Austria’s long-term contract for supply of Russian natural gas is a headache for Brussels

Natural gas pumping station (AP photo).
By John Cody
2 Min Read

Austria’s long-term energy contract with Russian majority state-owned provider Gazprom is causing friction within Brussels as Eurocrats continue to push for energy independence from Russia.

In 2018, prior to the conflict in Ukraine, Austrian oil and gas company OMV extended its contract to supply Russian gas until 2040. However, under the agreement, it is obliged to pay for the deliveries whether they are delivered or not.

This has put both Vienna and the European Commission in a difficult position after Brussels set a target for all EU member states to be completely off Russian gas by 2027.

According to France Info, many EU countries remain heavily dependent on Russian gas, and the EU’s three-year deadline seems entirely unrealistic for some countries.

Before the conflict in Ukraine started, 80 percent of Austria’s gas supply came from Russia, but two years later, this has risen to 97 percent because it is profitable for the Austrians themselves.

Although the obligatory payment clause in the contract is now seen as an “embarrassment” and a “strategic mistake” for Vienna, it is not yet clear whether it can lift it.

Earlier, Austrian Minister for Climate and Environment, Energy, Innovation and Technology Leonore Gewessler said the possibility of withdrawing from gas contracts with Gazprom was being considered.

The minister stressed that OMV should be prepared to withdraw from long-term contracts. He also announced the ministry’s intention to oblige Austrian companies to take concrete measures to reduce the share of Russian gas in their purchases and vowed to examine the legal basis for such requirements.

In practice, European Union member states do not pay much attention to the justification for refusing to honor contracts with Russian companies, so it is quite likely that Austria will follow the same path.

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