EU Gas Market Reform: Finland to Prohibit Import of Liquefied Natural Gas from Russia

The Finnish government is planning to ban the import of Russian liquefied natural gas (LNG) at the national level starting from 2025, as announced by the Minister for Climate and the Environment, Kai Mykkänen, in an interview with Helsingin Sanomat.

"I don't want to promise a specific date, but I hope the ban will be in effect by next year," the minister noted.

While Finland currently does not import pipeline gas from Russia, it continues to purchase liquefied gas, citing contractual obligations. The agreement between the Finnish company Gasum and Russian Gazprom is based on a "take or pay" principle, meaning Finland must pay for contracted volumes even if they are not used. Gasum representatives claim they only procure the minimum allowable gas volume according to the contract.

"As a buyer, Gasum is obligated to pay Gazprom annually for a certain gas volume, regardless of whether deliveries take place or not. If the company decided not to buy this volume, it would still be obliged to pay for the gas according to the contract," the company's website states.

Gasum ceased receiving pipeline gas from May 21, 2022, due to unexpected Russian demands for payment in rubles that were not stipulated in the contract. Following the failure to resolve the export dispute with Gazprom on time, the company decided to terminate the contract, announcing this decision on May 22, 2023.

The European Union has not yet reached a consensus on imposing sanctions on Russian gas. However, a regulation allowing member states to independently prohibit its import for security reasons is set to take effect in spring 2024. Latvia and Lithuania have already taken steps to ban the import of Russian gas at the national level, without waiting for these changes, while Finland opted to wait for this decision.

Minister Mykkänen acknowledged that it would be beneficial if the decision were made at the EU level, but unfortunately, some member countries are not ready for it. He added, "At the EU level, such a decision is impossible to make, that's a fact."

Last year, the import of Russian natural gas to Finland amounted to several million euros per month. Before Russia halted gas supplies to Finland in May 2022, imports were over 100 million euros per month.