Russian national gas company Gazprom halted deliveries to Austria early Saturday. The move follows a legal dispute with Austrian company OMV, which said it would stop paying for Russian gas after Moscow refused to comply with international arbitration. Vienna claims to have prepared for this stoppage of supply.
Russian natural gas giant Gazprom has stopped supplying gas to Austria since Saturday morning. Russia is thus putting an end to a commercial relationship which had lasted for more than six decades. This decision comes amid growing tensions between Russia and its former European partners, in the context of the war in Ukraine. But it arises directly from a legal conflict.
Gazprom does not want to pay financial compensation to Austria for its delivery interruptions in 2022
Indeed, there was a specific quarrel between Gazprom and OMV. The International Chamber of Commerce had granted the Austrian gas company financial compensation of 230 million euros, following delivery interruptions that occurred in 2022. The Russian company refused to pay this sum. In return, OMV stopped paying for Russian gas. Gazprom then judged that it had the right to suspend its exports to Austria. This choice is also in line with a broader strategy by Moscow to reduce its flows to Europe, since the invasion of Ukraine.
Austria claims to have prepared for this for a long time
Commenting on the cessation of Russian gas deliveries, Leonore Gewessler, the Austrian Minister of Environment and Energy, declared on X that “Russia is once again using energy as a weapon.” However, she assures that her country “has been preparing for this situation for a long time”, with “full” stocks (93%) and the use of gas pipelines from neighboring Germany. Since this weekend, it has been offering a solution to Austria via its liquefied natural gas (LNG) terminal in Mukran, on the island of Rügen.
Austria had already significantly reduced its supplies from Gazprom
The Mukran terminal has an annual connection capacity of 13.5 billion m3. This production is largely sufficient to cover Austria's 7 billion m3 of annual consumption. Before Saturday's cut, the country received 17 million m3 per day from Russia. Since 2022, Vienna had already significantly reduced its supply, from 90% to around 50%. But the suspension of Gazprom should indeed have economic consequences.
Austrian industries exposed to energy inflation
This decision is already causing an increase in energy costs for households and national businesses as winter approaches. Industries, in particular, which consume more energy than homes, risk being hit hard. A prolonged rise in energy costs could weigh on their competitiveness. For Russia, gas is practically the only means of pressure and blackmail in the face of Western sanctions which are severely hitting its economy.
Gazprom continues to honor its commitments to Europe
For several months, Moscow has been redirecting its exports to Asian markets to compensate for a sudden drop in European demand. However, Gazprom continues to honor its commitments to Europe. Its exports via Ukraine – the main gas transit route to the EU – remained stable on Monday, at 42.4 million m3. It must be said that many European countries still largely depend on Russian gas, such as Slovakia, Hungary and the Czech Republic. Still, Ukraine has said it will not renew the five-year transit agreement with Russia, which expires at the end of the year.
