What a Russia-Ukraine peace deal could mean for Europe’s gas supplies

Europe is pressing ahead with plans to ban Russian gas imports by the end of 2027, effectively capping Moscow’s energy future in the region and leaving a bevy of stranded assets in its wake.

The dual Nord Stream 1 and 2 subsea pipelines were early casualties of Russia’s invasion of Ukraine, with the infrastructure being sabotaged in late 2022 and the latter pipeline — costing $11 billion to build and aimed at doubling cheap Russian gas flows to Germany — never being certified for use.  

There had been speculation that the major energy infrastructure could eventually be resurrected if, or rather when, the war between Russia and Ukraine ends and there’s a peace agreement between the parties. 

However, talks to try to establish the grounds for a ceasefire have been moving at a snail’s pace with neither side willing to cross “red lines” regarding the permanent surrender of territory, be it sovereign or occupied. Speaking with British news website UnHerd, Vance said Monday that while the U.S. is going to “try to get this thing solved,” he “wouldn’t say with confidence that we’re going to get a peaceful resolution.”

Hopes of a deal have led to questions over what economic and energy links between Russia and the rest of the world could be re-established and, when it comes to Europe, whether a ceasefire could lead to a reintegration of Russian gas and the resurrection of the Nord Stream gas pipelines. 

Such a move would be highly contentious and divisive on the continent, given Russia’s full-scale invasion of Ukraine in 2022 and attempts in the region to wean itself off cheaper Russian gas. 

In 2021, before the war, Russian imports accounted for about 45% of the European gas consumption. This year, estimates expect imports of 13%. 

Ukraine would be outraged by any move that benefited its invader, and Poland has called for the pipelines — one of which has never been used — to be “dismantled.”  

That said, Ukraine itself benefited from an older pipeline that passes through the country as it collected transit fees. The Russia–Ukraine gas transit agreement expired at the end of 2024, with the two countries opting not to renew it given the war. The Nord Stream pipelines were specifically designed to circumvent Ukraine and avoid such fees, but the transit agreement could be one of many levers to use during negotiations if the tap is turned back on.  

The U.S. would likely baulk at the return of Nord Stream as it has hoped to muscle out Moscow and increase its market share of liquefied natural gas (LNG) sales to Europe. But Germany, which is directly connected to the pipeline and whose industries are struggling with high energy costs, might find the lure and return of Russian gas supplies hard to resist. 

The European Council and Parliament in December struck a provisional agreement on regulation to phase out imports of Russian gas. It is set to implement a full ban on liquefied natural gas (LNG) and pipeline gas imports from the end of 2026 and autumn 2027, respectively. 

The Danish Energy Agency in January granted permission for Nord Stream 2 to carry out preservation work on its damaged pipelines that are located within Denmark’s exclusive economic zone (EEZ) in the Baltic Sea.

“The purpose of the works is to prevent further gas blowout and the ingress of oxygenated seawater, that could potentially lead to corrosion,” the agency told CNBC, although the preservation works on Nord Stream 2 have not commenced yet. 

The permit has been granted on a number of conditions, the agency said, that are intended to ensure safe operation of the pipeline. It added that, among other conditions, the company must submit an annual plan for the pipeline facility “so that the Danish Energy Agency can continuously monitor the company’s plans for the facility’s future.” 

“Furthermore, all conditions in such permits would have to be fulfilled before the pipelines can be put into operation. The Danish Energy Agency has not received any such applications,” it said. 

But are the Norstream pipelines even salvageable now? 

Sergey Vakulenko, senior fellow at the Carnegie Russia Eurasia Center, told CNBC that the pipeline that was damaged in the sabotage incidents would need replacing in part, and the remaining undamaged one would not cost “much money at all” to resurrect. 

“I think they’re still repairable, salvageable. So you could have to cut a few miles of [the damaged] pipeline and replace it. But this could be done,” he told CNBC in October.  

“It could easily cost $1 billion or something like that, but there’s still one [pipeline] at operational strength so that could be used,” he said. Asked if the pipelines — which are filled with stagnant gas — are being looked after currently, Vakulenko said: “They’re not looked after at all.” 

The continent has not fully recovered from the energy crisis stemming from the full-scale invasion of its neighbour. The Dutch Title Transfer Facility, Europe’s main benchmark for natural gas prices, was double its pre-war prices in early 2025, per the IEA. Energy constraints are compounded further by the AI race, which has shifted public narratives from energy transition to energy addition. 

“So if you’re not too squeamish to buy Russian gas, if you don’t have to hold your nose too tight by buying it, then sure, there’s a lot of commercial and economic reasons as to why [to do it]. If it becomes politically, ethically palatable, then there will be quite a lot of stimuli to do so, but that’s again for the time when there is indeed some rapprochement between Russia and Europe, and that’s [a] big ‘if’,” Vakulenko said. 

However, Tancrede Fulop, utilities and renewables analyst at Morningstar, told CNBC that it would be too difficult to reintegrate Russian gas, at least in the short term, because of the fresh European legislation. He noted, however, that the legislation does include some exceptions for Hungary and Slovakia in emergency situations.

The policy shift was also rooted in a drive for energy independence after Russia’s “weaponisation of gas supplies,” the EU said. As a result, member states are likely to stay clear of an overreliance on one state going forward and instead invest in boosting overall domestic capacity.

Does Russia want European business?

Whether Russia would want to sell its gas to Europe is another looming question.

“Everybody thinks the energy crisis started with war in Ukraine, but it actually started in 2021,” Fulop said, noting several drivers of a cold winter, low wind speeds, and therefore high gas consumption.

Adding to the crisis was the fact that the EU was late to clear Nord Stream 2 for operations. “And so Russia started to reduce the flows of gas sent to the EU,” before the war started, he said. This suggests that the move from Russia may have been intended to add pressure on Europe to pick up the pace with Nord Stream 2.

On the other hand, “Russia is not in a very strong negotiating position,” according to Vakulenko. “For Russia, that gas is a stranded resource. So you could expect [that Europe] could negotiate a good deal.”

Russia has also looked to Asia as an alternative partner to Europe and has deepened ties with China via the Power of Siberia pipeline.  

Even if a peace deal with Ukraine is reached, “the message is quite alarming” around another potential conflict with Russia, Fulop said, given the flouting of European airspace in recent months.  

Ultimately, a renewed embrace of Russian gas “doesn’t seem like the most realistic scenario.”

It helps that gas prices have fallen lately, he added, perhaps with market watchers pricing in a peace deal. The EU will also benefit from the new export terminals in the U.S.  

“This is bearish for gas prices, positive for Europe, and that could offset the end of Russian gas imports,” Fulop said.