In response to Russian aggression, in 2022 the European Commission introduced the REPowerEU plan to eliminate dependence on energy purchases from Moscow. Since then, the development of green generation, increasing energy efficiency and diversifying supply sources have helped reduce more than 60 billion cubic meters of annual Russian gas imports. However, in 2024 the EU still received 52 billion cubic meters of blue fuel from the aggressor country, of which 32 billion cubic meters were delivered by pipelines and 20 billion cubic meters by sea tankers in the form of LNG (liquefied natural gas).

To finally get rid of these residues, the European Commission developed a “Roadmap” and presented it in early May. “Ukrainian Energy” studied this document and found out why market experts are skeptical of the promises of European officials to completely abandon Russian gas, as stated in the announced plans.

The European position

According to Eurostat, last year the share of Russian gas in the EU’s total gas imports reached 19%. “Dependence on Russian energy sources poses serious risks to the economic security of EU Member States, as Russia consistently uses energy sources as a weapon to threaten our stability,” the explanatory note to the Roadmap states. Therefore, “Europe is working together to secure alternative and affordable sources, while taking joint action to reduce Russia’s revenues that fuel its military machine.”

The document, which was expected in February, envisages a complete ban on imports of Russian pipeline and liquefied gas under long-term contracts “no later than the end of 2027.” It also calls for a ban on spot gas purchases (i.e. one-off exchange transactions at market prices) by the end of 2025. It also points to a gradual halt to imports of Russian oil and nuclear energy, so that EU countries can simultaneously “ensure the stability of energy supplies and prices.”

It is expected to be supplemented in June by legislative proposals that will provide the legal basis for European companies to terminate existing contracts with Russian counterparties early, citing force majeure.

“The EU position is very clear. We do not want energy from Russia in the future. We do not want it now and we will not want it after peace is restored. Putin has shown himself to be an unreliable partner and an aggressor, we cannot repeat the same mistakes in the future,” said European Energy Commissioner Dan Jorgensen. He called the Roadmap a “very clear signal” to the market that Europe does not want to use “a single molecule” of Russian energy under any circumstances, because “in the hands of the Kremlin it has turned from a commodity into a weapon to achieve an aggressive political goal.”

Legal subtleties

Christian Zinglersen, director of the EU Agency for the Cooperation of Energy Regulators (ACER), called the Brussels plan “an ambitious but at the same time pragmatic approach to gradually reducing dependence on Russian gas.” However, in practice it will not be easy to implement.

The most difficult part of the Roadmap will be the termination of contracts for buyers. “It is not easy to legally withdraw from agreements with Gazprom, because they often contain a “take it or pay” clause. If the refusal of gas is due to a political initiative of the EU, and not due to a violation by the supplier, such arguments lose their force. Sanctions would be a more solid legal basis, but they are being blocked by countries such as Hungary and Slovakia,” Reuters reported, citing energy law experts.

The precise timing of the Russian gas phase-out will depend on the EU’s ability to secure alternative LNG supplies from the United States, Qatar, Canada and Africa, Bloomberg reported. However, EU officials now believe that given the growth of the global LNG market, the phase-out plan will have limited impact on prices and EU energy security. The European Commission predicts that global LNG supply will grow rapidly in 2025, while demand will decline as renewables replace fossil fuels.

However, Europe remains an attractive destination for supplies from Russia’s large Yamal LNG project, which is Novatek’s key Arctic asset. France's TotalEnergies, Spain's Naturgy Energy Group and Germany's Securing Energy for Europe (SEFE) have long-term contracts with it. It is still unclear what measures the European Commission will propose to businesses to abandon these deals.

The market may not react at all. There are rumors that companies will start supplying more Russian fuel to Europe as soon as it becomes legally possible and politically acceptable. "The remaining demand for Russian energy resources is driven by cost considerations... EU countries are concerned about competitiveness and deindustrialization, so cheap Russian energy remains an attractive resource against the backdrop of a possible peaceful settlement in Ukraine," said an expert on sanctions at the International Institute

Maria Szagina, a professor at the Institute of Strategic Studies. She believes that one of the important signals that the EU can send is “legal mechanisms for terminating long-term contracts without paying large fines.”

Russian satellites

The “road map” is also a way to maintain pressure on Russia in a situation where the pace of introducing new tough energy sanctions has slowed down. In particular, Hungarian Prime Minister Viktor Orbán has promised to block any new energy restrictions and is constantly threatening to abolish the entire EU sanctions system, which requires unanimous renewal every six months. “The European Commission’s politically motivated plan to ban Russian energy is a serious mistake that threatens energy security and violates sovereignty,” Hungarian Foreign Minister Péter Szijjártó said.

Another opponent of increasing energy pressure on Russia is Slovakia. “The ban is not in the interests of either our country or other EU countries. The proposed initiatives will negatively affect prices and worsen the competitiveness of European industry,” said Slovak Prime Minister Robert Fico. He considers the European Commission’s plan “a political and ideological document that should never be implemented.”

Budapest and Bratislava are expected to remain among the opponents of the EU’s “anti-Moscow plans,” as they are still the main consumers of Russian pipeline gas in Europe. They argue that they are unable to switch to alternative purchases and abandon contracts with Gazprom. Therefore, fulfilling the conditions set by Brussels allegedly jeopardizes their energy security.

Old policy

Experts from the Center for the Study of Democracy and the Center for Research on Energy and Clean Air (CREA) concluded that the arguments of Hungary and Slovakia are a manipulation.

Their research found that these two countries have ample alternatives to Moscow’s oil and gas, but they refuse to use them. “The main reason is the desire to preserve hundreds of millions of dollars in profits. That is why they have taken advantage of sanctions exemptions to increase their dependence on Russian energy,” says the “Last Mile” study on the gradual abandonment of energy cooperation with the Kremlin in Central Europe.

“The continued import of Russian oil and gas into Hungary and Slovakia is not the result of technical or infrastructural constraints. It is the result of a deeply entrenched network of intermediaries and offshore trading structures that have allowed Russian companies to maintain control over the energy sectors of these countries and make huge profits,” said study co-author Martin Vladimirov, director of the Energy and Climate Program at the Center for the Study of Democracy.

The lack of a general consensus in the EU remains perhaps the main reason that prompts market experts to doubt the feasibility of Brussels' plans to sever any ties with Moscow in gas imports by 2027. "We still take into account its supply after that date in our analysis. We need details on the specific mechanisms that the European Commission intends to use to stop imports and make them public in June," said Christophe Galzer of the consulting company Rystad Energy.

Turkish mix

Montel agency reports that the EU currently imports about 100 million cubic meters of gas per day from Russia, of which about 40 million cubic meters are supplied via Turkey to Southeast Europe via the TurkStream pipeline, and the rest arrives by sea in the form of LNG.

“Turkey mixes pipeline gas – mainly Russian, Azerbaijani and partly Iranian – with liquefied gas from the US, Qatar, Algeria. However, it does not track the molecular origin of the resource in its gas network,” said Athanasios Konstantopoulos from the consulting company Arrow Resources. Therefore, according to the expert, without mandatory certification of the origin of the gas and control at gas metering stations where the blue fuel enters the EU market, the so-called “Turkish mix” could turn into a “de facto gray channel” for the transportation of Russian gas.

“This will allow Turkey to legally swap (exchange transactions) and re-export gas in a way that hides its origin and bypasses any potential EU sanctions. Russia, for its part, will be able to maintain a certain share of the European market – and all this within the framework of current legislation,” he expects.

Tamás Pletser, an analyst at Erste Investment in Budapest, agreed, noting that “natural gas is an almost homogeneous product in which it is impossible to determine the origin of the molecules.” “It is impossible to say from which deposits the gas in the mixture comes: from Russian, Turkish, American or Qatari deposits,” he added.

Thus, the complete exclusion of Russian gas from transportation via the TurkStream pipeline by 2027 is “unrealistic” unless several conditions are met: first, it is the termination of the current long-term contracts of European companies with Gazprom, and second, it is a political decision by the Turkish authorities to break off any gas interaction with Moscow or, in its absence, the introduction of EU sanctions or other administrative prohibitions that would stop gas supplies via TurkStream to Europe.

Svitlana Dolinchuk, specially for Ukrainian Energy