Austria ends 50-year gas flow from Gazprom after Russian gas seizure, sources reveal

Reuters reported the information.

According to the outlet, OMV was among the few remaining buyers of Russian gas in Europe after Gazprom lost almost all its customers there in the wake of Russia's invasion of Ukraine in 2022. Before the war began, Russia was Europe's single biggest supplier of natural gas.

On Nov. 13 OMV said it had won an arbitration case in Germany against Gazprom for €230 million ($239 million) in connection with irregular supplies to its German unit and would take steps to immediately enforce it against Gazprom's invoices. Three days later, Gazprom suspended gas supplies to the Austrian company.

A source close to OMV stated that the company viewed seizing Gazprom's gas supplies for October as a final opportunity, anticipating Ukraine’s termination of the deal allowing Russian gas transit in January. Gazprom, however, regards the seizure as non-payment and halted supplies in response, according to a source close to the Russian company.

Russia’s influence

The sudden termination of the Gazprom-OMV relationship took many gas market insiders by surprise and dealt a significant blow to Gazprom’s long-standing economic and political influence in Central Europe.

“Austria had been one of Gazprom's most loyal customers, remaining almost fully reliant on Russian gas even as other EU members switched to imports from Norway, the U.S. and Qatar in 2022,” Reuters stated.

A source close to Gazprom noted that Austria's extensive gas storage facilities have established it as a central hub for Gazprom in Europe over the past two decades. The source also mentioned that Austria benefited significantly, saving billions on cheap Russian gas following the start of the war in Ukraine.

Despite Gazprom cutting off OMV from supplies, Austria has continued to receive Russian gas via Slovakia, a Reuters review of regional gas flows has shown.

“The resales have not previously been reported. Gazprom and SPP declined to comment. OMV declined to say if it was buying gas from Gazprom indirectly through this arrangement,” the outlet concluded.

Reducing dependency

OMV's Stern had aimed to reduce dependence on Russian gas since assuming the position in 2021, according to Reuters findings.

“In addition to the action over irregular supplies in Germany, OMV has launched several other arbitration cases against Gazprom, having written down 2.46 billion euros worth of Russian investments after Moscow seized stakes it held in a Siberian gas field Yuzhno Russkoye,” the outlet said.

Austria, with its government holding a 31.5% stake in OMV, maintains political neutrality while supporting sanctions against Russia.

Chancellor Karl Nehammer was the first Western leader to meet Russian leader Vladimir Putin after the invasion. Last year, Foreign Minister Alexander Schallenberg stated that fully severing ties with Russia was unrealistic.

However, relations have recently grown tense. Austria's Raiffeisen Bank, the largest Western bank operating in Russia, had its local unit frozen by a Russian court in a dispute involving magnate Oleg Deripaska, leaving around €5 billion trapped in Russia. On the same day Gazprom halted gas supplies to OMV, Chancellor Nehammer accused Moscow of “using energy as a weapon”.

Austria's energy minister Leonore Gewessler said it was up to OMV to decide whether to exit from contracts with Gazprom.

"My task, and that of the federal government, is to create the framework conditions to make this exit possible," she said.