PARIS — What if Russian gas made a massive return to Europe? The European Commission may have confirmed its intention to completely phase out Russian gas by 2027, but some people are voicing dissent. And the prospect of a peace agreement in Ukraine is giving them ideas.
Europe has significantly reduced its dependence on Russian gas since 2022, following Moscow and Gazprom’s decision to cut pipeline deliveries. Russian gas now accounts for about 14% of European demand (down from over 40% before the war). Of that, 9% arrives by ship as liquefied natural gas (LNG), while 5% comes through the TurkStream pipeline, the only one still supplying Eastern Europe — primarily Hungary — after the transit contract with Ukraine ended on December 31.
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In Germany, some are clearly putting the issue on the table. Christof Gunther, who heads the Leuna chemical plant in former East Germany, recently said, in an interview with Bloomberg, that importing Russian gas is the only way to revive entire sectors of the German industry, such as the powerful chemical sector.
“If a peace agreement is reached, of course, we will need to ensure that the other damages caused by the war are repaired,” he said, adding that the return of Russian gas to Germany would be a “logical consequence” of peace. His stance received support from the Economy Minister of his state, Saxony-Anhalt, despite being from the CDU, a party generally opposed to the return of Russian gas.
The cost argument
Another sign of a Russian push in Europe: The Financial Times revealed this weekend that a close associate of Vladimir Putin, Matthias Warnig, a former Stasi agent who ran Nord Stream until 2023, is currently in talks with American investors to reactivate the pipeline connecting Russia to Germany.
A consortium is said to have even laid the groundwork for a post-sanctions deal with Gazprom, for whom Europe remains a vital market. “There might not even be a need to restart Nord Stream,” points out Thierry Bros, a professor at Sciences Po. “By adding the capacities of TurkStream and those passing through Ukraine, which are no longer used and have not been bombed by the Russians, we reach a potential of 60 billion cubic meters.” Not far from Germany’s annual consumption.
If we imagine a world where a peace agreement is reached, we will need to reassess the situation.
Russian gas certainly has a strong selling point: its price. The contracts in place before 2022, mostly indexed to oil prices, were negotiated at a price for Europeans that was half of the spot price for gas on today’s markets. But Europe is convinced that wholesale prices will drop in the next two to three years, with the commissioning of new liquefaction capacities in the United States and Qatar. Furthermore, Europe is committed to ramping up its biomethane production and reducing its consumption.
If trade resumes with Russia, the situation of the various players would first need to be clarified. Since Gazprom halted its supplies, several of the company’s clients have turned against it and won their cases in court. Examples include Austrian company OMV and the German company Uniper, which was granted the right by an arbitration tribunal last summer to demand more than billion from Gazprom for failing to meet its commitments.
France’s Engie is studying the question
The German company RWE and French company Engie have also taken legal action and filed lawsuits against their former supplier. For its part, Engie, which was one of the creditors of Nord Stream and had written off 987 million euros in its accounts for this reason, has not out the possibility of sourcing gas again from Russia, though it remains cautious. CEO Catherine MacGregor called the question “premature” during the presentation of Engie’s annual results last week.
But, “if we imagine a world where a peace agreement is reached, we will need to reassess the situation with our former suppliers,” she added. “We still have contracts that are valid, even if they are subject to legal disputes.”
MacGregor believes that there would be contractual and logistical work to be done initially, especially because the infrastructure has been damaged. “It will take time, and in any case, we will never fully return to the pre-crisis situation. The key will remain the diversification of supply sources for Europeans.” That is also the position of Brussels, but some member states may choose to make their own decisions.
