What Are We Up To On Russian Gas?
But also — Mercosur, Hearings, Meta, Defence
Hello! Today is Tuesday 19 November, and here is your EU news summary for the week. Feel free to share this newsletter with friends and colleagues, and follow us on Twitter and LinkedIn.
The Briefing
Germany is asking its ports to refuse deliveries of Russian gas. Belgium is proposing a ban on imports at the European level. Hungary is advocating for a reassessment of sanctions to lower energy prices. Put simply, there is no European strategy on Russian gas.
CLOSING THE TAP • Gazprom suspended its gas deliveries to the main Austrian supplier OMV on November 16, amid a price dispute following an arbitration decision.
Austria sources 98% of its gas from Russia. But stocks are full and winter should not be a problem. The EU is approaching the winter of 2024-2025 in a better position than two years ago, with gas stocks filled to 90% in November 2024.
However, Europe is struggling to completely wean itself off Russian gas.
REMINDERS • Gas is delivered either by pipeline or by cargo ships. Unlike pipeline-delivered gas, liquefied natural gas (LNG) is first liquefied to be transported by LNG carriers. Regasification terminals are needed to receive LNG. Cross-border pipelines are then needed to export it within the EU.
Problem(s): There are not enough regasification terminals and cross-border pipelines in Europe, limiting the possibilities of LNG export within the EU.
Cross-border projects are often controversial, as evidenced by the very complicated negotiations between France and Spain on the construction of gas pipelines between the two countries.
The price of LNG fluctuates according to global supply and demand, whereas pipeline-delivered gas prices are more stable. An increase in the share of LNG in the energy mix therefore exposes the EU to greater price variations.
SANCTIONS • The EU has adopted 14 packages of sanctions against Russia since the start of the war in Ukraine. Sanctions, or "restrictive measures" in Brussels jargon, have targeted coal and oil, but not gas (until very recently).
It took until the 14th package of sanctions in June 2024 for the EU to target imports of liquefied natural gas (LNG), notably with a ban on using European ports for the transshipment of Russian LNG for export to third countries. This measure applies from March 2025.
The 14th package of sanctions also includes a ban on the import of Russian LNG to regasification terminals not connected to the EU pipeline network, and a ban on any future investment in LNG projects under construction in Russia.
New sanctions could well be in the pipeline from 2025, with Poland succeeding Hungary to the rotating presidency of the Council of the EU in January, paving the way for new measures on Russian LNG.
DIVERSIFY • Even without official sanctions, Russia's share in European gas imports (LNG and pipeline combined) fell from 45% in 2021 to 18% for the first eight months of 2024, according to the energy union state report published in September by the Commission.
To make up for the significant drop in Russian gas imports, Europe turned to Norway, which has significantly increased its exports, mostly via pipelines. Norway is now the EU's largest gas supplier. It accounts for 34% of European imports (pipeline and LNG combined) in the first semester of 2024.
Europe has also turned to LNG. The United States is the key partner, with 48% of European LNG imports in the first half of 2024.
The United States is followed by Russia, which supplies Europe with 16% of its LNG. Russian LNG imports have been on the rise since 2022. France, Spain, and Belgium account for 87% of European imports of Russian LNG in the first half of 2024. The gas arriving in these countries can then be exported to other EU countries.
Moreover, the contract allowing Russian gas to flow through Ukraine via pipeline expires on December 31, 2024. Russian gas transiting by pipeline represents 5% of European imports in 2024, but the bulk of imports for Austria, Hungary, and Slovakia.
TRUMP FACTOR • Donald Trump intends to move the United States from energy independence to "energy dominance" and has vowed to significantly increase LNG output. Trump plans to lift the moratorium on the construction of new LNG infrastructure decided under Biden.
An increase in American production could help the EU reduce the share of LNG imported from Russia and rebalance the American trade balance, a major concern for Trump.
In Case You Missed It
MERCOSUR • French Prime Minister Michel Barnier met Ursula von der Leyen in Brussels last week to reiterate France’s opposition to the proposed trade agreement between the EU and Mercosur, a trade bloc made up of Argentina, Bolivia, Brazil, Paraguay, and Uruguay.
On 12 November, 622 French lawmakers published an open letter in Le Monde, urging President von der Leyen not to go forward with the deal.
The parliamentarians argue that the envisaged quotas for agricultural products would create unfair competition for European farmers, given the lower social, health, and environmental standards in South America.
The majority of EU Member States support the trade agreement, however. Europe’s energy transition would benefit from access to critical materials such as lithium and cobalt. In addition, Germany sees Mercosur as a new market for its struggling carmakers.
META • The European Commission has fined Meta €797,72 million for abusing its dominant position in the market for personal social networks to benefit Facebook Marketplace, an online ads service where users can buy and sell goods.
It is the first time that Meta has received a fine for abuse of a dominant position. As the Commission explains in its press release, market dominance is, as such, not illegal under EU antitrust rules. But “dominant companies have a special responsibility not to abuse their powerful market position by restricting competition.”
Meta occupies a dominant position in an international market for personal social networks (through Facebook and Instagram) as well as in the national markets for online display advertising on social media.
The Commission found that Meta has abused its dominant position in two ways.
First, Meta tied its ads service Facebook Marketplace to its personal social network Facebook, thereby giving Facebook Marketplace “a substantial distribution advantage which competitors cannot match.”
Second, Meta unilaterally imposed unfair trading conditions on other online classified ads service providers who advertise on Facebook and Instagram. This allowed Meta to use ads-related data generated by other advertisers for the sole benefit of Facebook Marketplace.
REYNDERS & BELLAMY • On 14 November, the College of Europe Alumni Association hosted the outgoing Commissioner for Justice Didier Reynders and French MEP François-Xavier Bellamy in Brussels for a discussion about rule of law and democratic legitimacy in Europe.
In his keynote speech, Mr Reynders pointed to the progress made, noting that two thirds of the recommendations issued in the 2023 Rule of Law Report had been fully or partially followed up.
Mr Bellamy stressed that rule of law can be threatened by an excess as well as a lack of government authority. He also warned that judges, particularly at the ECHR, sometimes fail to exclude politics from their legal interpretations.
HEARINGS • The hearings of the Commissioners-designates in Parliament ended on November 12 without an agreement between the political groups over their approval for the six Vice-Presidents and the Hungarian Olivér Várhelyi.
Tensions are high as the EPP is blocking the approval of Socialist Teresa Ribera, while the S&D is blocking the approval of Italian Raffaele Fitto and Hungarian Olivér Várhelyi.
The November 14 vote on the EU’s Deforestation Regulation (EUDR) did little to calm things down. The EPP succeeded in pushing through amendments that weakened the text, thanks to the support of the ECR conservatives, Patriots for Europe and ESN sovereigntists. For S&D and Renew, this breach of the “cordon sanitaire” by the EPP is a casus belli.
A meeting of the Conference of Committee Chairs is scheduled for Wednesday. The final vote on the College as a whole is still scheduled for next week (November 27).
If an agreement has not been reached by then, the von der Leyen II Commission risks seeing its inauguration postponed until January 2025.
DEFENCE • For the very first time, the European Commission has approved 300 million euros in European funding for five joint arms procurement projects under the European Defence Industry Reinforcement through common Procurement Act (EDIRPA).
This funding comes in addition to the 11 billion euros spent by 20 member states on the joint procurement of air and missile defence systems, modern armoured vehicles and ammunition. Some of the joint purchases will be used to support Ukraine.
Moreover, a new change to the rules governing the use of the European Cohesion Fund (CF) means that Member States now have greater flexibility to use the funds to better support their defence industries.
At a time when the Trump administration could severely cut off funding to Ukraine, this “clarification” of the rules would enable the EU to increase its financial support for Ukraine.
What We’ve Been Reading
In Politico, Eddy Wax explains how he ‘stopped worrying and learned to love Euro-English’.
The president of Airbus Defence & Space, Michael Schoellhorn, spoke with the Financial Times. Highly recommended reading.
This edition was prepared by Léopold Ringuenet, Lucie Ronchewski, Rogier Prins, Hana Rajabally, Lidia Bilali, Augustin Bourleaud, and Maxence de La Rochère. See you next week!