Naturgy: EU should reconsider its plans to ban Russian LNG imports

Naturgy’s management discussed this during the company’s first-half earnings report on Wednesday.

In 2018, Naturgy received its first LNG cargo from the Novatek-operated Yamal LNG plant in Russia in Spain under a long-term contract that lasts until 2041.

Rita Ruiz de Alda, Naturgy’s global head of control and energy planning, said during the call that the ongoing conflict in the Middle East contributed to higher energy prices and elevated market volatility through the first half of the year.

She said that geopolitical uncertainty would remain a “key market driver in the next months.”

“The group has a hedged position for 2026 but was able to capture opportunities from growing volatility, leveraging for this on our contract flexibilities, our LNG tanker fleet, and also on downstream positioning,” she said.

“As you all know, in June, the European Commission confirmed the ban on the long-term Russian LNG contracts from 2027. This affects our contract with Novatek,” she said.

“Let me be clear on two aspects. The first one is that security of supply to Naturgy clients is guaranteed, as Naturgy holds sufficient gas with free destination clauses to cover our gas commitments in Spain and Europe. Second, this ban is structured as a force majeure event by the EU, which relieves the standard take-or-pay obligation,” she said.

Naturgy’s general counsel, Manuel Garcia Cobaleda, added that “today the European indexes, the TTF, peaked its high in the last two years.”

“Probably this should make the European Union to review the ban system, because it has to be applied in a context quite different to the context in which they were decided, which was basically in autumn of 2025,” he said.

EU storage at low levels

Steven Fernandez, Naturgy’s global head of financial markets and corporate development, said that planning for the winter 2026/2027 in the EU “must start now to mitigate the risk of shortages and price spikes.”

He said there are “basically four dynamics worth highlighting right now.”

“One, the Russian gas ban removes somewhere between 10-13 percent of EU supply at peak, and importantly, was approved when the market was still expected to be well supplied,” Fernandez said.

“Two, the Hormuz disruption has removed around 20 percent of global LNG. Let me make that clear: 20 percent of global LNG, and there’s no clear timeline for resumption. That into an already tight market,” he said.

“Number three, EU storage is at its lowest level in five years, with limited economic incentive to refill given the TTF backwardation. And finally, let’s remember that storage is highly weather sensitive,” he said.

“That means that a cold winter, for example, as we have seen in the recent years, could risk shortages by February 2027. So essentially, the Russian ban was designed in a market of abundance, now facing a very different reality: low storage, Hormuz risk, and an already tight LNG market. Planning must be made now ahead of the winter,” Fernandez said.