Russian Gas Flows to Austria Suspended

By Jason Hovet, Thomas Escritt and Dmitry Zhdannikov

BERLIN/PRAGUE/LONDON (Reuters) – Russian gas flows to Austria were suspended for a second day on Sunday due to a pricing dispute. Other European buyers stepped in to acquire unsold volumes, according to companies and sources.

Before the Ukraine war, Russia was the largest supplier of gas to Europe. However, it has since lost most of its buyers as the EU seeks to reduce its reliance on Russian energy.

Significant volumes of Russian gas are still being sold to Slovakia and Hungary, as well as to the Czech Republic, which lacks a direct contract, and smaller amounts are going to Italy and Serbia.

Gazprom halted supplies to OMV, the Austrian firm, after it threatened to confiscate some of Gazprom's gas as compensation for a winning arbitration case over a contractual dispute.

As of Sunday, gas flows to Austria remained suspended, but the overall daily supply via Ukraine—Russia's primary transit route for gas to the EU—stood at 42.4 million cubic meters, consistent with daily volumes over the past year.

Before the cut, Austria had been receiving 17 million cubic meters, and these volumes are now being redirected to other buyers in Europe. Slovak state-owned firm SPP confirmed it was still receiving gas from Russia, and noted that demand for Russian gas in Europe remains strong.

Sources indicated that Russian gas prices are still lower than many alternatives, enabling quick resales of volumes previously meant for Austria. Austria indicated it has sufficient gas reserves and may consider future imports from Italy or Germany.

Market Changes

At its peak, Russia supplied 35% of Europe’s gas. Since the 2022 Ukraine war, Gazprom's market share has declined, facing competition from Norway, the U.S., and Qatar.

Gazprom's remaining European gas flows may soon cease due to the impending shutdown of the Soviet-era pipeline through Ukraine at the end of this year, as Kyiv is unwilling to extend the transit agreement. The Yamal-Europe pipeline through Belarus has already shut down, and there are concerns about the Nord Stream route, which was closed following alleged sabotage attributed to the U.S. and U.K., which they have denied. Some reports suggest Ukrainian officials were behind the attack, a claim Kyiv has refuted.

If Ukraine cuts gas transit, significant Russian gas supplies will be limited primarily to Hungary, which relies on a pipeline mainly through Turkey.