The EU's 2027 Russian Gas Exit Strategy: Navigating Energy Diversification and Geopolitical Risks in Central and Southeastern Europe

The European Union’s 2027 Russian gas exit strategy, a cornerstone of the REPowerEU Plan, represents a seismic shift in energy policy. By 2027, the EU aims to eliminate Russian gas imports entirely, having already reduced dependency from 45% in 2021 to 19% in 2025 [1]. However, the path to full decarbonization and energy security is fraught with geopolitical risks, infrastructure gaps, and economic trade-offs. For investors, the interplay of these factors in Central and Southeastern Europe (CSE) presents both opportunities and vulnerabilities.

Phased Ban and Geopolitical Reallocation

The EU’s phased ban on Russian gas includes a prohibition on new contracts after June 2026 and the cessation of long-term contracts by 2027 [2]. Yet, 2024 saw a 18% increase in Russian gas imports, driven by liquefied natural gas (LNG) and “whitewashing” practices—where gas is rerouted through third-party countries to obscure its origin [3]. This trend underscores the fragility of the phase-out plan, particularly in CSE, where countries like Hungary and Slovakia continue to rely on the TurkStream pipeline [4]. The end of Russian gas transit via Ukraine in 2025 further complicates supply chains, forcing CSE nations to pivot to alternative routes or face energy shortages [5].

The geopolitical risks are amplified by Russia’s use of a “shadow fleet” to evade sanctions, enabling continued gas exports to Europe [1]. For investors, this highlights the need to assess not only physical infrastructure but also regulatory and enforcement mechanisms. The EU’s proposed legal tools to allow companies to break Russian gas contracts—without facing arbitration penalties—remain untested, adding uncertainty to long-term investments [2].

Infrastructure Shifts and Investment Opportunities

The EU’s energy diversification strategy hinges on expanding LNG terminals, interconnectors, and renewable capacity. Central and Southeastern Europe is a focal point for these efforts, with the Connecting Europe Facility (CEF) allocating €5.8 billion to cross-border projects and the CESEC initiative prioritizing hydrogen and biomethane integration [6]. By 2025, 41 cross-border projects, including CO2 storage facilities like Greece’s Prinos and the Netherlands’ North Sea L10, have received CEF funding [7]. These projects align with the EU’s 2030 target of 50 million tonnes of annual CO2 injection capacity, signaling long-term investment potential in carbon capture and storage (CCS) [7].

LNG terminals in CSE, such as Croatia’s Krk and Bulgaria’s Alexandroupoli, are critical to replacing Russian pipeline gas. The EU’s 2025 CEF-E call for €600 million in grants further underscores the urgency of expanding LNG infrastructure [6]. However, the high upfront costs and long payback periods for such projects require careful evaluation of regional demand and regulatory support.

Renewables also present a compelling case. The REPowerEU Plan targets 45% of electricity from renewables by 2030, creating opportunities for wind, solar, and battery storage firms [6]. CSE’s geographic advantages—such as the Adriatic Sea’s offshore wind potential and the Balkans’ solar resources—position the region as a growth hub. Yet, political resistance to phasing out Russian gas, as seen in Hungary and Slovakia, could delay renewable adoption and strain public-private partnerships [4].

Geopolitical Vulnerabilities and Strategic Risks

Despite the EU’s efforts, CSE remains exposed to geopolitical vulnerabilities. The TurkStream pipeline, the last major Russian gas route to Europe, continues to supply 56 million cubic meters per day in February 2025 [3]. This dependency, coupled with the end of Ukraine’s transit contract, creates a dual risk: supply disruptions and price volatility. Investors must weigh these risks against the EU’s commitment to diversification, including new interconnectors like the IGB (Italy-Greece) and IEM (Greece-Bulgaria) projects [6].

Moreover, the EU’s reliance on LNG imports introduces exposure to global market dynamics. While the U.S. and Qatar are key suppliers, geopolitical tensions and shipping bottlenecks could disrupt flows. For CSE, which lacks the LNG infrastructure of Western Europe, this underscores the importance of regional cooperation and strategic stockpiling.

Conclusion: Balancing Risks and Rewards

The EU’s 2027 Russian gas exit strategy is a transformative endeavor, but its success in CSE depends on navigating complex geopolitical, regulatory, and infrastructural challenges. For investors, the key lies in aligning with projects that address both immediate energy security needs and long-term decarbonization goals. LNG terminals, hydrogen infrastructure, and renewable energy projects offer high-growth potential, but require careful risk assessment. As the EU races to meet its 2027 target, CSE’s role as a bridge between Eastern Europe and the Mediterranean will shape the region’s investment landscape for years to come.

Source:
[1] Roadmap to fully end EU dependency on Russian energy, [https://commission.europa.eu/news-and-media/news/roadmap-fully-end-eu-dependency-russian-energy-2025-05-06_en]
[2] Commission proposes a plan to phase out Russian gas and ..., [https://commission.europa.eu/news-and-media/news/commission-proposes-plan-phase-out-russian-gas-and-oil-imports-2025-06-17_en]
[3] The final push for EU Russian gas phase-out | Ember, [https://ember-energy.org/latest-insights/the-final-push-for-eu-russian-gas-phase-out/]
[4] How Eastern Europe Overhauled Its Natural Gas Market, [https://carnegieendowment.org/research/2025/04/how-eastern-europe-overhauled-its-natural-gas-market?lang=en]
[5] The end of Russian gas transit via Ukraine and options for ..., [https://www.bruegel.org/analysis/end-russian-gas-transit-ukraine-and-options-eu]
[6] Central and South-Eastern Europe Energy Connectivity, [https://energy.ec.europa.eu/topics/infrastructure/high-level-groups/central-and-south-eastern-europe-energy-connectivity_en]
[7] CO2 Infrastructure Projects Listed Among the 41 Cross-border Energy Infrastructure Projects Awarded Funding Under the CEF-E Programme, [https://www.globalccsinstitute.com/news-media/latest-news/co2-infrastructure-projects-listed-among-the-41-cross-border-energy-infrastructure-projects-awarded-funding-under-the-cef-e-programme/]