Russia-Austria fuel spat stokes fears of recent EU vitality disaster – DW – 11/19/2024 | EUROtoday

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

The Austrian utility OMV stated in a assertion that no fuel 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 fuel. Vienna stated it had ample shares to cowl the shortfall. OMV stated final week that home fuel storage was at greater than 90%.

But EU pure fuel costs rose to a one-year excessive as merchants received 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 fuel dispute

In January 2023, OMV sought arbitration from the International Chamber of Commerce, saying the Russian fuel big had brought on provide disruptions on the peak of the EU vitality disaster that erupted after Russia launched its full-scale invasion of Ukraine a 12 months earlier.

Russia, traditionally the European Union’s prime pure fuel provider, considerably reduce pipeline flows in 2022, citing technical points and fee 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 fuel provides, EU international locations scrambled to line up various provides and enhance fuel storage as costs skyrocketed. In August 2022, the Dutch TTF fuel 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 industrial 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 fuel.

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

EU vitality safety

The 2022 vitality disaster left the European Union’s fuel market extremely delicate to provide points, with any additional outages more likely to spike costs increased.

In 2024, heating demand throughout Europe has elevated because of colder temperatures. Although EU fuel storage amenities had been 95% full on November 1, the Reuters information company reported that, forward of winter, fuel withdrawals had begun sooner than in 2023

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

The dispute is exacerbated by the approaching closure of transit pipelines in Ukraine, via which Austria, Hungary and Slovakia obtain a lot of their Russian fuel. Kyiv has refused to resume the fuel transit take care of Moscow as a part of efforts to cut back financial ties with Russia, so it would expire on the finish of the 12 months. Ukraine earns transit charges price 0.5% of the war-torn nation’s gross home product (GDP).

Some analysts imagine that the volumes of Russian fuel by way of Ukraine to Austria might be practically halved if the row with Gazprom had been to worsen, as OMV’s subsequent fee 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 fuel analytics at consultancy ICIS, instructed the Financial Times.

The termination of the transit deal might additional disrupt Russian fuel provides to EU international locations that depend on this route.

The European Union is engaged on alternate options, together with a potential fuel swap take care of Azerbaijan that might see EU international locations proceed to purchase Russian fuel 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.

For now, Russian fuel remains to be flowing to the European Union. 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.

The Reuters information company reported that Austria’s fuel was possible being diverted to Slovakia, Hungary and the Czech Republic, with smaller volumes going to Italy and Serbia.

Edited by: Uwe Hessler