Russian Gazprom suspends supplies to Austria, in reaction to a fine by an international body. Vienna says its supply is assured, but the episode highlights how dependent the continent still is on Russian gas. After simmering under the surface for months, the latest dispute between Europe and Russia over natural gas exploded on Saturday (11/16). State energy giant Gazprom has cut supplies to Austria after threatening to confiscate some fuel as compensation for a contract dispute in which it won.
European Commission President Ursula von der Leyen accused Russian President Vladimir Putin of attempted blackmail, adding that the European Union “is prepared for this and ready for the winter.” Like Hungary, Slovakia and the Czech Republic, Austria still relies heavily on Russian gas.
The country has already announced that it has reserves to fill the gap, but the worsening of the Austro-Russian conflict has caused a record increase in the price of gas on the European market: between 14 and 19 November it increased by 7%, up at 46.63 euros (R$ 283) per megawatt/hour.
The gas conflict between Austria and Russia
In January 2023, Austrian energy company OMV asked the Paris-based International Chamber of Commerce (ICC) to arbitrate its dispute with Gazprom, saying the latter had caused supply bottlenecks at the height of the European energy crisis.
At the time, Russia had significantly reduced pipeline flow to Europe, citing technical problems, payment disputes and political leverage against international sanctions stemming from Putin’s large-scale invasion of Ukraine on February 24, 2022. .
European countries, which depended on Russia to meet up to 40% of their demand, rushed to look for alternatives, amid the meteoric rise in prices. In August 2022 the Dutch benchmark TTF recorded over 300 euros per MWh.
On November 13, 2024, the CCI decided the case in favor of OMV, ruling that Gazprom pay it 230 million euros, plus interest and costs. The ICC is internationally recognized as the body responsible for resolving trade disputes and its resolutions are binding on all parties. It had previously ruled in favor of the German Uniper, imposing a fine of over 13 billion euros on the Russian company for having suspended the supply of fossil fuels.
The OMV announced in a statement that it will “recover the recognized damages” by offsetting them with “invoices arising from the Austrian supply contract with Gazprom Export”. However, he anticipated a possible “deterioration of the contractual relationship”, which could lead to a “possible suspension of supplies” by the Russian state company.
The transit of Russian gas through Ukraine is expected to end in 2024
Before this conflict, Austria was up to 80% dependent on Russian gas. Alfons Haber, director of E-Control, the country’s energy regulator, reports that this percentage has fallen from 12% to 15%, but insists that “houses will not be cold this winter, nor next.” , also so that Russia can completely suspend supplies.
Much of the Russian gas bound for Austria, Hungary and Slovakia passes through pipelines that pass through Ukraine, and 0.5% of the war-ravaged country’s GDP comes from resulting transit fees. However, the agreement on this matter between Moscow and Kiev expires at the end of 2024, and the end of this flow is expected to damage supplies to European countries that depend on the Ukrainian route.
This Monday the Reuters news agency reported that, in total, gas supplies from Russia remain stable, with the flow diverted to Slovakia, Hungary and the Czech Republic, as well as smaller volumes to Italy and Serbia.
Source: Terra
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