EU Proposes Regulation to Phase Out Russian Natural Gas Imports: Key Measures and Implications

On June 17, 2025, the European Commission (“Commission”) published a proposal for a Regulation aimed at phasing out imports of Russian natural gas, enhancing the monitoring of energy dependencies, and amending existing EU energy security legislation (“Proposal”). The Proposal responds to the European Union’s ongoing efforts to address the economic and security risks arising from reliance on Russian energy, in line with the REPowerEU Plan announced in March 2022 and the REPowerEU Roadmap of May 6, 2025.

I. Background and Objectives

The Proposal is rooted in the European Union’s response to the 2022 energy crisis, which exposed the EU’s vulnerability to Russian natural gas supply interruptions and price volatility. According to the Commission, Russian state-controlled entities have repeatedly used energy exports as a tool of coercion, leading to significant economic and security repercussions across the European Union. Despite a reduction of imports by over 70% since 2021, Russian natural gas still accounted for approximately 13% of EU imports in 2025, with continued risks to energy security and economic stability.

The Proposal seeks to:

• Gradually eliminate Russian pipeline and liquefied natural gas (“LNG”) imports;
• Prevent market manipulation and capacity hoarding by Russian entities;
• Enhance transparency and monitoring of energy dependencies; and
• Require Member States to develop national plans for diversification away from Russian gas and oil.

II. Scope and Key Provisions

A. Import Ban, Services Ban and Transition Periods

The Proposal would introduce a blanket ban on imports of natural gas, whether through pipelines or LNG, originating in or exported, directly or indirectly, from Russia.

To permit adjustments and diversification of supply sources, limited exemptions would apply for contracts concluded before June 17, 2025:

• Short-Term Contracts: Existing short-term contracts (one year or less) may continue until June 17, 2026, except that imports executed under a short-term supply contract with delivery to an interconnection point with a landlocked country will be allowed until January 1, 2028;
• Long-Term Contracts: Existing long-term contracts (over one year) may continue until January 1, 2028.

To avoid capacity hoarding and facilitate alternative sources of supply, the Proposal would further introduce a ban on the provision long-term LNG terminal services to Russian and Russian-controlled entities, subject also to a transition period until January 1, 2028 for long-term contracts concluded prior to June 17, 2025.

Contracts concluded after June 17, 2025 would not be eligible for these transition periods, while contracts preceding that date would not be allowed to be amended, nor relied on beyond the volume of contracted quantities.

B. Transparency, Monitoring, and Information Exchange

To address the complexity of tracing the origin of gas and prevent its circumvention, specific reporting, monitoring and information exchanges would be introduced under the Proposal:

• Importers would be required to provide customs authorities with detailed contractual and supply chain information, including contract dates, durations, quantities, counterparties, and delivery points.
• LNG terminal operators would be required to report on services provided to Russian and Russian-controlled entities.
• Customs authorities would be empowered to request further information and may refuse entry if evidence is insufficient.
• A rebuttable presumption that natural gas has been exported from Russia would be established for gas entering through specified interconnection points, unless proven otherwise.
• Customs authorities, competent authorities, regulatory authorities, the Agency for the Cooperation of Energy Regulators (ACER), and the Commission, would be required to cooperate closely with the ACER, publishing annual reports on Russian gas contracts and market impacts.

C. National Diversification Plans

While oil and petroleum products are already subject to an import ban under EU sanctions targeting Russia, it remains subject to important exemptions, notably for imports of crude oil through pipelines, and no similar measure has been adopted to date with regard to natural gas. The Proposal does not further restrict imports of Russian oil, but would require Member States to, by 1 March 2026, develop and submit national diversification plans detailing measures, milestones, and barriers for phasing out Russian gas and oil imports by 1 January 2028. Plans must include data on existing contracts, alternative supply strategies, and identification of technical or regulatory obstacles.

While the Commission would assist the preparation and implementation of these plans and publish annual progress reports, it is envisioned that the Commission could issue recommendations in the event the objective of phasing out Russian oil by 1 January 2028 proves impossible.

D. Emergency Provisions

The Proposal would entrust the Commission with the monitoring of the security of gas supply on the EU market. Where needed, the Commission would be empowered to authorize the temporary suspension of import and services bans in the event of sudden and significant threats to the security of supply for one or more Member States, subject to conditions and time limitations.

III. Implementation and Enforcement

The Proposal, once adopted, would be directly applicable and binding in all Member States upon entry into force.

However, no specific penalties are foreseen, as the Proposal refers, at most, to the requirement for customs and other competent or regulatory authorities to use their enforcement powers, while providing for enhanced cooperation and information exchange mechanisms.

IV. Legality of the Proposal

The Proposal is based on the provisions of the Treaty on the Functioning of the European Union that deal with energy (Article 194(2)) and trade (Article 207) policies. In practice, this means its adoption only requires a qualified majority vote by the Council. However, since the proposed ban on Russian natural gas imports is based on the reasons that typically underpin EU sanctions regulations, questions may be raised as to appropriateness of that legal basis and potential lack of competence, thus paving the way to challenges before the Court of Justice of the European Union. Separately, since the Proposal can be interpreted as breaching public international law—including the fair and equitable treatment standard for foreign investments—it may give rise to disputes under the Energy Charter Treaty and other investment protection treaties.

V. Implications for Companies and Member States

The Proposal will now be subject to the ordinary legislative procedure that requires approval from the European Parliament as well as a qualified majority of the EU Member States.

The Proposal, if adopted, would have far-reaching consequences for EU operators and their non-EU counterparts. Companies importing natural gas or using LNG terminal services should review their supply chains and existing contracts and prepare for compliance with new obligations and associated reporting and transparency obligations. The phased approach provides time for adjustment, but imposes strict deadlines for the cessation of Russian gas imports and stringent evidentiary requirements.

Businesses should also anticipate the risks of litigation arising from the Proposal. While the Commission expects force majeure provisions to be relied on to justify breaches of contracts, such claims may be disputed before courts or arbitration tribunal by affected counterparties.

Separately, businesses and their respective Government should examine the legality of the Proposal and consider appropriate legal strategies.

V. Conclusion

The Proposal represents a significant step in the European Union’s strategy to eliminate energy dependencies on Russia, strengthen market resilience, and safeguard economic and security interests. Stakeholders should closely monitor the legislative process and, if the Proposal is ultimately adopted, prepare for the forthcoming compliance and reporting requirements.