The termination of the more than 50-year gas supply contract between Russia's Gazprom and Austria's OMV Group is a heavy blow to Gazprom's long-standing economic and political influence in Central Europe, according to Reuters.
OMV Group is one of the few European customers continuing to buy Russian gas from Gazprom after Moscow lost most of its European customers since the outbreak of the Ukraine conflict.
Previously, Austria was almost entirely dependent on Russian gas and was one of Gazprom's loyal customers. During the 2022 energy crisis, Austria saved billions of dollars by importing gas at preferential prices from Gazprom.
However, recently, the two corporations have officially terminated the transaction contract. This comes from many reasons, including allegations of breach of contract and reasons related to the economic and political situation.
According to Reuters, the contract termination occurred when the Austrian group “held up” Russian gas money to pay the arbitration award fee.
OMV said on November 13 that it had won an arbitration case against Gazprom in Germany — accusing the Russian company of providing irregular gas supplies to OMV’s German subsidiaries — for €230 million ($239 million) in compensation. OMV also announced that it would make a decision on invoices for Gazprom’s contracts.
OMV has “confiscated” $239 million in gas delivered in October to pay the arbitration award, Reuters sources said, the first time an EU customer has failed to pay Gazprom for gas.
Just three days later, Gazprom stopped supplying gas to the Austrian company. Gazprom considered OMV's "withholding" of $239 million as non-payment and therefore stopped supplying.
OMV, meanwhile, argues that Gazprom’s suspension of supplies is a breach of contract. An OMV spokesman said the transaction had stopped and the company did not expect the situation to change. He also declined to comment on its future relationship with Gazprom.
This event marks the end of an important phase in the energy relationship between Russia and Austria. However, it is reported that, despite ending direct distribution with Gazprom, Austria will still receive Russian gas through SPP, a third company from Slovakia. SPP is considered a gas transit point between the two corporations from Russia and Austria. Currently, all three have refused to comment on this arrangement.
In fact, withdrawing from the contract with Gazprom has always been part of Austria’s policy. In 2021, after taking office, OMV CEO Alfred Stern took the first steps to reduce dependence on Russian gas. Energy Minister Leonore Gewessler also affirmed: “Our task is to create the conditions for withdrawing from the contract to become possible.”
Amid strained political and economic relations between Russia and Austria, Austrian Chancellor Karl Nehammer accused Russia of using energy as a weapon.
According to Reuters, OMV's decision to end imports of Russian gas is not only an economic move but also a strong political signal. Although there are still many challenges, it is a major turning point in the context of the EU's efforts to escape its dependence on Russian energy.
