Gas prices in Europe rise sharply as Gazprom may cut off supplies to Austria
Photo: Gazprom to stop gas supplies to Austria
European gas futures jumped to their highest level in a year. This was due to fears that Gazprom may cut off supplies to Austria, Bloomberg reports.
Futures on the TTF hub in the Netherlands rose by 3.7% to 45.3 euros per megawatt-hour (about $510 per thousand cubic meters).
Austria's OMV warned that Russian gas supplies could be disrupted as the company intends to stop paying for imports from Gazprom to collect the money it won in arbitration.
OMV does not expect Gazprom to pay 230 million euros, which could prompt the Kremlin-controlled company to stop supplying.
Much of Europe has abandoned Moscow's flows in recent years, and Austria and Slovakia remain the main importers of the remaining gas supplied through Ukraine.
Payments for the supplies are likely to be made by the 20th of each month. “Given that OMV has said it will immediately seek to recoup the award, it’s possible it will withhold its payment to Gazprom for the deliveries it received in October,” said Tom Marzek-Manser, head of gas analytics at ICIS.
OMV said it could fulfill its supply obligations through alternative sources if supplies from Russia under its long-term contract were to be hampered.
“Austria can and will manage without Russian gas. Nevertheless, it is clear that a sudden interruption in supply could cause tension on the gas markets,” said Austrian Energy Minister Leonore Gewessler.
OMV said the supply of 5 terawatt-hours per month could be disrupted. That's about 1% of the European Union's total gas needs during the peak demand season earlier this year - still enough to make traders nervous given the fragility of the market balance. September was the 10th consecutive month that Russia covered more than 80% of Austria's gas demand.
Slovakia's largest energy supplier, Slovensky Plynarensky Priemysel, described alternative gas supply routes if the deal fails to secure future flows through Ukraine. In June, the German utility company Uniper was awarded more than 13 billion in compensation for undelivered gas to Gazprom.
Russian pipeline flows through Ukraine are expected to stop on December 31 unless an alternative agreement is reached with Kyiv.
Landlocked Central European countries can access LNG, including through new terminals that were quickly established in Germany and the Netherlands in the midst of the energy crisis.
