Two big EU countries surprisingly back Hungary's position on Russian energy

The European Union’s two biggest buyers of Russian liquefied natural gas (LNG) are refusing to endorse Brussels' plan to ban Russian gas, arguing that

they need more reassurance about the economic and legal consequences of the move before they can make a decision,

Politico reported on Tuesday.

Before the EU unveils its proposals, “we ask the Commission to present an in-depth impact assessment” of the measures, Belgian Energy Minister Mathieu Bihet said. The country will hold technical talks on the impact of the measures on Belgium’s LNG infrastructure, he said.

France, the bloc’s top buyer, told Politico that it favours a strategy of seeking alternative supplies. Meanwhile, Belgium, the second-largest buyer, wants a report detailing the economic fallout before making a decision.

What we're defending is a European strategy of diversification [...] which is already on the table,

French Energy Minister Marc Ferracci told Politco, referencing France’s plan to replace Russian supplies with Qatari products.

While Paris “supports the strategy of de-risking Russian fossil fuels,” Ferracci said, “a ban at European level means that nobody can import [Russian] LNG.”

Ferracci also raised questions about the "legal certainty" of the Brussels proposal, tapping into fears that private firms may be subject to Russian legal action over terminated contracts. For example, France’s TotalEnergies is currently bound by a supply contract with Novatek until 2032 and owns a 20% stake in the Yamal project, which operates an LNG facility in Siberia.

The stock of existing contracts [...] needs to be legally protected,

he said.

In the context of litigation, it has already been suggested that contracts could be annulled on the grounds of force majeure. EU decision-makers are still examining the details, but based on the statements made so far, EU lawyers believe that trade-based restrictions could be a good option.

For Spain and the Netherlands, the bloc’s third- and fourth-biggest buyers of Moscow’s LNG, the EU’s plans represent a welcome opportunity to end their energy ties to Russia. Both told Politico they are eager to back the upcoming legislation, which would end Russian gas contracts, banning short-term purchases this year and long-term contracts by 2027. 

According to the Kpler commodities platform, last year the four countries (Belgium, France, the Netherlands, and Spain) imported 16.77 million tonnes of Russian LNG, representing 97% of the EU’s total imports and over half of Moscow’s global exports. They spent more than €6 billion on the fuel in total.

Spain supports the European Commission's proposal to ban Russian gas imports as soon as possible […] through a common EU position,

 said a spokesperson from Spain’s ecological transition ministry. The Netherlands, too, “continues to support the full phase-out of Russian gas,” a spokesperson for the Dutch economy ministry told Politico. 

It will be crucial for the European Commission to get all four countries on board.

Hungary and Slovakia are likely to try to derail the ban, keen to keep pumping in cheaper Russian energy. If France and Belgium join the opposition, the plan's approval could be seriously jeopardised.

The Commission did not respond to Politico's request for comment, but has previously insisted that its proposals are legally watertight.

According to the information available so far, the EU may attempt to prevent Russian gas imports by introducing trade measures, in order to avoid a veto. One such measure could be the imposition of a substantial import duty, which would significantly increase the cost of importing Russian gas, making it unfeasible to sell it to EU countries at market rates. Although this would not be a formal embargo, its economic effects would be virtually the same.

These decisions would also require a qualified majority, i.e. the support of at least 55% of member states representing at least 65% of the EU population. France and Belgium have considerable diplomatic influence, so if they feel that the decision affects their interests, they could well use their lobbying power to oppose it.

It’s necessary to wait for the legal package … to have a better idea of all the implications for our country,

said Belgian Energy Minister Mathieu Bihet.

Cover image (for illustration purposes only): Getty Images