EU Weighs Targeting Spot Market for Russian Gas Phaseout

(Bloomberg) -- The European Union is preparing to discuss the idea of a ban on spot purchases of natural gas from Russia as part of its plan to phase out energy imports from Moscow.

The possible measure is one of a number of options explored by the European Commission, the EU’s executive branch, as it finalizes a roadmap document due to be presented to member states for consideration on May 6, according to an EU official. 

The aim is to explore ways to cut short-term reliance on Russia and allow companies to terminate long-term contracts, allowing for potential regulatory proposals to come at a later stage. The discussions are ongoing and the final shape of the roadmap could change, said the official, who asked not to be identified because the talks are private.

While European gas prices are now 1/10th of the peak they reached in 2022, the region’s supply is still tight as it needs to pay up to attract alternatives such as liquefied natural gas, urgently needed to restock depleted reserves. Significant volumes of new supply from the US and Qatar are expected from only 2027 onwards.

The roadmap document will attempt to outline ways in which the EU can reduce its reliance on Russian fossil fuels and nuclear materials. Despite efforts to cut imports following Moscow’s invasion of Ukraine, Russian gas imports are proving hard to eliminate altogether.

The commission’s latest initiative comes as US President Donald Trump pushes for a deal to halt the war in Ukraine. As part of his shake-up of relations with the EU, Trump has called on the bloc to buy more US LNG.

The commission does not comment on unpublished documents as a matter of policy.

While spot sales of Russian gas account for a small share of the EU energy market, banning them could be a simpler first step toward limiting energy purchases from the country, according to the EU official. 

Russia was Europe’s biggest gas supplier before its invasion of Ukraine. It’s now the second-largest, after Norway and ahead of the US. While Russian pipeline gas supplies have been cut significantly, LNG imports rose to a record in 2024.

Getting rid of existing Russian gas supplies to the EU is challenging because the bulk are tied up in complex long-term contracts. Many of those include so-called take-or-pay clauses.

Sanctioning Russian gas imports would, in theory, be the strongest legal tool allowing EU buyers to declare force majeure and walk away from their long-term agreements. But the EU has so far avoided proposing such a measure because opposition from Hungary and Slovakia would deny it the necessary unanimous support. 

Trade instruments such as tariffs or quotas — also under consideration by the commission as part of the roadmap — could be adopted by a qualified majority of member states, but some governments have raised doubts over whether those tools would allow companies to abandon their contracts without penalty.

Gas purchases on the spot market aren’t subject to such contractual arrangements and could be more easily targeted, the EU official said. 

Once adopted by the commission, the roadmap will be discussed by national governments. Any legal measures to be proposed by the EU executive arm as a next step would need support from member states and the European Parliament to become a law.

(Updates with European gas prices.)

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