EU to set out plan for phasing out Russian gas deals, existing contracts

The European Union will outline on Tuesday how it will try to halt new Russian gas deals and phase out existing contracts with Moscow, as it seeks to end decades-old energy relations with Europe's once-top gas supplier. 

The EU has a non-binding aim to end its reliance on Russian fossil fuels by 2027, which it set after Moscow's 2022 full-scale invasion of Ukraine. 

The European Commission, the EU executive, will on Tuesday publish a "roadmap" of more specific plans to accomplish that, including through measures aimed at banning new Russian gas import deals and spot contracts, people familiar with the matter told Reuters. 

 

The Commission has also been assessing legal options that would allow European companies to break existing Russian gas contracts by the end of 2027. Lawyers have said, however, it will be difficult to invoke "force majeure" to quit these deals, and that buyers could face penalties or arbitration for doing so. 

Any such tools would not kick in immediately. The Commission would need to follow up with legislative proposals in the coming months, requiring approval from the European Parliament and a reinforced majority of EU countries, depending on the type of legal tool proposed. 

The plans could still change before they are published on Tuesday. 

Around 19 per cent of Europe's gas still comes from Russia, via the TurkStream pipeline and liquefied natural gas (LNG) shipments. 

That is far below the 40 per cent Russia supplied before 2022. But European buyers still have "take-or-pay" contracts with Gazprom which require those that refuse gas deliveries to still pay for most of the contracted volumes. 

Uncontracted "spot" purchases made up around 31 per cent of the Russian LNG Europe bought last year, Rystad Energy data show. 

As it attempts to cut Russian imports, the European Commission has signalled willingness to buy more US LNG, one of the steps President Donald Trump has demanded from Europe as a way of shrinking its trade surplus with the United States. 

The Commission is also concerned about energy prices, and has said any measures to restrict Russian energy imports must hurt Moscow more than the EU, and take into account the impact on fuel costs. 

Imposing sanctions would be the fastest way for the EU to halt Russian gas imports. But sanctions would require unanimous approval from all 27 EU countries, and Slovakia and Hungary - which still receive Russian pipeline supplies - have vowed to oppose them. 

The US is pushing Russia for a peace deal with Ukraine, which, if reached, may reopen the door for Russian energy and ease sanctions. 

The European Commission had originally planned to publish its roadmap in March, but delayed it in part due to uncertainty around these developments.  (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)