Russia's Gazprom Export halts gas supplies to Austria's OMV after payment move

Russia's Gazprom Export halted gas supplies to Austria's OMV on Nov. 16 as expected, but Russian gas continues to flow via Ukraine to Europe.

Austria's energy regulator E-Control said Nov. 16 that the situation was being "continuously and closely" monitored.

OMV said Nov. 15 it had been informed by Gazprom Export that Russian gas supplies under its Austrian contract would be suspended from 6 am CET (0500 GMT) on Nov. 16.

It followed a decision announced late Nov. 13 by OMV that it would recover compensation awarded by an arbitration court in a claim against Gazprom Export by offsetting it against its bills for Russian gas deliveries to Austria.

E-Control confirmed the cutoff Nov. 16, saying Gazprom Export had ceased the delivery of gas to OMV.

"The gas supply to Austrian customers is still secure. Prices are also stable, there are no significant changes," it said.

Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price at Eur46/MWh Nov. 15, with prices trading slightly higher in early trade Nov. 18.

Despite the suspension of deliveries to Austria, flows of Russian gas at the Sudzha interconnection point on the border with Ukraine have been unchanged.

Flows were nominated for Nov. 18 at 42.4 million cu m/d -- in line with deliveries for most of 2024 -- according to data from Ukraine's grid operator GTSOU.

OMV's contracted supply from Gazprom Export had been around 17 million cu m/d.

OMV warning

OMV, which used to take its Russian gas via Ukraine and Slovakia, had already warned Nov. 13 that its arbitration move could lead to a "deterioration of the contractual relationship" with Gazprom Export.

It came after the company received a Eur230 million ($243 million) arbitration award in relation to Gazprom Export's irregular German gas supplies, which eventually ended in September 2022.

OMV had a contract for gas delivery to Germany, but flows ended with the suspension of exports by Gazprom Export through the Nord Stream pipeline at the end of August 2022.

OMV's trading arm OGMT initiated the arbitration request in January 2023.

It said Nov. 13 it would take the necessary next steps to enforce the award "with immediate effect."

Gazprom Export could not be reached for immediate comment.

Austrian Energy Minister Leonore Gewessler said Nov. 15 that the move showed that Russia was "once again" using energy as a weapon.

"Gazprom has proven once again today that Russia is not a partner," Gewessler wrote on X, formerly known as Twitter.

Gewessler added that Austria had been preparing for this situation for a long time. "Our energy supply is secure. The domestic gas storage facilities are full. They currently contain more than one year of Austria's consumption," she said.

"Pipelines from Italy and Germany offer sufficient capacity for the import of non-Russian gas. The state gas reserve is also fully filled."

Diversification strategy

OMV has been preparing for the potential of losing its Russian gas supply ahead of the expiry at the end of 2024 of the five-year gas transit agreement between Russia and Ukraine.

OMV said Nov. 13 that as part of its ongoing diversification strategy, it had "continuously and successfully" built up its gas supplies from non-Russian sources and additional pipeline capacities.

It said its portfolio of gas encompassed several supply sources from Norway, as well as additional long-term LNG volumes.

"OMV confirms that it can deliver the full contracted volumes of gas to its customers in case of a potential supply disruption by Gazprom Export. In addition, OMV's gas storage in Austria is currently at over 90%," it said Nov. 13.

In its third-quarter earnings report published Oct. 29, OMV said Russian gas imports under its long-term supply agreements with Gazprom Export fell slightly to an average of 5.1 TWh/month.

Purchased volume was down compared with 5.4 TWh/month in the second quarter.

Despite the quarter-on-quarter fall in Q3, Russian gas deliveries to OMV have been fairly steady.

Imports averaged 5.4 TWh/month in Q2, 5.1 TWh/month in first-quarter 2024, 5.3 TWh/month in fourth-quarter 2023, 5.4 TWh/month in Q3 2023 and 4.9 TWh/month in Q2 2023.