European Commission proposes a permanent departure from Russian gas imports

On 17 June, the European Commission (EC) published a proposal for a regulation to lead to the withdrawal of EU countries from imports of gas and oil from Russia. In particular, the paper suggests:

• introducing a ban on imports of gas from Russia through pipelines or in liquefied form, in a gradual manner, depending on the kind and time of conclusion of the contracts, to enter into force in full by the end of 2027. This is to be accompanied by a ban on long-term services to Russian operators at LNG terminals in the European Union;
• rules allowing the implementation and monitoring of this prohibition and the withdrawal of imports of oil, including through national gas and oil diversification plans;
• provisions in the framework of the amendments to the Regulation on the safety of gas supply – enabling a better assessment of safety of gas supply to the EU (see Annex).

The proposal will inactive be the subject of the work of the European Parliament and the Council of the EU, and the final form of the paper will depend on the changes proposed by these institutions. The regulation is based on EU trade and energy law and so requires a qualified majority alternatively than unanimity to adopt it. This avoids the opposition announced by Hungary and Slovakia. In addition, in order to enable companies to terminate contracts without being subject to contractual penalties, the EC states that the entry into force of the prohibition will constitute force majeure (power higher).

The announcement of the proposal for a regulation in the context of the Israeli-Iran War and uncertainty about the key partner-US policy confirms Brussels' political will to finalise the EU's departure from Russian gas. However, it is not known whether, due to the increasing instability and its impact on oil and gas markets in the world, most associate States will support the actions proposed by the EC.

Comment

• The paper sets out the actions announced in the "road map" of May this year to decision distant from gas importsFR (see besides European Commission plan to decision distant from imports of Russian energy natural materials). However, the deficiency of legal instruments to support the departure from Russian oil by the inactive imported Central European states (it is possible that the exclusion of the confederate strand of the Druzba pipeline from EU sanctions will serve). No formal instruments have been announced to encourage the EU to drop dependence on Russian uranium and atomic fuel and services throughout the atomic cycle. This may have been delayed over time due to much greater difficulties in withdrawing from cooperation with Russia in this area.
• The draft regulation confirms the EC's political will – powerfully supported by the Polish Presidency of the EU Council – to end gas imports from the FR. It is supported by the majority of associate States, including Germany, as shown by the EU Energy Council of 16 June, 1 of the main themes of which was to break off Russian natural materials. According to the EU Energy Commissioner Dan Jørgensen, the aim of the EC is to completely and permanently decision distant from gas there. This is to be needed to strengthen the EU's energy safety during the war in Ukraine and not to finance the country of the aggressor.
• The Commission besides plans to destruct Russia's ability to channel gas supplies in peacetime, guarantee unchangeable and predictable marketplace conditions, advance the accomplishment of EU climate policy objectives, and yet guarantee coherence within the EU. The legal basis proposed for the adoption of the Regulation requires a qualified majority of the associate States to circumvent the already announced opposition by Hungary and Slovakia. The Commission besides points out, citing Articles 207 TFEU and 21(3) TEU, that EU trade policy must comply with the key objectives of EU abroad policy. Accepting the paper and its entry into force while preserving these legal interpretations would open the way for further, more coherent action besides in another areas of trade policy.
• The EU plans are not conducive to the global situation. The oil and gas markets and the level of uncertainty are negatively affected, in peculiar by the changes in US policy and the ensuing concern about the future of US sanctions on Russian natural materials – the intensifying Israeli-Iran war. Already in the first days, it was noted that it translates into rising prices of both oil and gas on European exchanges. Moreover, it has already affected the availability of Israeli gas (for safety reasons, the operation of 2 of the 3 largest deposits has been closed) and the situation in regional markets (Egypt and Jordan implement emergency operations in the energy sector). The very hazard of possible escalation reflects the price levels on the stock exchanges, while its implementation can be affected not only by the immense deposits and production capacity of Iran, but besides by the way of the Ormuz Strait, which is delicate to the supply of around 20% of LNG, i.e. all exports from Qatar (see more details). Israel's attacks on Iran – consequences for oil and gas markets). All of this exposes the gas, it can complicate, among another things, the filling of its warehouses before the next winter, as well as affecting the temper and willingness of the associate States (also another than Hungary and Slovakia, which openly argue the EC's proposals) to accept more ambitious provisions and to decision rapidly distant from the remaining imports from the FR.

ANNEX

Key proposals in the EC proposal for a fresh regulation on phasing out Russian natural gas imports, improving monitoring of possible energy dependence and amending Regulation (EU) 2017/1938

1. The introduction of a gradual ban on imports of natural gas from Russia to the EU by:

• the prohibition from 1 January 2026 on the conclusion of fresh contracts for the supply of natural material in gas or liquefied form,
• a ban on the import of gas on the basis of short-term contracts concluded before 17 June 2025 (and not modified after that date),
• the order for the conclusion of short-term supply contracts to inland countries from 1 January 2028 if these contracts are linked to long-term contracts for the supply of Russian gas to those countries,
• in force from 1 January 2028, an order to end imports on the basis of long-term contracts concluded before 17 June 2025 (and not modified after that date).

2. Introduction of a ban on the provision of services to Russian operators at LNG terminals in the European Union from 1 January 2026. A transitional period until 1 January 2028 may be guaranteed to entities that have concluded a contract to supply specified services before 17 June 2025.
3. Increase the availability and transparency of gas import data from Russia and the provision of services at LNG terminals by extending the function of customs offices, regulators, the Agency for the Cooperation of Energy Regulators (ACER) and the EC.
4. Specify the rules and deadlines for the establishment of national plans for diversification of natural gas and oil supply and the function of the EC and Gas Coordination Group in their creation and implementation.
5. Amendments to Regulation (EU) 2017/1938 concerning measures to guarantee the safety of natural gas supply to increase the ability to monitor safety of gas supply to the EU, in peculiar those relating to gas from Russia.

The draft regulation is based on a double legal basis, i.e. Article 207 TFEU (trade policy) and Article 194(2) TFEU (energy policy).