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EU is looking for ways to break Russian gas contracts without penalties - FT

Kyiv • UNN

 • 9699 views

The European Commission is exploring legal ways for EU companies to terminate long-term gas contracts with Russia without paying large penalties. This is part of the EU's plan to abandon Russian fuel by 2027.

EU is looking for ways to break Russian gas contracts without penalties - FT

Brussels is exploring legal options that would allow European companies to terminate long-term Russian gas contracts without paying huge penalties to Moscow, the Financial Times reports, UNN writes.

Details

According to three officials familiar with the plan, the European Commission is studying contracts and the possibility of declaring force majeure, which would allow importers to exit their obligations without paying additional fees.

"If the whole idea is not to pay Russia, then [paying compensation] will undermine the whole purpose," said one EU official.

This move is said to underscore the EU's struggle to wean itself off Russian energy and deprive the Kremlin of revenue for its war in Ukraine. Russian gas now accounts for only 11 percent of the bloc's pipeline supplies, compared to nearly two-fifths in 2022, but volumes of Russian liquefied natural gas (LNG) have soared over the past three years.

European Commission lawyers are exploring legal options as part of a roadmap for how the bloc will get rid of Russian fossil fuels by 2027.

EU is set to present a plan to stop importing Russian oil and gas in May15.04.25, 12:44 • 7827 views

The plan, it is noted, comes at a critical time for the EU, amid its efforts to present a US energy deal to counter President Donald Trump's tariff regime.

The US is already the largest supplier of LNG to the bloc and is seen as an obvious replacement for any further reduction in Russian fuel, the publication points out.

According to the Center for Research on Energy and Clean Air, the EU paid Russia EUR 21.9 billion for oil and gas between February 2024 and February 2025.

Unlike Russian coal, gas is not subject to import bans, while the EU has banned 90% of oil imports from Russia. Gas imports from the country have increased by about 60 percent in the last three years, but overall Russian gas exports to the bloc are still the lowest since 2022, the publication writes.

The roadmap, originally scheduled for publication in March, was reportedly delayed in part due to concerns that any further legislation would be blocked by Hungary and Slovakia, which now account for most of the pipeline gas flowing to the EU. "Hungary's pro-Russian government has threatened to reject gas sanctions that require unanimous approval from the 27 EU member states," the publication said.

The roadmap was also reportedly delayed due to initial discussions on the future of the Nord Stream pipeline connecting Germany and Russia, which resumed amid US efforts to seek a rapprochement to end the war in Ukraine, and the inclusion of gas purchases in trade talks with the Trump administration.

"It's a mess," said one EU diplomat. - How does the US fit into all this? How do we diversify?"

However, European Commission President Ursula von der Leyen told the Financial Times that the plan should be published in "three to four weeks."

Despite pressure from Brussels, the publication writes, EU countries are wary of forcing companies to cut LNG supply contracts with Russia for fear that this will lead to higher prices as companies grapple with geopolitical turmoil and high costs.

The European Commission has given member states the power to prevent Russian and Belarusian operators from connecting LNG to port infrastructure or sending their gas through EU pipes, but ministers have complained that this does not give them strong enough legal means to force companies to terminate their contracts.

The complexity for European Commission lawyers is that contracts are confidential and generally vary, the publication notes. "Using the war in Ukraine to invoke force majeure may not be sufficient from a legal point of view," said one EU official. France, Spain and the ports of Belgium are the main centers for importing Russian LNG. The Russian Yamal LNG plant still has contracts with some of the largest energy companies in the EU, including Shell and Naturgy, the publication points out.

The Bruegel think tank in Brussels this month advocated for tariffs rather than a complete ban on Russian gas imports, noting that the former would bring revenue to the EU and force Russian suppliers to lower prices to remain competitive. Unlike sanctions, tariffs only require the support of a majority of EU member states to be approved.

"There is an urgent need for an effective joint instrument for importing Russian gas - otherwise Russia may again use the (prospect) of selective gas supplies to fuel deep divisions between member states," analysts wrote.

EU considering partial return to Russian gas imports - Reuters14.04.25, 14:51 • 8673 views

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