It is possible to "live well" without Russian gas, so why does Austria still receive goods from Gazprom?

Austrian state energy giant OMV AG has a long-term contract with Gazprom, obliging the company to buy Russian gas.

The steady flow of gas from Russia via Ukraine is meeting more than half of the Austrian economy's needs. (Source: Anews)

Austria’s gas supplies are under close scrutiny as the country says it wants to diversify its sources and reduce its dependence on Russia. However, trade data shows that a steady flow of gas from Moscow via Kiev meets more than half of Vienna’s economy’s needs.

Overflowing gas storage and unimpeded shipments are signs that the market is feeling more comfortable after Russia's extraordinary military campaign in Ukraine, said Walter Boltz, senior energy advisor for Baker & Mckenzie LLP.

"Austria will be able to survive, even if the gas flow through Ukraine is suddenly interrupted this year. But I am concerned that Austria cannot escape its ties with Gazprom. There are significant risks when Ukraine's gas transit agreement with Russia expires next year," he stressed.

Austria's contract with Gazprom runs until 2040. Despite the conflict, Gazprom continues to supply gas to OMV's Baumgarten gas hub via gas pipelines running across Ukraine.

The gas transit agreement between Russia and Ukraine is due to expire in December 2024. The Kiev government has said it will not negotiate a new deal with Moscow.

Although Ukraine has signaled that it is open to European companies arranging gas access on an individual basis, there are still threats of a military operation.

Austria has enough gas to meet its domestic needs through 2025, even without Russian supplies, Boltz said, but long-term price stability can only be achieved through new pipelines.

“The risk in 2025 and 2026 is that there won’t be any gas, but prices could be quite high. We need to avoid another price crisis,” Boltz noted.

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