Russia-Austria gasoline dispute stokes fears of recent vitality disaster – DW – 11/19/2024 | EUROtoday

The European Union’s newest gasoline dispute with Russia blew up over the weekend after effervescent beneath the floor for months. On Saturday, Russian state-owned vitality large Gazprom reduce deliveries to Austria after the Alpine nation threatened to impound a number of the gasoline as compensation for a contractual dispute it had gained.

The Austrian utility OMV stated in a assertion that no gasoline supply was constructed from 6 a.m. native time (0500 UTC/GMT) on Saturday.

Austrian Foreign Minister Alexander Schallenberg accused Moscow of “once again using energy as a weapon.”

Ursula von der Leyen, the president of the European Commission, the EU’s govt arm, stated Russian President Vladimir Putin was making an attempt to “blackmail” Austria and the bloc. She stated the European Union was “prepared for this and ready for winter.”

Austria, together with Hungary, Slovakia and the Czech Republic, remains to be closely reliant on Russia for gasoline. Vienna stated it had ample shares to cowl the shortfall. OMV stated final week that home gasoline storage was at greater than 90%.

But EU pure gasoline costs rose to a one-year excessive as merchants bought wind of the worsening dispute. Between Thursday and Tuesday, costs had shot up by greater than 7% to €46.63 ($49.34) per megawatt-hour (MWh).

Russia-Austria gasoline dispute

In January 2023, OMV sought arbitration from the International Chamber of Commerce, saying the Russian gasoline large had prompted provide disruptions on the top of the EU vitality disaster that erupted after Russia launched its full-scale invasion of Ukraine a yr earlier.

Russia, traditionally the European Union’s high pure gasoline provider, considerably reduce pipeline flows in 2022, citing technical points and cost disputes, whereas in search of political leverage within the face of worldwide sanctions following the invasion of Ukraine.

Having relied on Russia for as much as 40% of their gasoline provides, EU international locations scrambled to line up various provides and enhance gasoline storage as costs skyrocketed. In August 2022, the Dutch TTF gasoline benchmark surged to over €300 per MWh.

Last Wednesday, the Paris-based International Chamber of Commerce dominated in OMV’s favor, awarding the Austrian utility €230 million in damages, plus curiosity and prices, the corporate stated.

The International Chamber of Commerce is a physique acknowledged for resolving worldwide business disputes, and its rulings are binding on all events. The ICC had beforehand dominated in favor of Germany’s Uniper, entitling it to over €13 billion in damages for non-delivery of Russian gasoline.

OMV stated in a press release that it might “recover awarded damages” by “offsetting its claims against invoices under the Austrian gas supply contract with Gazprom Export.” OMV warned of a doable “deterioration of the contractual relationship” with Gazprom, which it acknowledged may result in a “potential halt of gas supply.”

How may the dispute influence Europe’s vitality safety?

The 2022 vitality disaster left Europe’s gasoline market extremely delicate to any provide points, with any additional outages prone to spike costs greater.

Already this yr, heating demand throughout Europe has elevated because of colder temperatures, and though EU gasoline storage services have been 95% full on November 1. Reuters information company reported that, forward of winter, gasoline withdrawals had begun sooner than final yr.

Before this row, Austria’s gasoline imports from Moscow made up 80% of deliveries. Alfons Haber, the pinnacle of the nation’s vitality regulator E-Control stated Gazprom provides had been lowered by between 12 and 15% because of the dispute however insisted that “homes will not be cold either this winter or next,” even when Russia cuts provides altogether.

However, this newest dispute is additional exacerbated by the approaching closure of transit pipelines in Ukraine by which Austria, Hungary and Slovakia obtain a lot of their Russian gasoline. Kyiv has refused to resume the gasoline transit cope with Moscow as a part of efforts to scale back financial ties with Russia, so it can expire on the finish of the yr. Ukraine earns transit charges value 0.5% of the war-torn nation’s gross home product (GDP).

Some analysts consider the Russian gasoline volumes through Ukraine to Austria may practically half if the row with Gazprom worsens, as OMV’s subsequent cost is due on November 20.

“OMV may withhold this next payment, which would be around €213 million, but this could trigger Gazprom in cutting that contract off immediately,” Tom Marzec-Manser, head of gasoline analytics at consultancy ICIS, instructed the Financial Times.

The termination of the transit deal may additional disrupt Russian gasoline provides to European international locations that depend on this route.

The EU is engaged on alternate options, together with a doable gasoline swap cope with Azerbaijan that would see European international locations nonetheless purchase Russian gasoline however with out having to barter with the Kremlin. Critics say the proposals would undermine Western sanctions on Moscow and proceed Europe’s dependence on Russian vitality.

Despite the considerations, for now, Russian gasoline remains to be flowing to Europe. Russian information company TASS on Monday cited Gazprom as saying that general provide to Europe was unchanged, suggesting that new European patrons had been discovered.

Reuters information company stated Austria’s gasoline was probably being diverted to Slovakia, Hungary and the Czech Republic, with smaller volumes going to Italy and Serbia.

Edited by: Uwe Hessler