Trickery with Russian gas: Türkiye could be the weak point in the EU's plan to decouple from Russia

EU seeks to close all the loopholes...

The European Union has reached a historic turning point. Regulations are expected to be adopted this year that will eliminate all imports of Russian natural gas and crude oil by 31 December 2027 — or potentially even sooner. If diplomacy fails and certain countries block the regulations, the EU could also bring the era of Russian energy in the union to an end through trade policy measures (tariffs).

However, questions are increasingly being raised about how to enforce the rules, given that it is virtually impossible to trace the origin of gas at the molecular level. During transportation, molecules from different sources typically mix, meaning it is difficult to determine the gas's origin when it reaches the consumer.

That is why, in early September, it was announced that the EU would shift the burden of proof to importers. If a shipment arrived at the Russian-EU border via Belarus or the Bulgarian-Turkish interconnector (Strandja–Malkoclar), it would automatically be classified as Russian, unless the importer could provide clear evidence to the contrary.

...but the market could still go around the Commission

Patrick Pouyanné, CEO of TotalEnergies, said at an investor forum:

If the EU bans Russian LNG, we will redirect Yamal shipments elsewhere – either to Türkiye or India. Türkiye is not in the EU.

The French oil and gas giant owns a 19.4% stake in Novatek and a 20% share in the Yamal LNG project. It also has a long-term contract for the supply of 5 million tonnes of LNG per year, of which approximately 2 million tonnes will be supplied to Europe, 2 million tonnes to Asia and 1 million tonnes will be available for sale on the open market.

Pouyanné's words represent the first open acknowledgement that Russian LNG could be redirected to countries with fewer political and regulatory constraints. This could potentially enable it to return to the European market. This is because, once gas from different sources enters the Turkish gas system, it gets mixed together, creating opportunities for 'trickery'. With gas from five or six different sources already flowing through Türkiye's pipeline system, it is easy to 'relabel' Russian molecules as Azerbaijani ones, for example.

In order to understand the process, it is necessary to be familiar with physical swap transactions. In the natural gas market, these transactions represent an exchange agreement whereby no actual delivery takes place from the original source to the destination country; rather, quantities are essentially 'swapped' on paper.

To give a simple example: a European company has a contract with a Russian gas supplier, but the actual molecules are not brought into the EU. Instead, the Russian gas specified in the contract is “replaced” with, say, Azerbaijani gas in Türkiye. On paper, the European company is now importing Azerbaijani gas across the border, thereby complying with EU restrictions.

Although the EU intends to prevent whitewashing through the above regulation by placing the burden of proof on traders/importers who know the market,

it will be very difficult for the EU to monitor and enforce this properly.

Cover image (for illustration purposes only): Getty Images