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Before the end of the year, Russian gas could be stopped from Austria

The company has said that the Russian gas supply to OMV, an Austrian oil and gas company, could be stopped before the end the year because of an arbitration case against Gazprom.

Austria is still one of few European countries that are dependent on Russian Gas, as the rest of Europe has cut back imports after Moscow's invasion of Ukraine.

OMV announced on Wednesday that it received an arbitration award of over 230 million euro ($243.06 millions) from the International Chamber of Commerce due to irregular supplies of gas to its German unit from Gazprom, which will end in September 2022.

Nordstream, the gas pipeline that runs from Russia to Germany, was damaged by explosions at that time and never repaired.

OMV must offset its claim against invoices from its Austrian contract for gas supply with Gazprom export, which is supplied via a Ukrainian transit, in order to compensate.

Gazprom has declined to comment.

If a new agreement between Ukraine's Naftogaz, and Gazprom cannot be reached by the end the year, the Ukraine transit route will end. Kyiv repeatedly stated that it would not extend its contract with Gazprom.

OMV pays Gazprom for gas in Austria every month at the end of the calendar month. This means gas could be stopped this month or by December, the company said.

If Gazprom stops delivering gas, the supply of gas via Ukraine could be cut in half as early as Nov. 21, according to Klaas Dzeman, a market analyst with Brainchild Commodity Intelligence.

The Dutch wholesale gas price rose to its highest level in almost a year, on Thursday morning. This was due to fears that Russian gas could be cut off to Austria.

SUPPLY

According to data from the Austrian Energy Ministry, as of August, 82% all Austrian gas imports were from Russia. OMV's supply contract with Gazprom, which runs until 2040, is one of the main reasons for Austria still receiving large quantities.

This contract specifies an annual gas delivery of approximately 6 billion cubic meters and includes a clause that requires OMV to pay whether or not it uses the gas.

OMV said that it had been preparing to cut off Russian gas for some time and can still supply gas to its clients. It has long-term contracts and secured transportation capacity from Germany, Italy and Austria. The Netherlands is another source of liquefied gas.

The current developments around the OMV contract for Russian Gas are serious, but they do not threaten our supply security immediately. "We have always known gas supplies from Russia were unsafe," said Leonore Gwessler on X.

Other European gas companies have also brought cases against Gazprom for lower-than-contracted supplies or not fulfilling contract obligations, including CEZ, RWE, Uniper and ENI.

Gazprom itself has launched multiple litigations against European companies regarding gas supply to try and combat at least 17 billion euro ($17.86billion) in claims.

The Russian court has also been asked to arbitrate the case, claiming that European sanctions have barred Gazprom from accessing European justice, and Western restrictions prohibit the use of Russian bank cards, complicating entry visa clearance.

(source: Reuters)