The War in Ukraine and the Consequences for the European Gas Market: New Russian Sanctions a Tit for Tat? Not Quite

European energy companies face unprecedented uncertainty as a result of Russia’s invasion of Ukraine. As noted in our last White Paper, many countries have progressively imposed increasingly significant sanctions on Russia and Belarus. These have included targeted sanctions on Russian institutions, state-owned enterprises and political elites, restrictions on debt and equity instruments, as well as a broad range of other restrictions that impact the energy sector, including import and export controls (with, most recently, the European Union’s introduction of a phased prohibition on the import of crude oil and certain petroleum products from Russia into the European Union on June 3, 2022).

Since the publication of our White Paper on the ripple effects on the downstream European gas market  in early May 2022, the Ukrainian government announced it would suspend the transportation of Russian gas through its eastern Luhansk region and shift volumes to run through the Sudzha interconnection point instead. Thereafter, the Russian government announced its own counter-sanctions program, initially targeting 31 energy companies worldwide, including former Gazprom-related companies now under German state trusteeship.

This White Paper explores recent developments involving the transportation of Russian gas through Ukraine, Russian counter-sanctions, the potential effects of these developments on the mid- and downstream gas markets in Continental Europe, as well as potential legal remedies that some market participants may need to consider.