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Europe’s failure to put long-term international security interests above short-term economic benefits over Georgia in 2008 and over Ukraine in 2014 was key in encouraging Russian President Vladimir Putin to launch the full-scale invasion of Ukraine on 24 February 2022. Back then, Europe – and its de facto leader, Germany – had used cheap and plentiful imports of Russian gas and oil as a base to power economic growth for years. So when Russia launched military actions against two independent sovereign European countries within the space of ten years, Berlin and Brussels simply looked the other way rather than implement any meaningful sanctions – never mind, a military response – against Moscow. According to a very senior source in the Russian government exclusively spoken to by OilPrice.com after the 2022 invasion, Putin had no doubt at all that the same toothless response would come from Europe at that time, just as it had on both previous occasions. He was nearly right in his view. Had the vast Russian military convoy directed at capturing Kyiv not been bogged down by fierce Ukrainian resistance allowing other countermeasures against the invasion to be secured then the one-week victory Putin predicted would have occurred. At that stage, Europe’s only concern was whether it would have to start paying in roubles rather than euros for the same vast quantities of Russian gas and oil as before, as analysed in full in my latest book on the new global oil market order. As time passed with no such victory, it was pressure from the U.S. and U.K. that pushed Europe into taking more assertive action. With alternative sources of supply for the continent built up since then, Europe does not want to be in the same position again, especially as a slew of intelligence points to further Russian attacks on NATO’s Eastern Flank in the coming two years.

That year – 2027 – is the time by which Europe intends to have ended all Russian gas imports, and it is serious this time. On 6 May, the European Union’s (E.U.) executive branch -- the European Commission (E.C.) – published its roadmap to phase out Russian energy imports completely by the end of 2027. One part of this will be done by improving the transparency, monitoring and traceability of Russian gas across the E.U. markets. New contracts with suppliers of Russian gas will be prevented and spot contracts will be stopped by the end of this year. Another part will address Russian oil imports with a focus on employing the same techniques as for gas but focused on Russia's ‘shadow fleet’ -- vessels used by Russia to evade sanctions on oil. The final part will address the nuclear element of the threat from Moscow, restricting new supply contracts co-signed by the Euratom Supply Agency for uranium, enriched uranium and other nuclear materials deriving from Russia. The E.U. has already reduced its share of Russian gas imports from 45% to 19% due to the implementation of the REPowerEU Plan in May 2022. However, E.U. Energy Commissioner Dan Jorgensen underlined on 13 May that: “The E.U. is very clear. We do not wish for energy from Russia in the future. We don’t wish it now and we will not wish it after a peace [in Ukraine].” he said. “The Roadmap is a very clear signal that we don’t want to import so much as a single molecule [of Russian gas or oil] in the future,” he added.

Over the past few days, the E.U. has upped the ante on several key measures in line with its broad agenda to continue reducing Russian gas and oil imports into the continent. In its wide-reaching 17th package of sanctions against Moscow, the E.U. focused on squeezing Russian energy exports by increasing the number of ships in its shadow fleet that continues to transport oil in circumvention of existing prohibitions. Added to the E.U. sanctions list last week were 189 tankers, bringing the total number of blacklisted ships to 342. Other associated firms were also hit, including Russian tanker firm Volga Shipping, insurer VSK, and various shadow tanker operators in the UAE, Turkey, and Hong Kong. The UK – no longer a member of the E.U. – added another 18 tankers transporting Russian oil illicitly on the same day, having blacklisted 110 vessels earlier over the month. Russian oil company Surgutneftegas was also added to the E.U.’s blacklist, having been earlier sanctioned by the U.S. Measures are also being taken to further tighten up the monitoring of the Russian System for Transfer of Financial Messages (SPFS), which was established to act as an alternative to the international SWIFT payment system. In its 16th sanctions package, the E.U. imposed a ban on all SPFS transactions that occur outside Russia itself and imposed multiple sanctions on neighbouring Belarus as a broader signal of its intentions to allies and potential allies of Russia. “It’s increasingly obvious that we [the E.U.] cannot rely on the U.S. as we did before [the second-term of U.S. President Donald Trump] to safeguard our security, so it is even more vital that we assert ourselves against further Russian aggression by keeping current sanctions in place and extending them to our goal of zero [fossil fuel] imports [from Russia] as soon as possible, and certainly zero gas by 2027,” a senior source who works closely with the E.U.’s energy security complex exclusively told OilPrice.com recently.

Looking ahead, he added, the next round of sanctions will see a further ratcheting up of pressure on the Kremlin. One element of this is likely to be a reduction in the current US$60 per barrel (pb) price cap on Russian oil closer to the price of production, he said. For a long time before the Russia-Ukraine War began, this was around US$40 pb. Premium products are capped at US$100 pb, and discounted products at US$45 pb. Other likely measures relate to gas pipelines, banks, and payment networks and mechanisms not just relating directly to Russia but involved in any way connected to it. “Although Nord Stream 1 and 2 [offshore natural gas pipelines that transported gas from Russia to Germany across the Baltic Sea] are non-operational currently, there is still good reason to sanction any future business involving them being done, particularly as they have been mentioned by Russia in discussions with the present U.S. administration” said the E.U. source. “We need to make sure that they can never again be used by Russia to push its energy into Europe and build up any sort of dependence as there was before,” he added.

All these measures take on the added impetus that Europe fully expects another Russian military action against its Eastern borders by the end of 2027 at the latest. NATO Secretary General and former Prime Minister of the Netherlands, Mark Rutte, said in December: “[Russian President, Vladimir] Putin believes that a serious, irreconcilable struggle is unfolding for the formation of a new world order – these are his own words. Others share his belief, not least China.” Consequently, he added: “This requires us all [in Europe] to be faster and fiercer. It is time to shift to a wartime mindset and turbo-charge our defence production and defence spending.” It also means that securing adequate and sustainable energy supplies from sources other than Russia is a European security priority, as is denying the Kremlin the opportunity to use revenues acquired from gas and oil sales into Europe to be used to fund an attack against it. In the same vein, it is also why several key countries in the E.U. are now pushing to have the ‘snapback sanctions’ on Iran triggered before their 18 October expiration deadline. “Verified reports show that Iran is becoming ever more active in the Russia-Belarus campaign of eroding NATO’s eastern flank defences particularly along the vulnerable northern and southern border defences that are most vulnerable,” said the E.U. security source last week.  “In the last delivery of mid- and long-range missiles from Tehran to Moscow, for the first time the IRGC [Islamic Revolutionary Guards Corps] included as they had promised in February in a meeting a visit to Moscow, Etemad [a late generation ballistic missile], and Fath 360 [a multi-lunch ballistic missile launching system], with most of the latter to be positioned by Moscow near the Belarus border with Poland,” he underlined. “Tehran believes that by signing an agreement with the United States, the E.U. will become toothless in their attempt to force new sanctions and additional inspections on them,” he said. “However, we can and will act on Iran and we can and will do the same against Russia too,” he concluded.

By Simon Watkins for Oilprice.com