Russia’s invasion of Ukraine has created a massive headache for many nations and the energy sector alike. Western energy firms faced a stark choice: stay in Russia and risk reputational damage to their brands, or pull out and reassess investments on short notice. In a nation that ranks among the world’s largest fossil fuel repositories, billions of dollars in losses are often imagined. The decisive factors varied from company to company. Yet one thing stayed clear: Brussels urged decoupling from Russian gas while resisting a straightforward blanket sanction. The immediate consequence could be substantial penalties if a contract cannot be terminated under force majeure, and the risk landscape remained unsettled for many operators in the European market.
In recent months, several gas companies have reduced their exposure to Russia—though not all have fully exited or terminated contracts. Many remain active in the country, caught between pressure from stakeholders and the imperative to safeguard assets and profits. As one analyst notes, social and market pressures have driven some firms to adjust their positions, but the financial toll on profits and asset values has been significant. [Source: Baker Institute, analyst Anna Mikulska]
Contracts of Spanish energy companies
The situation reads like a tense negotiation where prewar agreements still bind operations. Take a long-term contract with Novatek for a substantial LNG supply expected to run over a 15-year horizon. Some players argue that the gas in question did not originate in Russia, yet the logistics show a reliance on Russian-based supply chains via intermediaries. [Source: industry reports]
Naturgy’s contract, signed well before the invasion, remains in force through 2041 and envisions continued imports into Spain. The annual LNG volume represented a meaningful portion of Naturgy’s global supply, and the company’s leadership emphasizes a commitment to contract terms unless legally overridden. A spokesperson stresses that deviating from these terms could trigger international disputes. [Source: Naturgy annual report and company spokespeople]
Having a contract breached early is fraught with risk, and many disputes advance to arbitration. Penalties depend on the contract’s precise clauses and the grounds for termination. Experts in energy studies emphasize that explanations for breach matter greatly; a unilateral withdrawal without covered grounds can lead to substantial financial consequences. [Source: Center for Energy Studies]
Reasons for force majeure
Force majeure provisions cover sanctions, natural disasters, war, or unilateral changes in contract terms. The reality is that parties can be drawn into long, costly legal battles with outcomes that may remain unpredictable for years. The pressure of such cases is a real concern for European energy players facing complex international dynamics. [Source: energy policy analysts]
Disputes over force majeure and contract obligations have already shaped corporate strategies. Last December, a major energy company began drawing back from some Russian projects or reconfiguring its leadership, signaling that continued supply can hinge on EU sanctions and the ability to claim force majeure to withdraw. CEOs have warned that unilateral breaches can trigger substantial penalties, underscoring the high financial stakes involved in these cross-border arrangements. [Source: industry reports and executive statements]