European Commission seeks way to terminate Russian gas supply contracts

The European Commission is exploring legal options that would allow European companies to terminate long-term contracts for Russian natural gas supplies without having to pay penalties. The Financial Times reported this on Tuesday.

According to three officials familiar with the plan, the European Commission is examining Russian natural gas supply contracts and the possibility of declaring force majeure. This would allow importers to end their obligations without paying additional fees, the Financial Times reports.

The EU has set a goal of gradually moving away from Russian fossil fuels by 2027. The share of Russian natural gas in supplies to the European Union has fallen from around 40% before Moscow's invasion of Ukraine in February 2022 to 11%. At the same time, however, supplies of liquefied natural gas (LNG) from Russia have increased.

The EU has already banned imports of Russian coal, seaborne oil and refined oil products from Russia. No sanctions have yet been imposed on imports of Russian natural gas or LNG, apart from an EU-wide ban on transshipping Russian LNG for export to other regions.

According to the Financial Times, one problem for the Commission's lawyers is that the contracts are confidential and tend to vary. Using the war in Ukraine to invoke force majeure may not be legally sufficient, one EU official said.

Exploring legal options for terminating the contracts is part of drawing up a plan to phase out supplies of Russian energy commodities by 2027. The Commission is due to present the plan, which has already been postponed twice this year, on May 6, a European official told Montel.