The European Union is set to give member states powers to ban natural gas imports from Russia and Belarus on national security grounds, the Financial Times reported on Dec. 7, citing a draft proposal from the European Commission. Under the proposal, member states could ban companies in Russia and Belarus from buying capacity in their gas pipelines and liquefied natural gas terminals.
The proposal is another step to discourage additional EU purchases of Russian natural gas short of an embargo, and it would provide a basis for EU energy companies to halt imports from Russian or Belarusian gas providers without incurring penalties for breach of contract. This move is not expected to disrupt Europe’s energy supply or significantly increase energy prices, as it would not force EU companies to quit existing contracts but rather give them the option to do so. Moreover, even a complete interruption of Russian natural gas deliveries into Europe would not lead to market impacts comparable to those seen in 2022, particularly as Russian LNG would find new buyers relatively easily given the tightness of the global LNG market.
The move is part of the European Union’s broader effort to stop importing Russian natural gas by 2027. While pipeline imports from Russia have dropped dramatically since the start of the Russia-Ukraine war, imports of LNG have surged, with Russian gas altogether accounting for 10%-12% of the European Union’s total intake. Member states and the European Parliament will need to approve the final version of the text.
