With the Ukrainian gas transit deal set to expire in 2024, TurkStream is poised to become Russia’s sole remaining pipeline outlet to Europe. Stopping its operations would cut off Russia’s pipeline gas revenue entirely.
Martin Vladimirov is Director of the Energy and Climate Program at the Centre for the Study of Democracy (CSD).
The US Department of Treasury’s sanctions on Gazprombank present a decisive opportunity for the European Union to finally end all Russian pipeline gas imports.
This will accelerate the closure of the most glaring loophole in Western energy sanctions that have so far failed to deter Russian aggression in Ukraine and have perpetuated the West’s complicity and hypocrisy.
While Gazprombank was previously the exclusive conduit for payments under contracts with Gazprom, Russian President Vladimir Putin’s decree issued on Thursday (5 December) now allows payments to bypass the sanctioned bank through third-party intermediaries or mutual debt offsetting.
The EU and the US must act swiftly to target alternative payment channels that could sustain Russia’s gas revenues. The US should revoke General License 8, which still permits energy-related payments to several major Russian banks, including Sberbank and VTB.
Although transactions in euros could theoretically continue, European banks are unlikely to facilitate them due to the risk of inadvertently violating US sanctions. Sanctioning Gazprombank also creates legal grounds for European gas consumers to try to suspend or renegotiate their long-term supply agreements with Gazprom without financial penalties.
Countries heavily reliant on Russian gas—such as Greece, Hungary, Austria, and Italy—have pushed for exemptions citing security of supply concerns. The Turkish energy minister, Alparslan Bayraktar, and the Hungarian foreign minister, Peter Szijjarto, already did so, saying that their countries cannot do without Russian gas.
The US should not succumb to this public pressure, which is based not on evidence about the unavailability of alternative gas supply but on rhetoric and misinformation.
Despite declining volumes, Russia remains Europe’s second-largest gas supplier, covering 18% of EU imports as of late 2024. However, existing LNG terminals and interconnectors in the Baltic and Mediterranean regions can deliver three times the non-Russian gas needed to replace Russian supplies in Central and Eastern Europe.
To prevent the region from taping into alternative gas supply, Gazprom is dumping cheap gas on Central and Southeastern European markets that has stifled LNG imports and other diversification efforts, reinforcing Europe’s dependency and continuing the flow of funds to the Kremlin.
This dependency extends to critical infrastructure, such as TurkStream, where Gazprombank services payments for gas transit. TurkStream’s European extension is pivotal for Russia, generating approximately $8 billion annually in transit revenues under a long-term agreement between Gazprom and Bulgaria’s Bulgartransgaz.
With the Ukrainian gas transit deal set to expire in 2024, TurkStream is poised to become Russia’s sole remaining pipeline outlet to Europe. Stopping its operations would cut off Russia’s pipeline gas revenue entirely.
In 2022 Bulgaria was the first European country for which Gazprom discontinued the supply of gas, after Sofia refused to bow to the Kremlin’s illegal demands for ruble-based payments. In a similar vein, it should now reject any amendment to the TurkStream transit deal.
To reinforce this stance, the US should impose secondary sanctions on financial institutions involved in Gazprom’s transit payments. Furthermore, the European Commission must investigate TurkStream’s compliance with the EU Gas Directive, particularly its preferential treatment of Gazprom and capacity-blocking practices that stifle competition.
Leveraging these sanctions will reduce Kremlin’s military potential in Ukraine and aligns well with the EU’s REPowerEU strategy to phase out Russian gas by 2027. Accelerating this timeline is both feasible and urgent.
Yet, this diversification effort could remain only on paper if Russian gas exporters are able to reroute their sales and expand their network of third-party companies ready to benefit from the premium profits they are getting for trading relatively cheaper Russian gas.
Since by the Turkish law all gas entering Turkey is automatically owned by BOTAS, the Turkish company could resell surplus Russian gas volumes as nominally Turkish gas to the rest of the EU market. This is consistent with the Russian-Turkish plans for a natural gas hub that will serve to replace Gazprom’s lost sales to Europe. The Russian company can potentially expand sales by between 8 and 10 billion cubic meters per year, around 75% of the current transit through Ukraine.
The EU must issue binding guidelines prohibiting any financial transactions linked to Russian gas imports or transit, even when intermediaries or obfuscated labeling is involved. Russia’s tactics to rebrand its gas via Turkey or Ukraine must be countered through stringent due diligence on capacity booking contracts and robust enforcement mechanisms.
A complete phaseout of Russian pipeline gas would strike a decisive blow against the Kremlin’s economic leverage. It would sap the resource base of Russia-linked state capture networks that have infiltrated Europe, seeking to undermine democratic institutions and stability.
To cement this shift, the EU member states should criminalise evasion practices. To make sanctions enforcement more robust and coherent, the EU should also expand the European Public Prosecutor’s Office’s enforcement powers.
These measures would not only safeguard Europe’s energy independence but also lay the groundwork for a affirming Europe’s economic security strategy capable of deterring Russian aggression and strengthening democratic resilience across the continent.
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