OMV Wins €230 Million in Dispute with Gazprom

OMV Wins €230 Million in Dispute with Gazprom

Image: APA/THEMENBILD/HELMUT FOHRINGER

 

An arbitration court has awarded Austrian gas company OMV €230 million in damages, plus interest and costs, in its dispute with Russian gas giant Gazprom.

The claim will be offset against OMV’s payment obligations to Gazprom Export under the Austrian supply contract, the company announced on Wednesday evening.

OMV warned that this could lead to a disruption in Russian gas supplies but stressed that it is well-prepared for such a scenario.

Since Moscow’s invasion of Ukraine in February 2022, Austria, along with other EU countries, has been moving away from Russian energy.

OMV has already secured alternative gas supplies from non-Russian sources, including additional capacity from Norway and liquefied natural gas (LNG). “OMV reaffirms that it can supply the contracted gas quantities to its customers, even in the event of a possible disruption of supplies from Gazprom Export,” the company said.

OMV’s gas storage facilities are currently over 90% full.

Origin of the dispute

The dispute stems from irregular deliveries from Gazprom Export, including a complete halt in September 2022 to Germany. OMV said the compensation would help cover the financial losses from 2022. If Gazprom stops deliveries in response to the compensation, OMV could face small one-off losses, but these would be “far outweighed” by the damages.

In July, OMV CEO Alfred Stern had already stated that OMV is no longer reliant on Russian gas, having significantly reduced imports. However, OMV is still bound by a long-term supply contract, which obliges it to accept Russian gas until 2040.

If Gazprom were to halt deliveries, OMV could stop purchasing Russian gas. Even if, as threatened by Ukraine, no Russian gas flows through Ukraine after the end of the year, Russia would be in breach of contract, allowing OMV to exit the increasingly unwanted long-term agreement. The prospect of no Russian gas reaching Austria has now lost much of its alarm, according to the company.

No gas shortage

In a separate statement on Thursday, Austria’s energy regulator, E-Control, said it does not anticipate a gas shortage in the country. Should OMV withhold payments following the arbitration ruling and Gazprom Export halt deliveries to Austria, the various measures implemented in Austria would ensure gas supply for the next two winters, according to E-Control board member Alfons Haber.

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