Gold rallies over 3% this week

The European Union is aiming to ban all Russian energy imports by the end of 2027, which was already talked about a lot before but no concrete measures were taken as Russia remained the EU’s second biggest gas supplier, and now a non-member state could frustrate EU efforts to disengage from Russian energy supplies.

The European Commission announced plans this week to completely stop all Russian natural gas imports, by banning member countries from signing new supply contracts with Gazprom and exiting current contracts without paying fines. 

The first problem is that not all EU members support such a step, with countries such Slovakia and Hungary vehemently opposing due to concerns that such a step would weaken the competitiveness of European companies due to higher costs. 

However, Turkey has gradually become a major gas center that contains a lot of Russian gas, with both Hungary and Slovakia getting their Russian gas supplies through a Turkey-Black Sea pipeline. 

Such a pipeline would likely prolong EU dependence on Russian gas, with Russian gas imports already increasing from 30% in 2021 to over 50% in 2024. 

Turkey imports a lot of Russian gas, with some used locally, and the rest is exported to south eastern Europe, with Turkey aiming at becoming a major regional center for natural gas through local production and conduit services between Russia and the EU.

Turkey already announced direct plans to replace Ukraine as the conduit territory for Russian gas exports to the EU, with Hungary alone expected to import 8 billion cubic meters this year, up from 6 billion in 2023, while Slovakia similarly planning to increase imports through revisions to its long-term contracts with Gazprom.

The Turkish pipeline and its role as an intermediary will likely frustrate EU plans to completely disengage from Russian energy imports, with Turkey representing a loophole that some eastern European countries will rely on to bypass laws aimed at restraining Russia.