EU explores legal routes to terminate Russian gas contracts
The European Commission is exploring whether there are legal avenues that would allow European companies to terminate long-term gas contracts with Russia without incurring substantial contractual penalties, reported the "Financial Times," citing three EU sources.
As the newspaper reported, the European Commission is examining existing agreements on the import of Russian natural gas and considering the possibility of invoking a force majeure clause that would permit European importers to cancel contracts.
The challenge lies in the confidentiality and variation of gas import contracts. Using the ongoing war in Ukraine to invoke a force majeure clause, which would allow contract termination, may not be legally sufficient, highlighted the source quoted by the newspaper.
The exit of EU importers from contracts for Russian gas is part of a broader strategy, a "roadmap," for the EU to phase out Russian fossil fuels by 2027. This strategy aims for the Union to become independent from Russian gas supplies and to deprive the Kremlin of revenues it uses to fund the war in Ukraine.
EU countries paid Russia 21.9€ billion for oil and gas from February 2024 to February 2025, the British newspaper highlighted, citing calculations from the Centre for Research in Energy and Clean Air.
Currently, Russian gas constitutes around 11% of the gas supplied to EU countries via pipelines, down from about 40% in 2022. Concurrently, over the past three years, the delivery of Russian liquefied natural gas (LNG) has significantly increased.
The EU has ceased 90% of oil imports from Russia and banned the import of Russian coal, but has not included Russian natural gas in this ban. Imports of this resource from Russia to Europe have risen by approximately 60% over the past three years, although they still remain at the lowest level since 2022, reminded the "FT."
The EU "roadmap" was initially set to be published in March, but its release was delayed due to concerns that Hungary and Slovakia, which receive most of their gas via pipelines from Russia to the EU, would block it. The government in Budapest threatened to reject the adoption of EU sanctions on gas from Russia. A decision on this matter requires unanimous consent from all 27 EU member states.
European Commission President Ursula von der Leyen told the "FT" that the plan is expected to be released "within three to four weeks."
EU countries concerned about forcing companies to breach contracts
Despite pressure from Brussels, EU countries are concerned about compelling companies to breach contracts with Russia for LNG supplies. They fear rising liquefied gas prices, as companies will grapple with high costs and geopolitical uncertainty.
The European Commission has granted EU countries powers to prevent Russian and Belarusian operators from connecting to port infrastructure or transporting gas via EU pipelines. According to governments, however, this measure does not provide sufficient legal authority to compel companies to break contracts.
The main ports where Russian LNG is delivered to the EU are located in France, Spain, and Belgium. Russian liquefied gas plant Yamal LNG still has contracts with some of the largest energy companies in Europe, including Britain's Shell and Spain's Naturgy, emphasised the "FT."
