Europe is moving ahead with plans to ban Russian gas imports by the end of 2027, effectively limiting Moscow’s energy future in the region and leaving it with a large number of stranded assets.
The dual Nord Stream 1 and 2 undersea pipelines were early casualties of Russia’s invasion of Ukraine, with the infrastructure sabotaged in late 2022 and the latter pipeline (which cost $11 billion to build and was intended to double Russia’s cheap gas supplies to Germany) never being certified for use.
There was speculation that key energy infrastructure could eventually be restored if or when the war between Russia and Ukraine ends and a peace agreement is reached between the two countries.
But talks to establish the basis for a ceasefire are progressing at a snail’s pace, with neither side willing to cross the “red line” of permanent surrender of territory, whether sovereign or occupied. In an interview with British news site Unhard on Monday, Vance said the United States would “try to resolve this issue” but “I cannot say with confidence that there will be a peaceful solution.”
Expectations for an agreement have led to questions about what economic and energy ties will be re-established between Russia and the rest of the world, and, when it comes to Europe, whether a ceasefire will lead to the reintegration of Russian gas and the revival of the Nord Stream gas pipeline.
Such a move would be highly contentious and divisive on the continent, given Russia’s full-scale invasion of Ukraine in 2022 and the region’s move to divest from cheap Russian gas.
As of 2021, before the war, imports from Russia accounted for about 45% of Europe’s gas consumption. This year’s import volume is estimated at 13%.
Ukraine will be furious at any move that benefits the invaders, and Poland has called for the pipelines (one of which has never been used) to be “dismantled.”
However, Ukraine itself benefited from the collection of transit fees for older pipelines running through the country. Russia and Ukraine’s gas transportation agreement expires at the end of 2024, with both countries choosing not to renew it in view of the war. The Nord Stream pipeline is specifically designed to circumvent Ukraine and avoid such fees, but if the tap is turned back on, a transit agreement could be one of many tools used during negotiations.
The United States is likely to balk at Nord Stream’s return as it wants to strengthen Moscow and increase its market share for liquefied natural gas (LNG) sales to Europe. But Germany, which is directly connected to the pipeline and whose industry suffers from high energy costs, may find it difficult to resist the lure and return of Russian gas supplies.
In December, the European Council and the European Parliament signed an interim agreement on regulations phasing out imports of Russian gas. Imports of liquefied natural gas (LNG) and pipeline gas are scheduled to be completely banned from the end of 2026 and fall of 2027, respectively.
Is Nord Stream salvageable?
In January, the Danish Energy Agency granted Nord Stream 2 permission to carry out maintenance work on the damaged pipeline, which lies within Denmark’s exclusive economic zone (EEZ) in the Baltic Sea.
Maintenance work on Nord Stream 2 has not yet begun, but the agency told CNBC: “The purpose of the work is to prevent further gas eruptions and the ingress of oxygenated seawater, which could lead to corrosion.”
The agency said the permit was granted based on a number of conditions aimed at ensuring the safe operation of the pipeline. It added that, among other conditions, the company must submit an annual plan for the pipeline facility “so that the Danish Energy Agency can continuously monitor the company’s plans for the future of the facility.”
“Furthermore, all conditions of such a permit must be met before the pipeline can begin operating. The Danish Energy Agency has not received any such application.”
But is the Norstream pipeline still salvageable?
Sergei Vakulenko, a senior fellow at the Carnegie Russia and Eurasia Center, told CNBC that the pipelines damaged by the sabotage will need to be partially replaced, and that restoring the remaining undamaged pipelines will not cost “a whole lot of money.”
“I think it’s still repairable and salvageable,” he told CNBC in October. “So we may have to cut several miles of (damaged) pipeline and replace it. But it’s possible.”
“It could easily cost $1 billion or close to that, but we still have one operational pipeline that we can use,” he said. Asked whether pipelines filled with stagnant gas were currently being taken care of, Vakulenko said: “Not at all.”
Can Europe put up with Russian gas again?
The big question is whether Europe will be able to resume purchasing from Russia.
“The Nord Stream (pipelines) were 55 million cubic meters each. So that leaves one with 27.5 million cubic meters…and this is probably the upper limit of what Europe is ready to buy from Russia,” Vakulenko said.
He said if there was a change of government in Russia and Putin was no longer president, Europe “would be very willing to buy some Russian gas,” but not if it was the same amount it was buying before.
“In that case, Nord Stream would help. But that’s a very big IF,” he added.
“On the other hand, there are parties in Europe, or at least in Europe, that, for various reasons, do not mind having at least some Russian gas included in Europe’s energy mix, in order not to become too dependent on US supplies. Russia is the lowest-cost supplier to Europe,” he said.
The continent has not fully recovered from the energy crisis caused by the full-scale invasion of its neighbors. According to the IEA, Dutch title transfer facilities, a key indicator of European natural gas prices, were double their pre-war levels as of early 2025. Energy constraints are further exacerbated by AI competition, which is shifting public perception from energy transition to energy addition.
“So if there is less resistance to buying Russian gas, if you don’t have to put up with too much to buy it, then certainly there would be a lot of commercial and economic reasons why (to do it). If it became politically and ethically acceptable, there would be quite a lot of incentive to do it, but that’s also when there is certainly some degree of proximity between Russia and Europe, and that would be (a) big thing.”
But Tancrede Fulop, utilities and renewable energy analyst at Morningstar, told CNBC that new European legislation will make it very difficult to reintegrate Russian gas, at least in the short term. However, he pointed out that the law contains some exceptions for Hungary and Slovakia in emergency situations.
The EU said the policy shift was also rooted in Russia’s move toward energy independence after its “weaponization of gas supplies.” As a result, member countries are likely to continue to avoid over-reliance on any one country and instead invest in increasing their overall domestic production capacity.
Does Russia want European business?
Whether Russia wants to sell gas to Europe is also a pressing question.
“Everyone thinks the energy crisis started with the Ukraine war, but it actually started in 2021,” Fulop said, pointing to cold winters, lower wind speeds and resulting increased gas consumption as several factors.
The fact that the EU was delayed in obtaining permission to operate Nord Stream 2 also added to the crisis. “So Russia started reducing the amount of gas sent to the EU before the war started,” he said. This suggests that Russia’s move may have been intended to put pressure on Europe to pick up the pace on Nord Stream 2.
On the other hand, Vakulenko said, “Russia is not in a very strong negotiating position.” “For Russia, that gas is a resource with nowhere to go. So you can expect (Europe) to be able to negotiate a good deal.”
Russia is also looking to Asia as an alternative partner to Europe, deepening ties with China through the Power of Siberia pipeline.
Mr Fulop said that even if a peace deal was reached with Ukraine, the possibility of a new conflict with Russia “sends a very worrying message” given the violations of European airspace in recent months.
After all, accepting Russian gas again “doesn’t seem like the most realistic scenario.”
He added that gas prices have been falling recently, perhaps because market watchers are factoring them into the peace deal. The EU will also benefit from the US’s new export terminal
“This is bearish for gas prices and positive for Europe, potentially offsetting the end of Russian gas imports,” Fulop said.
