Europe is pressing ahead with plans to ban Russian gas imports by the end of 2027, effectively capping Moscow’s energy future in the region and leaving a bevy of stranded assets in its wake.
The dual Nord Stream 1 and 2 subsea pipelines were early casualties of Russia’s invasion of Ukraine, with the infrastructure being sabotaged in late 2022 and the latter pipeline — costing $11 billion to build and aimed at doubling cheap Russian gas flows to Germany — never being certified for use.
There had been speculation that the major energy infrastructure could eventually be resurrected if, or rather when, the war between Russia and Ukraine ends andthere’sa peace agreement between the parties.
However, talks to try toestablishthe grounds for a ceasefirehave been movingat a snail’s pace withneither side willing to cross “red lines”regardingthe permanent surrender of territory, be it sovereign or occupied. Speaking with British news website UnHerd, Vance said Monday that while the U.S. is going to “try to get this thing solved,” he “wouldn’t say with confidence that we’re going to get a peaceful resolution.”
Hopes of a dealhave led to questions over what economic and energy links between Russia and the rest of the world could be re-established and, when it comes to Europe, whether a ceasefire could lead to areintegration of Russian gasandthe resurrection of the Nord Stream gas pipelines.
Such a move would be highly contentious and divisiveonthe continent, given Russia’sfull-scaleinvasion of Ukraine in 2022 andattemptsin the region to wean itself off cheaper Russian gas.
In 2021, before the war, Russian imports accounted for about45%of the European gas consumption. This year, estimates expectimports of 13%.
Ukraine would be outraged by any move thatbenefiteditsinvader,and Poland has called for the pipelines — one of which has never been used — to be “dismantled.”
That said, Ukraine itselfbenefitedfrom an older pipeline that passes through the countryas it collected transit fees. The Russia–Ukraine gas transit agreement expired at the end of 2024, with the two countries opting not to renew it giventhewar.TheNord Streampipelines were specifically designed to circumvent Ukraineand avoid such fees, but the transit agreement couldbe one ofmanylevers touse during negotiationsif the tap is turned back on.
The U.S. wouldlikely baulkat the return of Nord Stream as it has hoped to muscle out Moscow and increase its market share of liquefied natural gas (LNG) sales to Europe.ButGermany, which is directly connected to the pipelineandwhose industries are struggling with high energy costs,might find thelureand return of Russian gas supplies hard to resist.
The EuropeanCouncil and Parliament in December strucka provisional agreementon regulation tophase out imports of Russian gas. Itis set to implementa full ban on liquefied natural gas (LNG) and pipeline gas importsfrom the end of 2026 and autumn 2027, respectively.
IsNord Streamsalvageable?
The Danish Energy Agency in Januarygranted permission for Nord Stream 2 to carry out preservation work on its damaged pipelinesthat arelocatedwithin Denmark’s exclusive economic zone (EEZ) in the Baltic Sea.
“The purpose of the works is to prevent further gas blowout and the ingress of oxygenated seawater, that could potentially lead to corrosion,” the agency told CNBC, although the preservation works on Nord Stream 2 have notcommencedyet.
The permit has been granted ona number ofconditions, the agency said, that are intended to ensure safe operation of the pipeline. It added that, among other conditions, the company mustsubmitan annual plan for the pipeline facility “so that the Danish Energy Agency can continuously monitor the company’s plans for the facility’s future.”
“Furthermore, all conditions in such permits would have to be fulfilled before the pipelines can be put into operation. The Danish Energy Agency has not received any such applications,” it said.
But are theNorstreampipelines even salvageable now?
SergeyVakulenko, senior fellow at the Carnegie Russia EurasiaCenter, told CNBC that the pipeline that was damaged in the sabotage incidents would need replacing in part, and the remaining undamaged one would not cost “much money at all” to resurrect.
“I think they’re still repairable, salvageable.Soyou could have to cut a few miles of [the damaged] pipeline and replace it. But this could be done,” he told CNBC in October.
“It could easily cost $1 billion or something like that, but there’s still one [pipeline] at operational strength so that could be used,” he said. Asked if the pipelines — which are filled with stagnant gas — are being looked after currently,Vakulenkosaid: “They’re not looked afterat all.”
Can Europe stomach Russian gas, again?
Whether Europe could resume purchases from Russia again is the big question.
“Each of theNord Streams[pipelines] were 55 million cubic meters. So that oneremainingis 27.5 million cubic meters … andthat’sprobably thetop of what Europe would be prepared to buy from Russia,”Vakulenkosaid.
He said that if there was a change of government in Russia and Putin was no longer president, Europe would be “quite willing to buy some Russian gas,” but not if the same amounts it was buying before.
“ThenNord Streamwould come in handy. Butthat’s[a] very big’IF,'” headded.
“On the one hand, Europe, or at least there are parties [countries] in Europe, who wouldn’t mindhavingat least some Russian gas in the European energy mix for a number of reasons, to not be too reliant on U.S. supply. Russia is the lowest cost supplier to Europe,” he said.
The continenthas not fully recovered from the energy crisis stemming fromthefull-scale invasion of its neighbour.The Dutch Title Transfer Facility,Europe’s main benchmark for natural gas prices,was doubleitspre-war pricesinearly 2025,per the IEA.Energy constraintsare compounded further by the AI race, which has shiftedpublic narrativesfromenergy transition to energy addition.
“Soif you’re not too squeamish to buy Russian gas, if you don’t have to hold your nose too tight by buying it, then sure, there’s a lot of commercial and economic reasons as to why [to do it]. If it becomes politically, ethically palatable, then there will be quite a lot of stimuli to do so, butthat’sagain for the time when there is indeed some rapprochement between Russia and Europe, andthat’s [a] big ‘if’,”Vakulenkosaid.
However,Tancrede Fulop,utilitiesand renewables analyst at Morningstar,told CNBC that it would be too difficult to reintegrate Russian gas, at least in the short term,because ofthefreshEuropean legislation. He noted, however, that the legislation doesincludesome exceptions for Hungary and Slovakia in emergency situations.
The policy shift was also rooted in a drive for energy independence after Russia’s “weaponisation of gas supplies,” the EU said. As a result, member states are likely to stay clear of an overreliance on one state going forward and instead invest in boosting overall domestic capacity.
Does Russia want European business?
Whether Russia would want to sell its gas to Europe is another looming question.
“Everybody thinks the energy crisis started with war in Ukraine, but it actuallystarted in 2021,”Fulop said, noting several drivers ofa cold winter, low windspeeds,and therefore high gas consumption.
Adding to the crisis was the fact that the EU was late to clear Nord Stream 2 for operations. “And so Russia started to reduce the flows of gas sent to the EU,” before the war started, he said. This suggests that the move from Russia may have been intended to add pressure on Europe to pick up the pace with Nord Stream 2.
On the other hand, “Russia is not ina very strongnegotiating position,” according to Vakulenko. “For Russia, that gas is a stranded resource.Soyou could expect[that Europe]could negotiate a good deal.”
Russiahas also looked to Asiaas an alternative partner to Europe and has deepened ties with China via the Power of Siberiapipeline.
Even if a peace deal with Ukraine is reached, “the message is quite alarming” around another potential conflict with Russia,Fulop said, given the flouting ofEuropeanairspaceinrecent months.
Ultimately, a renewedembrace of Russian gas “doesn’tseem like the most realistic scenario.”
It helps that gas prices have fallen lately, he added,perhaps withmarket watchers pricing in a peace deal.TheEU willalsobenefitfrom the newexport terminals in the U.S.
“This is bearish for gas prices, positive forEurope, and that could offset the end of Russian gas imports,”Fulop said.
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