Naturgy warns EU ban on Russian LNG faces tight market
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Spanish energy firm Naturgy said the EU should reconsider its ban on long-term Russian LNG contracts, citing a tight global market. The company noted that the ban, set to take effect in 2027, was designed when supply was abundant but now faces low storage and geopolitical risks.
The Ban's Impact
Naturgy's contract with Novatek's Yamal LNG plant, running until 2041, is affected by the EU ban on long-term Russian LNG contracts from 2027. Rita Ruiz de Alda, Naturgy's global head of control and energy planning, said security of supply is guaranteed via contracts with free destination clauses. The ban is structured as a force majeure event, relieving take-or-pay obligations.
Market Tightness
Steven Fernandez, Naturgy's global head of financial markets, highlighted four dynamics: the Russian ban removes 10-13% of EU peak supply; the Hormuz disruption cuts 20% of global LNG with no clear timeline; EU storage is at a five-year low; and storage is highly weather-sensitive. He warned that a cold winter could risk shortages by February 2027.
EU Storage Levels
Fernandez said planning for winter 2026/2027 must start now to mitigate shortages and price spikes. EU storage has limited economic incentive to refill due to TTF backwardation. Manuel Garcia Cobaleda, Naturgy's general counsel, noted that TTF peaked at a two-year high, suggesting the EU should review the ban given the changed context since autumn 2025.
What's Next
The EU is set to implement the ban on long-term Russian LNG contracts from 2027. It remains unclear whether the bloc will adjust the policy in response to the tight market conditions and geopolitical risks.
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Naturgy warns EU ban on Russian LNG faces tight market
