ICIS Whitepaper: Can Russian gas return to Europe after arbitration awards?

The following text is from a white paper published by ICIS called ‘Can Russian gas return to Europe after arbitration awards?’

You can download the pdf version of this paper here.

Written by: Aura Sabadus and Andreas Schroeder
Graphs by: Yashas Mudumbai

Recent geopolitical events have led to discussions around the potential resumption of Russian pipeline gas flows to Europe. However, complex legal and reputational challenges could make the process very difficult.

In this Q&A, ICIS reviews the arbitration cases brought against Gazprom, explaining the difficulties facing those seeking to renegotiate contracts and analyses some scenarios for the possible return of Russian gas.

HOW MANY ARBITRATION CASES HAVE BEEN INITIATED?

Since Gazprom cut pipeline gas supplies to Europe following Russia’s invasion of Ukraine in 2022, more than 20 EU buyers initiated arbitrations, claiming financial damages in excess of €18 billion and, in some cases, the termination of contracts.

Over the last year, several companies such as Germany’s Uniper and RWE or Austria’s OMV were awarded damages.

In Uniper’s case, for example, the arbitration tribunal awarded €13 billion, one of the highest ever, and terminated the company’s long-term contracts amounting to 18.5 billion cubic meters (bcm), which were due to expire in 2030.

ICIS has verified and compiled a list of the arbitration cases covering around 100bcm of gas, equivalent to two thirds of the annual volumes delivered by Gazprom under long-term contracts.

In some cases, covering approximately 20bcm/year, contracts have already expired since 2022.

In others, amounting to over 28bcm/year, companies were awarded financial claims and had contracts legally terminated, but some agreements covering around 30-35bcm/year may still be pending.

The largest claims in terms of financial damages and contracted volumes were reportedly made by Germany, followed by Italy, France and Austria. These contracts had expiry dates between 2030-2040.

The list compiled by ICIS is not exhaustive as proceedings are secret and many companies had been keen to protect the confidentiality of contractual terms.

When excluding the contracts that can be accounted for, as well as those which remain active, there are still around 38-40bcm/year tied up in agreements under arbitral proceedings, but which ICIS could not verify from publicly available information.

RUSSIA HAS MADE COUNTERCLAIMS. DO THEY MATTER?

Unless companies had assets in Russia prior to the start of war and the ensuing 2022 energy crisis, counterclaims brought by Gazprom in Russian courts are unlikely to be considered by companies active in western jurisdictions, lawyers interviewed by ICIS said.

Publicly available information indicates that by mid-March 2025, Gazprom had initiated 15 counterclaims in Russian courts.

NEXT STEPS?

With most legal proceedings now concluded, buyers have several choices.

One option is to turn the page completely on Russian imports. In some cases, such as Lithuania, Poland or Finland, the return of Russian gas supplies is unlikely, at least for the foreseeable future.

These countries have managed to put in place alternative solutions such as expanding or building LNG regasification capacity, signing new LNG contracts or, in Poland’s case completing the Baltic Pipeline designed to bring gas from the North Sea.

Finland’s Gasum initiated arbitration for its 2.5bcm/year contract, due to expire in 2031, amid disagreement with a Russian demand to pay in rouble in 2022 as well as with regards to certain terms in the contract.

The arbitral tribunal ordered Gasum and Gazprom Export to continue their bilateral contract negotiations but these were unsuccessful. As a result, Gasum terminated its long-term contract with Gazprom Export on 22 May 2023.

In other cases, such as Uniper’s, where the financial compensation is significant, the claimant could consider recouping the sum. Lawyers interviewed by ICIS said one option would be to arrest Gazprom’s remaining receivables.

However, most of these assets are now in former Soviet countries or Turkey, which may ultimately prove challenging to seize.

The other option would be to secure payments in kind whereby Gazprom would agree to deliver gas to the equivalent value of the compensation owed to the buyer.

HOW MUCH GAS COULD BE RENEGOTIATED FOR FUTURE IMPORTS?

Energy lawyer Alan Riley told ICIS that, in theory, volumes could be as high as those that had been lost in 2022. In reality, however, these could be much smaller or even impossible to secure.

This would be because there may be some companies uninterested in renewing a business relationship with Gazprom.

Secondly, there are also reputational considerations at stake. Many companies would not want to be associated with Gazprom or might fear that with a new US administration willing to sanction Russian companies in the upcoming years, they may become collateral victims.

Others, however, may be inclined to consider renegotiating some of the volumes, particularly if Russia is ready to offer significant discounts for an extensive period of time.

Riley said Gazprom could offer prices at US Henry Hub level, which would help to bring down soaring energy costs for western European economies reeling from the 2022 energy crisis.

WHAT ARE THE CHALLENGES FACING COMPANIES LOOKING TO RESUME IMPORTS?

More than 100bcm of gas delivered by Russia prior to 2022 has now been replaced by spot volumes or mid-term contracts with LNG or pipeline suppliers.

While the European supply picture remains tight at least for the remaining months of 2025, there are several factors that will determine whether Russian gas would make a comeback any time soon.

These relate to companies’ strategies, Gazprom’s commercial and legal constraints, EU regulations, availability of supply routes and global competition.

COMPANIES’ STRATEGIES

While many companies will be tempted to resume negotiations for gas from Russia, many will also be mindful of collateral issues.

For example, some companies which held supply contracts with Gazprom were also shareholders in projects such as Nord Stream 1 or financial investors in Nord Stream 2 – both pipelines connect Russia to Germany for gas deliveries.

If the Nord Stream pipelines, which were sabotaged in 2022, are repaired and brought back into commercial use, a question remains as to whether companies would have an interest in resuming imports via these routes.

In some cases, where contracts were terminated following arbitral proceedings, companies are no longer legally required to return to the project.

However, it’s unclear whether others, which held supply contracts with Gazprom for volumes delivered to Germany and were also financial investors in Nord Stream 2 or shareholders in Nord Stream 1 would seek to resume imports.

WHAT ARE GAZPROM’S CHALLENGES?

Gazprom’s challenges are equally complex.

On the one hand, it’s interested in regaining its European market share, having been unable to diversify elsewhere. On the other, the risks of returning would be significant because if it were to conclude new deals, other companies holding financial claims against Gazprom would immediately seek to seize its European revenue.

This means Gazprom would either have to conclude deals with all previous buyers or allow another Russian entity to step in.

To leverage its way back into the market, Gazprom or any other Russian entity may also have to offer significant price discounts to undercut competitors. Such an option would prove challenging particularly for Gazprom, which is undergoing financial difficulties at the moment.

Furthermore, new global LNG capacity which is expected to enter operation next year could also pressure gas prices, giving Gazprom or other Russian entities limited flexibility in terms of offering discounts.

WHAT ARE THE POSITIONS OF THE EU AND THE US?

The EU set a 2027 deadline for the phaseout of Russian fossil fuel imports. Nevertheless, it has repeatedly postponed publishing the relevant roadmap, arguably expecting to get a better understanding of discussions related to arbitrations or the return of any of the supply routes including Ukraine, the Nord Streams or Poland’s Yamal pipeline which runs from Russia, through Poland to Germany.

The roadmap is considered essential because it will ultimately define whether companies can resume Russian imports and, if so, in what quantities and over what period of time.

While more than a third or 35bcm of the gas supplied by Russia has been displaced by US LNG, it’s unclear to what extent US producers will be able to retain and even increase their European market share, particularly in the light of a growing transatlantic political rift.

Russian LNG and pipeline gas to Europe went down from 160bcm in 2018 to 51bcm in 2024. In contrast, US LNG went up from 25bcm in 2021 to 59bcm in 2024. Hence, 34bcm of US LNG fills the ‘Russian gap’ of 109bcm.

For US producers, retaining a foothold in Europe will be of critical importance as the share of US LNG in the EU’s total imports reached a record 24% in March 2025.

However, as US President Donald Trump is now pushing for a rapprochement with Russia and the negotiation of a peace deal with Ukraine, one issue on the agenda may be the return of some Russian flows to Europe.

The US President will be forced to strike a fine balance between protecting the interests of US producers and making concessions to Moscow.

SUPPLY ROUTES

Even if companies were to agree on volumes, duration of contracts, price and other sensitive contractual terms, their ability to resume these flows will depend on the availability of import routes.

Prior to Russia’s war in Ukraine, Gazprom was using four transport corridors – Ukraine, Nord Stream 1, the Yamal pipeline to Germany via Poland and TurkStream 2 transiting the Black Sea and Turkey.

There have been discussions about the possible resurrection of the Nord Stream lines or the return of transit via Ukraine after a five-year agreement expired on 1 January 2025.

Although there are reports of high-level talks involving Trump and Russian counterparts for the possible return of one of at least one of the Nord Stream 2 pipelines that remains intact, the legal complexities that need to be addressed are formidable.

A first hurdle relates to the debt restructuring of Gazprom subsidiary Nord Stream AG. The company was given until 9 May to present a plan to repay its debt or face bankruptcy.

Even if it’s successful in persuading the Swiss court it is in a position to pay, the next difficulty would be to obtain the outstanding certification for its company Gas for Europe.

The German company was established in January 2022, following amendments to the EU’s Third Gas Directive, which would require Swiss-based Nord Stream 2 AG to establish a German subsidiary to act as an independent transmission system operator for the section of the pipeline operating in German territorial waters.

Considering ongoing geopolitical tensions as well as the fact that Germany had to spend billions of euros to bail out Uniper and subsidize end consumer prices following the Russian-triggered energy crisis of 2022, the likelihood of granting approval to Nord Stream 2 under current conditions is low.

The Federal Ministry for Economic Affairs and Climate Action (BMWK) is reportedly preparing for the possible demand from the United States for the activation of the two Nord Stream 1 and 2 gas pipelines.

The German government rejects the idea of resuming Russian gas deliveries via the Nord Stream pipelines in the Baltic Sea but it is unknown what position it would take if faced with US demands to bring it back online.

Yamal

Another route that could be considered is the 35bcm/year Yamal pipeline, transiting Belarus and Poland for deliveries in Germany. Prior to the crisis, the Polish section was owned by EuRoPol Gaz, a joint venture between PGNiG (currently under PKN Orlen), Gazprom and Gas Trading, a company majority owned by PGNiG, making the Polish side, the majority stakeholder.

After Gazprom reduced and then stopped deliveries altogether in 2022, Poland sanctioned Gazprom’s share in EuRoPol Gaz. In response, Russia sanctioned EuRoPol Gaz, which meant that gas could no longer be delivered via this route.

Since 2022, both Poland and Russia initiated legal proceedings against each other, claiming each financial damages amounting to $1.5 billion.

Resurrecting the transport route would therefore depend not only on solving the legal disputes but also on the normalisation of political relations between Poland Russia, which is unlikely given current circumstances.

Ukraine

The third route – Ukraine – would have been the most likely option for the resumption of transit considering the sheer capacity of the transmission network, which can ship more than 100bcm/year to Europe.

Nevertheless, ongoing war-related risks and the recent destruction on the Russian side of the border of the Sudzha metering station, a critical piece of infrastructure measuring gas inflows leaving Russia and entering Ukraine, could block the return of transit in the immediate future.

Given the ongoing war conditions, Kyiv may be looking to demand a share of Russia’s sales revenue to be paid to Ukraine as part of compensation for war-related damages.

TurkStream

Finally, Russia’s remaining option to send gas to Europe is TurkStream 2. However, with nearly 16bcm of active contracts in place, the pipeline is working close to full capacity.
This means it would either have to expand TurkStream at a time when its revenue has been sharply falling or persuade Turkey to increase border capacity on the adjacent Strandzha border point with Bulgaria. The border point was previously used to import Russian gas shipped north to south until 2020.

The entry capacity of this border point was over 15bcm/year but the reverse capacity, shipping gas from Turkey to Bulgaria, has an estimated 4bcm/year.

Nevertheless, the Turkish incumbent and gas grid operator, BOTAS, said it could double it. Parallel upgrades would have to be carried out in the neighbouring Bulgarian gas transmission system to decongest the network and accommodate additional imports.

HOW MUCH RUSSIAN GAS COULD RETURN TO EU MARKET?

From a purely technical perspective, there are very generous limits to Russian supplies into Europe.

• The Ukraine transit (via Sudzha) could bring more than 100bcm/year.
• The opening of a Nord Stream 2 string could bring 27.5bcm pipeline gas.
• A reactivation of the Polish Yamal pipeline could add some 30bcm/year.
• A stop of EU sanctions against Gazprom’s Arctic LNG could bring some 13Mt LNG/year (~18bcm) of Russian LNG to the global market with Europe as most attractive destination.

ICIS believes a return of Russian pipeline gas and LNG to Europe will not be hindered by technical limitations but is challenged for political considerations.

ICIS Gas Foresight suggests that a return of Russian gas would have severe implications for LNG imports into Europe. In a model-based scenario analysis ICIS tested a combined activation on January 2026 of:

• Ukraine gas transit with 15bcm/year
• Nord Stream II gas pipeline string with 27.5bcm/year
• Arctic LNG with 13Mt/year export capacity

An additional annual 375TWh (34bcm) of Russian gas supply would bring LNG imports into Western and Central Europe down by some 365TWh (33bcm) in 2026 and reduce average gas prices by more than 5% according to model results.

A potential return of Russian gas into Europe hinges on the reactivation of commercial activities between European energy corporations and a Russian entity.

Looking at Gazprom’s suspended gas supply contracts, the theoretical potential is large.
More than 100bcm/year could flow to Europe if the suspended commercial contracts would be reactivated.

ICIS Gas Foresight’s base case view assumes that Russian pipeline gas supplies will be restricted to Balkan countries as well as Hungary and Slovakia.

LNG continues to flow to Europe and makes up the lion’s share of more than two-thirds of Russian deliveries into Europe as of 2025 and for the future.