The European Union will gradually stop importing Russian natural gas - by 2027. First, the conclusion of new supply contracts will be suspended. How will this affect energy prices?
Why should gas imports be stopped?
The reason is Russia's ongoing offensive war against Ukraine. Because of this, the EU has already imposed large-scale sanctions against Russia, including a ban on the import of coal and oil.
In the case of natural gas, the EU has been slow, as a number of member states - especially in Central and Eastern Europe - depend heavily on Russian supplies. The EC now wants to impose a complete ban in order to further reduce economic dependence on Russia and increase pressure on Moscow, according to German public broadcaster ARD.
How dependent is the EU on Russian gas?
In 2024, Russian gas supplies still accounted for 19 percent of total EU imports, according to EC data. In 2023, natural gas and liquefied gas worth 15.6 billion euros were imported from Russia to the EU. For comparison: supplies from the US were worth 19.1 billion euros.
What exactly is the EC planning?
The European Commission (EC) is planning a gradual ban on gas imports from Russia by the end of 2027 at the latest. The first step involves suspending the conclusion of new supply contracts - including for short-term purchases. Existing long-term contracts should gradually expire.
So far, two-thirds of Russian gas supplies are based on such long-term contracts, notes ARD. A complete import ban will also affect these long-term contracts.
How will the ban be implemented legally?
The exact legal basis for the import ban has not yet been determined. It is likely that the EC will resort to commercial law, suggests the German public-law media.
The imposition of a formal sanctions package, as in the case of coal and oil, does not seem likely, since this would require the unanimous consent of all EU countries – a move that countries such as Hungary and Slovakia reject.
How will the ban affect gas prices?
According to the EC, consumers should not fear drastic consequences. The Commission will ensure that measures to cut off Russian energy supplies are implemented in a way that has only a minimal impact on prices and does not lead to deficits. EU Energy Commissioner Dan Jorgensen stressed that no member state should face supply problems. "We want to keep prices as low as possible," he added.
Experts suggest that the EU ban on Russian gas imports could lead to price increases only in the short term. While in the medium and long term a decrease can be expected: due to higher efficiency, falling gas consumption in industry and the expansion of the application of renewable energies, the demand for gas in the EU will continue to decrease. The expansion of the liquefied gas supply network is also expected to have an impact, ARD points out.
What do the EU's plans mean for the energy market?
Market experts believe that the economy in the Community will cope without problems with the planned import ban - mainly because a substitute has already been found for the majority of Russian imports. Since the beginning of Russia's offensive war against Ukraine, EU countries have invested heavily in energy security, ARD points out. This mainly concerns the construction and expansion of liquefied gas terminals, the strengthening of gas pipelines between member states, as well as better connections with international sources of supply such as Norway, the United States, Qatar, Algeria and Azerbaijan.
In the summer of 2024, European gas storage facilities were filled faster than in previous years. Many countries, including Germany, France and the Netherlands, reached a capacity of over 90 percent by the end of the summer. This has also reduced fluctuations in gas market prices, as well as dependence on short-term fuel purchases.
Can the import ban accelerate the energy transition?
Analysts see the EC's proposal to stop supplies from Russia as an opportunity for an energy transition. In this way, investments in renewable energies and green hydrogen technologies could increase significantly – especially in energy-intensive sectors such as the chemical industry, metalworking and construction.