The EU finally abandons Russian gas
- Matthew Parish
- 2 hours ago
- 8 min read
The agreement reached on 3 December 2025 between the European Parliament and the Council is, in effect, the EU’s final political decision to end her gas relationship with Russia. It is a provisional legislative deal under the REPowerEU framework that must now be formally endorsed by both institutions, but the core of the regime – a binding, dated phase-out of all Russian LNG and pipeline gas – is politically settled.
Below is an outline of what was agreed, how the timeline works, and what it is likely to do to the Russian economy.
From dependence to prohibition
Before Russia’s full-scale invasion of Ukraine, over 40 per cent of EU pipeline gas imports came from Russia; in 2024 that had fallen to about 11 per cent. Counting both pipeline gas and LNG, Russia still supplied just under 19 per cent of EU gas imports in 2024, and roughly 13 per cent in 2025, worth over €15 billion per year.
In oil the EU moved much faster, pushing Russian crude and products down to below 3 per cent of imports by 2025. Gas proved harder because existing long-term contracts and infrastructure locked several member states into Russian supplies, and because Russian LNG, largely outside earlier sanctions, continued to flow in substantial volumes. Russia remained the second-largest LNG supplier to Europe in the first half of 2025, with around 13 per cent of EU LNG imports.
The 3 December deal is therefore designed to close the remaining loopholes: it codifies, in primary EU law, a calendar under which every form of Russian gas supply is eliminated by autumn 2027, with only tightly circumscribed emergency derogations.
The legal instrument and its political status
The agreement is a provisional trilogue deal on a directly applicable regulation to phase out imports of Russian natural gas. It sits under REPowerEU, an EU energy modernisation initiative, and is explicitly justified as protection against the “weaponisation” of energy supplies by Russia after 2022.
Key institutional points:
Parliament’s negotiating teams from the Industry, Research and Energy Committee (ITRE) and the International Trade Committee (INTA) reached the deal with the Danish Council Presidency in the night of 3 December.
The agreement now goes back to those committees for a confirmatory vote (scheduled for 11 December 2025), then to the full Parliament in its 15–18 December plenary, and in parallel to the Council for formal adoption.
Once adopted and published in the Official Journal, the regulation will enter into force in early 2026. From that date, binding prohibitions start to bite in stages.
Politically, a blocking minority is no longer available: Hungary and Slovakia have already announced their intention to challenge the measure before the Court of Justice, but could not prevent the regulation passing because energy trade sanctions of this type are adopted by qualified majority, not unanimity.
The phase-out architecture: how the ban is structured
The core of the deal is a stepwise prohibition of Russian gas imports, structured along three axes:
Type of gas (LNG versus pipeline).
Type of contract (new contracts, short-term contracts, long-term contracts).
Transitional windows to allow diversification and storage.
The Council’s press release spells out the main elements.
New and spot contracts
Six weeks after the regulation enters into force, general imports of Russian LNG and pipeline gas are prohibited, subject only to transitional arrangements for existing contracts.
For spot-market LNG, Parliament summarises the effect more politically: from early 2026, spot LNG from Russia is in practice banned, ensuring that no new ad hoc cargoes can enter EU terminals.
Short-term contracts signed before 17 June 2025
Short-term LNG supply contracts: imports are banned from 25 April 2026.
Short-term pipeline gas contracts: imports are banned from 17 June 2026.
These dates are designed to give importers one more winter to re-arrange their supply portfolios while still making clear that Russian gas will disappear from the EU system well before the end of the decade.
Long-term LNG contracts
Existing long-term LNG contracts with Russian suppliers must end by 1 January 2027. Parliament obtained this earlier date, bringing the LNG phase-out forward by a full year compared with earlier Council and Commission drafts.
Long-term pipeline contracts
Long-term pipeline gas imports from Russia are prohibited from 30 September 2027, on condition that member states are on track with the gas storage targets laid down in the gas storage regulation.
In any event even if storage levels are not met, the absolute final deadline is 1 November 2027.
Media and Commission communications round this to “autumn 2027” for a complete ban on Russian gas imports, with some national flexibility only within that narrow band.
Customs control and anti-circumvention
A distinctive feature of the regulation is a prior authorisation system for gas imports, aimed at preventing relabelled Russian gas entering the EU via intermediaries:
Importers must provide detailed proof of origin (country of production) for gas cargos before they are imported or stored in the EU.
For Russian gas or gas falling under the transitional exemptions, documentation must be submitted at least one month before entry; for non-Russian gas, at least five days (seven days for imports via certain interconnection points such as Strandzha 1).
That list can be adjusted; a supplier can be removed if there is evidence of circumvention, effectively threatening traders in permissive jurisdictions with loss of privileged access.
National diversification plans and the oil dimension
The regulation requires every member state to submit a national diversification plan explaining how she will eliminate Russian gas imports within the agreed timetable, and to notify the Commission within one month of entry into force whether she still has Russian gas contracts or national bans already in place.
The same planning obligation is extended to member states that still import Russian oil. Parliament used the negotiations to extract a written commitment from the Commission to propose, in early 2026, separate legislation to ban Russian oil imports entirely by the end of 2027.
Penalties and emergency derogations
To give the ban teeth, the co-legislators introduce harmonised maximum penalties for non-compliance. The Council text speaks of “effective, proportionate and dissuasive” penalties with ceilings for both companies and individuals; press accounts indicate possible fines up to 3.5 per cent of global turnover or €40 million for firms, and up to €2.5 million for individuals, with scope for member states to set lower levels within those ceilings.
At the same time, there remains a suspension clause, narrowed during negotiations:
A member state must declare a state of emergency in relation to security of gas supply and seek authorisation from the Commission.
Only short-term supply contracts can be temporarily exempted.
The Commission must demonstrate strict necessity and may lift the prohibition only for a limited period.
The Commission is required to review the regulation after two years, including the authorisation system, allowing for adjustment if the rules have unexpected market effects.
How much does this actually cost Russia?
Several data points give a sense of the order of magnitude.
Since February 2022 EU member states have purchased over €216 billion of Russian fossil fuels (oil, products, gas, LNG) in total.
Russia’s overall fossil fuel export revenues fell to about €546 million per day in September 2025 and €524 million per day in October 2025, the lowest levels since the start of the full-scale invasion.
Within that, LNG revenues were about €38 million per day in September 2025, and Russia remained the EU’s second-largest LNG supplier in the first half of 2025 with roughly 13 per cent of EU LNG imports.
On the budgetary side, oil and gas revenues currently account for just over 25 per cent of Russian federal budget revenues, with VAT and other domestic taxes now more important; nevertheless, these hydrocarbon revenues are critical for financing defence spending, which is running at around 8 per cent of GDP.
Gas exports to Europe are already much lower than before the war. One recent analysis estimates that Russia’s total natural gas exports have fallen by roughly 42 per cent relative to 2021, with the loss overwhelmingly concentrated in the European market.
The new regulation therefore bites into a diminished but still valuable revenue stream:
Pipeline deliveries to the EU are high-margin, legacy flows based on depreciated infrastructure. Shutting them off by 2027 removes a large share of Gazprom’s most profitable business.
LNG exports to the EU are one of the few remaining channels by which Russian gas still reaches Western markets at competitive prices. Those flows are now given a hard stop by the end of 2026 for spot and short-term contracts and 1 January 2027 for long-term contracts.
CREA and other analysts already attribute the recent fall in Russia’s fossil-fuel export earnings in part to lower European demand; the legal ban locks this trend in and prevents a rebound if prices or politics change.
Why gas matters for the structure of Russia’s economy
The direct loss of EU gas revenue is only part of the story. Several secondary effects are likely:
Loss of pricing power and permanent discounts
Europe was historically the premium market for Russian gas. Once access is legally closed, Russia becomes even more dependent upon a narrow group of buyers, principally China and Türkiye, leaving her with weak bargaining power and forcing deeper discounts on both pipeline gas and LNG.
Reorienting gas flows is technologically and financially harder than rerouting oil: pipelines are fixed assets, and liquefaction capacity is limited. New eastbound pipelines take years and tens of billions of dollars to build, and sanctions restrict equipment and financing.
Stranded assets and under-investment
West-bound export infrastructure – from the Yamal system to auxiliary compressor stations and storage serving the EU market – is at risk of becoming stranded.
With EU demand legally disappearing, Gazprom’s investment case for maintaining or modernising these assets evaporates. In the medium term that implies lower production, less associated investment in upstream fields and servicing, and hence lower domestic industrial activity in gas-producing regions.
Fiscal pressure and macroeconomic drag
Russian oil and gas revenues in November 2025 were already down roughly one-third year-on-year, and the Finance Ministry is raising VAT to compensate.
Removing the remaining EU gas income by 2027 will add to that pressure, particularly as military spending absorbs about 8 per cent of GDP and alternative revenue sources (domestic taxes, debt issuance, drawing down the National Welfare Fund) face their own constraints.
The likely result is tighter budget conditions, more aggressive domestic taxation, and a need to cut or postpone civilian spending, all of which reinforce a pattern of militarised austerity.
Balance-of-payments and technological isolation
Gas exports are an important source of hard currency. As EU gas payments disappear, Russia will rely even more heavily on oil exports to Asian buyers, plus non-energy exports which are themselves hampered by sanctions and weak growth.
Lower foreign-exchange inflows limit Russia’s ability to import high-technology goods and sophisticated industrial equipment from third countries, increasing the long-term cost of sanctions and further eroding productivity.
Political and strategic implications
From Moscow’s point of view, the EU’s decision closes off any realistic prospect that gas leverage over Europe can be restored after a hypothetical ceasefire or political change. Gas has been turned from a mutual dependency into a structural asymmetry: Europe can and will do without Russian gas; Russia cannot easily do without the European market.
For the EU, the decision completes the strategic shift initiated in the Versailles Declaration of March 2022: ending dependence on Russian fossil fuels as a matter of security policy. The Council estimates that Russian gas still accounts for around 13 per cent of EU gas imports in 2025; by binding a 2027 deadline into law, the Union removes the residual ambiguity that allowed volumes to creep up again in 2024–25.
There will be serious distributional disputes within the Union. Highly gas-reliant and landlocked states such as Hungary and Slovakia, lacking direct access to LNG terminals, warn of higher prices and supply insecurity and are preparing legal challenges. But the fact that the measure has passed the legislative stage suggests that a political judgement has been made in Brussels: that the strategic cost to Russia of losing the EU gas market outweighs the economic discomfort to those member states, which can in principle be mitigated by internal EU solidarity mechanisms.
For Russia, by contrast, there is no ready substitute of equal value. The phased EU gas ban does not collapse her economy on its own, but it tightens a slowly constricting ring: lower hydrocarbon earnings, deeper discounts to Asian buyers, chronic under-investment, and growing fiscal strain. In combination with oil sanctions and the parallel EU effort to mobilise frozen Russian assets for Ukraine, it points towards a long-term erosion of the energy-rent model upon which the Kremlin has financed both its social contract and its war.