Austria Considers Ending Gas Contract with Russia Amid High Imports
Austria is taking drastic measures in an attempt to break its reliance on Russian gas imports. The country’s energy minister, Leonore Gewessler, has indicated that Austria may terminate the long-term contract of energy company OMV to purchase gas from Gazprom. This move comes as Austria seeks to reduce its dependency on affordable Russian gas, a dependency that has persisted for decades.
In the wake of Russia’s invasion of Ukraine in 2022, Austria has been actively seeking alternative gas providers. While political leaders have expressed concerns about Moscow’s reliability as a partner, OMV, a partly state-owned oil company, has made it clear that they will continue to buy gas from Gazprom under their existing contract, which is valid until 2040.
However, Gewessler revealed that Austria’s reliance on Russian gas actually increased in December 2022, reaching a record high of 98% of total imports, up from 76% the previous month. This has raised concerns about the slow progress of gas import diversification efforts. Gewessler criticized both the market and energy companies for not doing enough to reduce Austria’s dependency on Russian gas, stating, “The market and the energy companies that are part of it are not fulfilling their responsibility to reduce the dependency on Russian gas sufficiently. The diversification of our gas imports is advancing far too slowly.”
To address this issue, Gewessler announced that her ministry has commissioned economic think-tank Wifo to conduct a study on the economic impact of terminating the OMV contract, as well as the risks associated with remaining dependent on Russian gas. The study is expected to be completed by the summer.
In addition, Austria’s energy ministry plans to make it obligatory for gas-selling companies in the country to take tangible steps in reducing the proportion of Russian gas in their supply mix. Gewessler acknowledged that this requirement would need a two-thirds majority in parliament to be enacted into law, and the ministry is currently examining the legal foundation for such a measure.
It remains unclear to what extent Austria’s coalition partner, the conservative People’s Party, led by Chancellor Karl Nehammer, is involved in these plans. With a parliamentary election scheduled for later this year, the far-right Freedom Party is leading in the polls, adding another layer of complexity to the decision-making process.
As Austria seeks to break free from its reliance on Russian gas, the outcome of these discussions will have significant implications for the country’s energy landscape.
Analyst comment
Positive news: Austria considers ending gas contract with Russia amid high imports
Short analysis: Ending the gas contract with Russia could help reduce Austria’s dependency on Russian gas. The country’s energy ministry plans to enforce measures to diversify gas imports and reduce the proportion of Russian gas in the supply mix. The economic impact and risks will be evaluated in a study, and the decision-making process may be influenced by the upcoming parliamentary election. The outcome will have significant implications for Austria’s energy landscape.