in the general-news landscape.
