The European Union’s bid to phase out Russian fossil fuels by 2028 may come with a hefty price tag for Slovakia. The country’s state-owned gas importer, SPP, has warned that it could face penalties of up to €16 billion ($18 billion) for ending its long-term contract with Russia’s Gazprom early. This warning comes as part of the EU’s proposed REPowerEU plan, which aims to ban new gas contracts with Russia from 2026 and all long-term contracts by the end of 2027.
The plan, backed by Commission President Ursula von der Leyen, has been met with controversy, particularly from countries like Slovakia that rely heavily on Russian gas. Slovakia’s Prime Minister, Robert Fico, has slammed the plan as “economic suicide,” citing the potential for increased prices and energy insecurity across Europe. The country is particularly vulnerable, depending on Russia for about 85% of its gas.
In an effort to mitigate potential losses, the EU Commission is exploring legal avenues to enable European companies to claim force majeure, allowing them to terminate Russian gas contracts without penalties. However, SPP has cautioned that even if it invokes force majeure, Gazprom may still seek compensation if an EU-wide import ban comes into effect.
Slovakia is not alone in its opposition to the plan. Hungary, Austria, and reportedly Italy have also expressed concerns about the impact of cutting off Russian gas supplies. Unlike sanctions, which require unanimous backing from all EU member states, this plan is expected to be introduced as trade legislation, requiring support from just 15 out of 27 EU members to pass.
The country’s energy setup leaves it particularly exposed. In February, Slovakia began receiving Russian gas via the TurkStream pipeline after Kiev halted transit through Ukraine, avoiding a domestic energy crisis. However, the country had already experienced a significant reduction in Russian gas imports due to Ukraine-related sanctions and the 2022 sabotage of the Nord Stream pipeline.
As the EU’s proposal navigates the co-decision legislative process, it will require approval from both the European Parliament and the Council. The outcome will have significant implications for Slovakia and other European countries that rely on Russian gas, raising questions about the region’s energy security and the potential economic consequences of the phaseout plan.
