The European Union has finally managed to reach an agreement on how to phase out imports of Russian natural gas in line with sanction efforts to punish Moscow for the invasion of Ukraine by sapping its energy commodity export revenues.
The agreement reached this week will involve a legally binding, gradual reduction in both LNG and pipeline gas imports from Russia, eventually resulting in a full ban on these exports, with the deadlines set for the end of 2026 for LNG and the autumn of 2027 for pipeline gas, Reuters reported today. The publication did not go into details about what earlier opponents to the gas ban had been promised in exchange for their agreement to the ban.
Russian energy exports to the European Union stand at a fraction of what they used to be prior to February 2022, yet the European Union is still Russia’s biggest LNG client. In terms of total gas imports, Russia had a 12% share of the EU market in October, Reuters noted in its report. That’s down from 45% before 2022.
Earlier this year, the EU made the first tentative steps towards banning Russian LNG by making transhipment of Russian LNG for re-export to third countries from EU ports illegal. The ban was part of one of the latest sanction packages devised by Brussels to discourage Russia from pursuing its stated objectives in Ukraine. Discussions on a full ban of LNG imports from Russia, however, continued.
The reason that it has taken so long for the European Union to reach an agreement on the ban of Russian gas imports is, of course, price. Even in liquefied form, gas from Russia is palpably cheaper than U.S. ports for geographical reasons. However, the EU has demonstrated repeatedly that it does not prioritise energy affordability, even when its own businesses warn against energy cost inflation in view of its effect on the broader economy.
By Irina Slav for Oilprice.com
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