EU Discusses Targeting of Spot Market for Russian Gas Phaseout

Pipework at a natural gas condensate storage and distribution site in Norg, Netherlands, on Wednesday, Nov. 17, 2021. European gas surged to the highest level in a month, fueling wider inflation concerns, as delays to a controversial new pipeline from Russia stoked fears of a supply shortage this winter. Photographer: Peter Boer/Bloomberg Photo by Peter Boer /Bloomberg

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(Bloomberg) — The European Union is preparing to discuss the idea of a ban on spot purchases of natural gas from Russia as part of a plan to phase out energy imports from the country.

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The potential measure could be one of a number of options due to be presented May 6 to EU members by the European Commission, the bloc’s executive branch, according to an EU official.

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The tools will be presented in a roadmap document for consideration by member states. The aim is to explore solutions to cut short-term reliance on Moscow and allow companies to terminate long-term contracts, paving a way for potential regulatory proposals to come at a later stage.

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Discussions surrounding the plan are ongoing and the final shape of the roadmap is still subject to change, said the official, who asked not to be identified because the talks are private.

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The roadmap document will attempt to outline ways in which the EU can reduce its reliance on Russian fossil fuels and nuclear materials. Despite efforts to cut imports following Moscow’s invasion of Ukraine three years ago, Russian gas imports are proving hard to eliminate altogether.

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The latest initiative to end the energy reliance on Moscow comes as US President Donald Trump pushes for a deal to halt the war in Ukraine. As part of his shake-up of relations with the EU, Trump has called on the bloc to buy more US liquefied natural gas.

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The commission has a policy of not commenting on unpublished documents.

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While spot sales of Russian gas account for a small share of the EU energy market, banning them could be a less complex first step toward limiting purchases from the country after liquefied natural gas imports from Moscow climbed last year.

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Russia was Europe’s biggest gas supplier before its invasion of Ukraine. It’s now the second-largest, after Norway and ahead of the US. While Russian pipeline gas supplies have been cut significantly, LNG imports rose to a record in 2024.

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Getting rid of existing Russian gas supplies to the EU is challenging in large part because the bulk are tied up in the form of complex long-term contracts. Many of those accords include so-called take-or-pay clauses.

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Sanctioning Russian gas imports would, in theory, be the strongest legal tool allowing EU buyers to declare force majeure and walk away from their long-term gas contracts. But the EU has so far avoided proposing such a measure because opposition from Hungary and Slovakia would deny it the necessary unanimous support. 

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Trade instruments such as tariffs or quotas could be adopted by a qualified majority of member states, but some governments have raised doubts over whether those tools would allow companies to abandon their contracts without penalty.

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Gas purchases on the spot market aren’t subject to such contractual arrangements and could be more easily targeted, the EU official said. Discussions on the plan are still ongoing and the final shape of the roadmap is still subject to change, they added. 

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Once adopted by the commission, the roadmap will be discussed by national governments. Any legal measures to be proposed by the EU executive arm as a next step would need support from member states and the European Parliament to become a law.

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