博彩对冲

The European Commission on Tuesday outlined its REPower EU road map designed to permanently wean itself off Russian fossil fuels over the long term while ensuring its own energy security.

The blueprint builds on a plan first launched in March 2022 after Russia鈥檚 invasion of Ukraine.

EU Energy Commissioner Dan Jorgensen told journalists in Brussels that Europe would ban remaining imports of Russian piped gas and LNG under existing long-term contracts by the end of 2027.

鈥淣ew contracts with suppliers of Russian gas (pipeline and LNG) will be prevented and existing spot contracts will be stopped by the end of 2025. This measure will ensure that already by the end of this year, the EU will have slashed by one third remaining supplies of Russian gas,鈥� the Commission said in a statement.

Europe has sought to drastically reduce its previous reliance on Russian fossil fuels. Volumes of imported Russian gas fell from 150 billion cubic meters in 2021 to 52 Bcm in 2024, with Russia鈥檚 share of European gas imports plunging from 45% to 19%.

Meanwhile, Russian oil imports to Europe have shrunk from 27% in early 2022 to just 3% now. Russian coal is banned under EU sanctions, while in the nuclear sector, EU member states that still use Russian-made VVER reactors 鈥渉ave made progress in replacing Russian nuclear fuel with fuel from other producers,鈥� the Commission said.

鈥淟ast year, we in the EU paid 鈧�23 billion [$26 billion] to Russia for our energy imports. That's 鈧�1.8 billion per month. This needs to stop,鈥� Jorgensen told the press conference.

Political Landscape

European diplomats canvassed by 博彩对冲 were mainly supportive of the idea of a complete Russian fossil fuel phaseout over time.

EU states such as Poland and the Baltics have for some time demanded tougher sanctions enforcement on Russian fossil fuel imports. Landlocked Central European states such as Hungary, Slovakia and Austria, which still rely on Russian oil and gas volumes, have either voiced opposition for political reasons or over energy security concerns.

鈥淚 expect most will fulfill the plan, and it is not impossible for landlocked countries to achieve,鈥� said one senior European diplomat. 鈥淏ut there will be a minority that will not do it, and I don鈥檛 think Hungary and Slovakia will fulfill the pledge first made in early 2022.鈥�

Even after the end of Russian gas transit through Ukraine in 2025, Russian volumes still represent around 13% of the EU鈥檚 overall gas imports, a Commission communication to the European Parliament outlines.

Currently, around two-thirds of Russian gas imports are supplied based on long-term contracts, while around one-third is provided under spot purchases. Despite advancing its energy transition, gas is expected to remain part of the EU鈥檚 energy mix over the coming decades.

Jorgensen was forced to defend the policy over fears of the impact of its proposals on European gas prices. He said that Russian imports this year will be around 37 Bcm.

Jorgensen pointed to the expansion in LNG supply projects, with between 25 Bcm to 30 Bcm entering the market by 2026. By the end of 2026, Europe is projected to have new LNG capacity close to 90 Bcm, he said.

鈥淎dd to that 8 Bcm of pipeline gas from Romania and the fact that every year, we鈥檙e reducing our own consumption in Europe by around 15 Bcm. Overall, we don鈥檛 estimate that this will lead to increases in price,鈥� he insisted.

Devil Is in the Details

Enforcement may yet prove a major headache. 鈥淲e have not yet seen the specific enforcement mechanisms, as the formal proposals are expected in June,鈥� said another European diplomat. 鈥淎t this stage, it is difficult to make a definitive assessment.鈥�

Market players and traders have already pointed out the difficulty for the Commission, or whichever specific body will be tasked with enforcing the new legislation, on ensuring Russian volumes do not get through.

Initially, for example, it could prove hard to confirm whether a cargo from Russia鈥檚 Yamal LNG plant has been bought on spot or under a long-term contract. 鈥淭hey would have to have the buyer open their books to show whether it鈥檚 a spot or term purchase,鈥� said one European LNG trader.

The legal basis to end long-term or spot contracts for Russian gas will be under force majeure. Jorgensen confirmed that short-term contracts, representing one-third of imports, will end this year. Long-term contracts will wind up by the end of 2027, and this 鈥渨ill be in the form of a ban.鈥� From the companies鈥� perspective, 鈥渓egally speaking 鈥� [it will be] force majeure, and therefore, they cannot be held responsible,鈥� he said.

The bans that form part of the overall plan will be adopted through qualified majority voting and applied across EU member states.

鈥淪o contrary to sanctions, where you need unanimity, they can be adopted with a majority. Also, contrary to sanctions, they do not need to be renewed once in a while. If it鈥檚 their legislation [in an EU state], it's there. And if one country or several countries, hypothetically speaking, do not apply the law, then we of course have the normal procedures of how to deal with that.鈥�

Impact on Russian Gas

A full ban on Russian gas will prove tough for Russian companies to redirect volumes given their current reliance on the European market, Russian analysts have said.

An EU ban on Russian imports could result in a reduction in Russia鈥檚 LNG exports and delays in new Russian projects, already focusing on non-Western markets due to US sanctions, analysts say.

鈥淚t is difficult to do something about this because when redirecting supplies to other regions, the transportation distance increases by two-and-a-half to three times, and it is also necessary to find market niches,鈥� Alexei Belogoryev of the Institute of Energy and Finance Foundation told a recent industry conference in Moscow.

China is looking to increase LNG imports from Russia, but even if Beijing doesn鈥檛 buy any US LNG, the niche will hardly be big enough to absorb the Yamal LNG volumes supplied now to Europe, analysts say. The EU transshipment ban that came into force in March also complicates the logistics of Yamal deliveries to Asia, while the direct eastward Northern Sea Route still cannot be open all year round.

Russian Oil Deliveries

Russian crude is currently shipped via the southern leg of the Druzhba pipeline to Hungary and Slovakia. The Czech Republic, which previously received Russian barrels via the Druzhba pipeline, stopped imports in March and has no plans to resume deliveries after completing a critical expansion of the Transalpine Pipeline.

Russia will have to accommodate the Czech barrels, although sources say Moscow had little difficulty taking the volumes in March and April. Slovakia and Hungary are expected to continue Russian oil imports for as long as possible.

Last year, Russian supplies via Druzhba to Hungary, Slovakia and the Czech Republic totaled 12.8 million tons (255,100 barrels per day) compared to 35.9 million tons (720,000 b/d) in prewar 2021 when consumers also included Germany and Poland.

Nuclear Sector

Jorgensen, meanwhile, said new restrictions to phase out Russian imports of uranium, enriched uranium and other nuclear materials would be introduced, as well as obligations to be transparent and diversify supplies. 鈥淲e will make Russian fuels economically unattractive and strengthen our European Union nuclear fuel supply chain.鈥�

This is part of a "gradual phasing out" that the road map promises for all Russian nuclear fuel imports, including the fuel assemblies for the Soviet-supplied "VVER" reactors in Bulgaria, the Czech Republic, Finland, Hungary and Slovakia.

Suppliers in Germany, Spain and Sweden are able to supply forms of the fuel assemblies for these types of reactors, and operators of the EU VVERs have already stockpiled at least a couple years of fuel. The road map refrains from opposing Hungary's plans to build twin Russian-supplied reactors.