Towards The End Of Russian Oil And Gas In Europe?
Introduction
Since Russia's oil and gas industry is estimated to represent up to 50% of its total federal budget revenues and around 20% of its GDP, it is not surprising that, in an effort to curtail these revenues, the European Union ("EU") introduced numerous measures to target this sector, as part of the successive waves of sanctions imposed following the invasion of Ukraine. To date, nonetheless, the EU has refrained from introducing a comprehensive ban on Russian oil and gas imports into the EU. Effectively, such a ban was already introduced in respect of Russian seaborne crude oil and petroleum products in the 6th package adopted in June 2022. Although 90% of Russian oil imports in the EU are reportedly covered, important exemptions remain, notably as imports of Russian crude oil by pipeline remain legally permissible. Conversely, imports of Russian natural gas remain largely unaffected by EU sanctions. Limited prohibitions were introduced in the 10th package of 25 February 2023, to prohibit Russians from booking gas storage capacity, and in the 14th package of June 2024, to prohibit the transshipment of Russian liquefied natural gas ("LNG") through the EU. Even if the 18th package, announced on 10 June 2025 and still under discussions as of the date of this post, explicitly targets Russia's energy sector, none of the announced energy-related sanctions actually provides for a complete ban on Russian oil and gas imports into the EU.
Instead of relying on sanctions to cut itself entirely from Russian energy, the EU is proposing an alternative route, building on the REPowerEU Plan announced in March 2022 and officially launched in May 2022. This plan builds around two priorities: ending the EU's dependence on Russian fossil fuels and promoting the green transition. In line with these commitments, the EU and its Member States have engaged in significant efforts to diversify their sources of supply, enhance renewable energy deployment and improve energy savings. These efforts resulted in a decline in the share of Russian oil and gas imports in the EU (respectively, from 27% to 3% between early 2022 and 2024 for oil and from 45% to 19% between 2021 and 2024 for gas). But this decline is relative: the EU continued to import 52 billion cubic meters of Russian gas and 13 million tons of crude oil in 2024. Continued high-levels of Russian imports thus incentivized the European Commission ("Commission") to unveil the REPower EU Roadmap on 6 May 2025, announcing further legislative steps to address the security threat caused by overdependency on Russian energy imports, through a gradual and coordinated ban against Russian oil, gas and nuclear energy on the EU markets.
On 17 June 2025, the Commission unveiled a legislative proposal, presented as a set of measures towards a "gradual phase-out of Russian gas and oil imports into the EU". The actual proposal however, seeks to phase out Russian natural gas import, improve the monitoring of potential energy dependencies and amend the security of gas supply Regulation ("Proposal"). The Proposal, therefore, focuses heavily on Russian natural gas and the need to address economic and security risks associated with Russia's past weaponization of dependencies, exacerbated by the ongoing war in Ukraine. Phasing out Russian oil is thus an ancillary aspect of the Proposal, with no strong commitment to further expand the existing sanctions framework. Furthermore, while central to the REPower EU strategy, proposals targeting nuclear energy have been entirely decoupled.
The Clock is ticking: phasing-out Russian natural gas by 1 January 2028
The Proposal targets both natural gas in gaseous state and LNG, as covered by tariff codes 2711 11 00 and 27 11 21 00, through a mix of prohibitions, enhanced scrutiny and dedicated monitoring.
A principled import ban… subject to exemptions – The Proposal envisions a complete ban on imports of natural gas, whether gaseous or LNG, which originates in or is exported – directly or indirectly – from Russia ("Russian gas"), beginning on 1 January 2026.
To give EU importers time to adjust and diversify their sources of supply, exemptions would allow for the execution of certain contracts concluded before 17 June 2025. Namely, imports under short-term contracts, i.e., contracts lasting one year or less, would remain permitted until 17 June 2026, while imports under long-term contracts, i.e., contracts lasting more than one year, would remain permitted until 1 January 2028. A specific exemption would account for the situation of landlocked countries, for which imports under short-term contracts would remain permitted until 1 January 2028, provided a long-term contract has been concluded before 17 June 2025 for delivery at the virtual trading point of that landlocked country.
These contract-based exemptions are, however, intended to be stringent, in order to contribute to the objective of reducing, and not increasing Russian gas imports. Accordingly, several conditions are imposed to avoid any anticipation or misuse of the exemptions. First, contracts entered into after the publication of the Proposal will not be eligible. Second, contracts concluded before 17 January 2025 will only be eligible to the extent they have not been amended after that date and in respect of contracted quantities, i.e., excluding make-up quantities, shortfall recoveries, or other volumetric modifications. Third, these contract-based exemptions would not be automatic, as importers will be required to provide evidence to customs authorities of the fact that a contract exists and meets the above conditions.
Avoiding capacity hoarding through prohibitions on long-term LNG terminal services – To complement the import ban and permit alternative import sources to effectively enter the market, the Commission also proposes to target the infrastructure supporting Russian gas flows into the EU.
The provision of services by LNG system operators (e.g., offloading, storage, sending out, berthing, regassification, backhaul liquefaction, truck loading, bunkering, ancillary services and necessary temporary storage, delivery to the transmission system) under contracts with a duration of more than one year to entities established in Russia or controlled by Russian individuals or entities would be prohibited as of 1 January 2026.
Here as well, services provided under contracts concluded before 17 June 2025 would remain permitted until 1 January 2028, subject to the same stringent conditions and evidentiary requirements as for the import ban on Russian gas.
Enhanced scrutiny by customs authorities to ascertain the origin and point of export of natural gas imports into the EU – Gas is a homogeneous commodity, possibly blended and/or traded through multiple actors at wholesale level, making it difficult to track its origin and point of export. To tackle this issue, the Proposal would require importers to submit detailed information to customs authorities (including date and duration of contract, contracted quantities, parties to the contract, gas producer and country of production, port of loading, delivery points, modification to contracts, etc.). As needed, customs authorities would be entitled to request further information, up to the provision of entire gas supply contracts, excluding price information. If the evidence provided is not deemed conclusive, customs authorities may refuse the release for free circulation of imported natural gas.
For certain interconnection points between the EU and Russia, Belarus, Serbia and Turkey, natural gas would be presumed to have been exported from Russia, requiring importers to provide "unambiguous evidence" of the non-Russian origin of the natural gas.
Likewise, LNG terminal services providers would be required to cooperate with customs authorities in ensuring compliance with the services ban.
Monitoring application and cooperation between EU authorities – Monitoring of the phase-out of Russian gas would be entrusted to customs authorities, as well as competent authorities under the security of gas supply Regulation, regulatory authorities under the gas internal market Directive and the Agency for the Cooperation of Energy Regulators ("ACER"), which would be expected to share information, notably to avoid circumvention.
Mind the gap: monitoring the security of gas supply and incorporating built-in safeguards
Monitoring security of supply – The Proposal foresees amendments to the security of gas supply Regulation to require natural gas undertakings to provide detailed information on each supply contract for Russian gas to the Commission and to competent authorities, where a Member State declares a crisis related to the deterioration or disruption of the gas supply situation. LNG terminal services providers would equally be required to provide information to the Commission on services booked by Russian(-controlled) customers.
The Commission would also be tasked with the continuous monitoring of the exposure of the EU's energy system to Russian gas supplies and assess the implementation of the Russian gas phase out, with annual reports possibly accompanied by recommendations on potential actions and measures to be "taken into account" in Member States' national diversification plans (discussed below).
Built-in safeguards in exceptional circumstances – Where "sudden and significant developments" threaten the security of supply of a Member State, the Commission would be empowered to authorize the temporary suspension of the Russian gas prohibitions, in whole or in part, subject to any necessary condition and to the extent and for the duration needed to address the threat identified.
Planning ahead: requiring national diversification for Russian gas… and oil
Under the Proposal, Member States would be required to establish diversification plans describing measures, milestones and potential barriers to discontinue all imports of Russian gas and oil by 1 January 2028. These diversification plans are to be notified to the Commission by 1 March 2026, which would support the preparation and implementations of these plans, as appropriate, and report on progresses achieved.
While the Proposal foresees a complete ban on Russian gas imports by 1 January 2028, no similar requirement is envisioned as regards Russian oil. Russian oil imports are, indeed, largely banned already under existing EU sanctions, but existing exemptions would remain in place. In fact, the Proposal acknowledges that national diversification plans may identify a "risk that the objective of phasing out Russian oil by 1 January 2028 may not be achieved". In such cases, the Commission would be empowered to issue recommendations to the Member States concerned, which would only have to update their diversification plans "taking into consideration" such recommendations.
Big teeth, but uncertain bite: risks and enforcement considerations
Diversification risks and opportunities – The Commission's assessment is that diversifying away from Russian gas and oil is essential and feasible, "if introduced in a stepwise, coordinated and well-prepared manner in a spirit of solidarity". Member States will thus be incentivized to further pursue efforts under the RePowerEU Plan to not only engage in energy supply diversification diplomacy, but also reduce reliance on fossil fuels in general, through enhanced energy savings, decarbonization and renewable energy sources.
While numerous actions are ongoing in this regard, it remains that shifting away entirely from Russian gas and oil may prove difficult, especially for those Member States where the energy transition has been slower or where legacy infrastructure still depends heavily on Russian supplies.
Likewise, despite the Commission's assessment, in a context of geopolitical turbulences and volatile energy prices, closing the door to Russian oil and gas may trigger an upward pressure on costs for energy-intensive sectors, such as chemicals, food and drink, iron and steel or minerals, which must be adequately anticipated and addressed.
Meanwhile, and given the insistence on correlating the phasing out of Russian oil and gas with the EU REPower Plan, such phasing out should create parallel incentives for natural gas suppliers outside Russia, as well as investments by governments and private investors into the renewable energy and clean tech sectors.
Compliance risks – Navigating through the obligations foreseen under the Proposal would present significant compliance challenges for gas importers and LNG terminal services providers in the EU, as well as their suppliers outside the EU. Indeed, while EU operators would be concerned in the first place by these new obligations, their counterparties outside the EU would need to cooperate with them in order to secure access to the EU market. The entire EU gas supply chain would therefore be required to design and implement measures to avoid legal and reputational risks, including:
- Conducting a thorough analysis of current supply chains and existing contracts in order to assess whether, and to what extent, they may be impacted;
- Carrying enhanced due diligence, especially in case of multi-layered contracts, to ascertain whether natural gas originates in or is exported from Russia or whether LNG terminal services are provided to parties that are "controlled" by Russian entities. This may prove particularly delicate where Russian gas is blended with supplies from other sources or traded through intermediaries or where parties would seek to obfuscate their control structure in order to circumvent restrictions.
- Keeping and maintaining robust documentation, in order to provide the requisite information to customs authorities and/or address any follow-up inquiry.
- Incorporating enhanced contractual provisions reflecting the obligations arising from the Proposal and providing for indemnification in case of breach.
Litigation risks – EU sanctions typically provide for so-called "no claims" clauses, which provide guarantees to EU operators that claims related to contracts or transactions affected by sanctions cannot be enforced or satisfied in the EU. Accordingly, operators that were required to comply with the EU import ban on Russian crude oil and petroleum products imposed under sanctions targeting Russia were, to a certain extent, protected from such claims. Such protection remains limited as sanctions-related litigation and arbitration continue to be brought, notably outside the EU.
The Proposal, however, does not include any similar "no claims" clause. Litigation risks appear however inevitable, insofar as major long-term Russian gas supply contracts will have to be cut off by 1 January 2028.
Those considerations are only reflected in the recitals to the Proposal. Recital (18) notably states that "[t]his Regulation creates a clear legal prohibition to import Russian natural gas, constituting a sovereign act of the Union beyond the control of gas importers and rendering the performance of natural gas imports from Russia unlawful, with direct legal effect and without any discretion for Member States concerning its application". Put simply, the Commission's solution is for EU operators to claim force majeure, as explained in the Staff Working Document accompanying the Proposal (Section 4.4). Whether that argument will hold would most likely be tested before relevant adjudication venues, in particular since Recital (16) itself recalls that "the commitment from Heads of State to phase out gas supplies was already made in March 2022; it was renewed in the REPowerEU Strategy, the REPowerEU Plan and the REPowerEU Roadmap".
As seen also in the context of sanctions, Russia could seek to impose countermeasures, which would entitle litigation to be brought in Russia, disregarding any contractual provision to the contrary and negating the relevance of the EU ban on Russian gas. Again however, and contrary to steps taken in the context of sanctions to grant further protection to EU operators, the Commission merely proposes a clarification in Recital (26) of the Proposal that doing so would be contrary to international law, rendering any related claim unenforceable.
Uncertain enforcement landscape – The Proposal foresees no specific penalties for violation of the Russian gas ban. At most, it requires customs and other competent or regulatory authorities to "[make] full use of their enforcement powers", without specifying what those powers should be.
The absence of a clear enforcement framework may therefore result in a fragmented landscape, with different risks, penalties and enforcement appetite depending on the Member States concerned.
Not a done deal: legislative procedure and political context
While prohibitions under the Proposal are very similar to import bans imposed as part of sanctions targeting Russia, it is not presented as, nor based on the same legal basis as sanctions, i.e., the Common Foreign and Security Policy ("CFSP") and more precisely Article 29 of the Treaty on the European Union and Article 215 of the Treaty on the Functioning of the European Union ("TFEU"). Rather, the Proposal's legal bases lie in the energy and trade competences of the EU, as enshrined in Articles 194(2) and 207 of the TFEU.
In practical terms, relying on these legal bases avoids a major political obstacle: the unanimity requirements for the adoption of CFSP measures. Instead, the Proposal will go through the ordinary legislative procedure, requiring approval by both the European Parliament and the Council. In that configuration however, the Council is only required to adopt the text by a qualified majority, i.e., by at least 15 Member States representing at least 65% of the total EU population.
This lowers the political threshold, but does not guarantee smooth passage. Both the European Parliament and the Council will be entitled to propose amendments to the Proposal. Furthermore, certain Member States have already expressed concerns that the Proposal threatens their energy security and could seek to form a blocking minority to prevent its adoption, mitigate its content or obtain additional delays. Alternatively, they could leverage their opposition to block other legislative initiatives, particularly where unanimity is required. For instance, Hungary and Slovakia are reported to have stalled ongoing talks on the 18th sanctions package in order to pressure the Commission into dropping the Proposal. Finally, legal challenges, particularly as regards the appropriateness of the legal bases relied on by the Commission, cannot be excluded.
The procedural avenue followed by the Commission certainly illustrates its willingness to take decisive actions to stop Russian oil and gas flows into the EU. Its outcome, and the ability to overcome related political and, possibly, legal challenges, remains nonetheless uncertain and may be indicative of future similar actions in other critical domains.
