Austria’s energy company OMV has terminated its long-term gas supply contract with Russian giant Gazprom, citing “fundamental breaches” of the agreement.
The contract, originally set to run until 2040, was scrapped following a recent dispute, the firm announced in a press release.
The dispute escalated last month when OMV – in which the Austrian government holds a 31.5% stake – announced it would deduct a court-awarded compensation claim from its monthly gas payments. In response, Gazprom halted gas supplies. Since 16 November, OMV has received no gas directly from Gazprom, although Russian gas continues to flow into Austria indirectly through open trading channels.
Diversifying Supply Sources
In a statement, OMV CEO Alfred Stern said the company had fully replaced Gazprom’s supply volumes with alternative sources over the past three years. These include OMV’s own gas production in Norway and Austria, liquefied natural gas (LNG), as well as supplies from other producers. However, the statement did not name these external suppliers, and OMV did not respond when contacted by The International.
Stern also assured that OMV’s gas storage facilities in Austria are currently 85% full, securing the country’s energy needs.
“It is OMV’s key priority to always be a reliable supplier to our customers in any markets and countries we operate in. Being fully cognisant of this profound responsibility, we have continuously implemented our diversification strategy for gas supply sources and additional pipeline capacities,” Stern said.
OMV had faced mounting pressure to cut ties with Russia but was constrained by the terms of its contract, which required payment for gas even if it wasn’t needed.
History of the Deal
The agreement, signed in 2006, was initially hailed as a significant achievement but later drew criticism for its extended duration and restrictive conditions. Before supplies were halted, OMV was receiving about 7,400 MWh per hour – roughly 5 TWh per month. For context, Austria consumed 75 TWh of gas in 2023, down from nearly 100 TWh before Russia’s invasion of Ukraine.
The contract’s termination comes as Europe prepares for a possible end to all Russian gas flows through Ukraine in January 2025. Ukraine has said it will not renew its pipeline transit agreement with Russia, but it’s still unclear if this will completely stop gas supplies.
No Change in Gas Prices
There have been no immediate changes in gas flows or prices following OMV’s announcement, according to Austria’s energy regulator, E-Control.
As of Thursday morning, the flow of Russian gas to Austria remained stable, in line with previous weeks. Deliveries were also consistent at Velké Kapušany, the Slovakian-Ukrainian border crossing, according to data from the European Network of Transmission System Operators for Gas (ENTSO-G).
“This change does not affect the market situation or the available volumes at this time,” said Alfons Haber, head of E-Control. “We have gas deliveries to Austria as we did after November 16. We expect the impact on the market to be minimal.”
Meanwhile, gas prices remained stable at trading hubs. At Europe’s main gas exchange, the TTF in the Netherlands, the price for one megawatt-hour (MWh) of gas dropped slightly to €44.5, while gas at the Baumgarten hub in Lower Austria was priced at €48 per MWh on Thursday. OMV’s stock rose by 0.32% on the Vienna Stock Exchange.
Legal Validity of OMV’s Move
Former E-Control chief Walter Boltz believes OMV’s decision to terminate the contract is legally sound. He pointed out that since Gazprom voluntarily halted its deliveries, OMV is likely to have a strong legal case for ending the agreement. Boltz told “ZIB 2” on Wednesday evening that Gazprom could not invoke force majeure, as it continues to supply gas to Austria. “I assume OMV has carefully considered this and timed the move to ensure the best legal chances,” he said.
Boltz is part of a commission established by Energy Minister Leonore Gewessler to investigate the OMV-Gazprom contract. Despite the termination, the commission is still expected to present its final report.
Official Reaction
Austrian Chancellor Karl Nehammer welcomed OMV’s move, framing it as a victory for Austria’s resilience and preparedness.
“Russia tried to use energy as a weapon against us, but it didn’t work. Gazprom failed to honour its contracts, which is why OMV has terminated the agreement that was set to run until 2040. Our energy supply is secure because we are well-prepared. Austria will not be blackmailed,” Nehammer said.
Climate Minister Leonore Gewessler called the decision an essential step towards energy independence, marking the end of Austria’s reliance on Russian energy supplies. “For decades, Austria has been reliant on Russian energy. This decision poses no risk to Austria’s energy security. Austria can no longer be blackmailed by Russian gas deliveries,” she said.
Gewessler also stressed that consumers should not bear the financial burden of the transition. “Customers must not bear the additional costs of this foreseeable change,” she warned.
