The price of gas in Europe has exceeded $500 per thousand cubic meters. The news received a further boost from Austria, where OMV announced that it had obtained compensation from Gazprom in an arbitration and plans to receive it from the payments the Austrians make each month for Russian gas. This approach will force Gazprom to reduce supplies or suspend them altogether.
On November 14, gas prices in Europe reached $505 for the first time since December 4, 2023. According to Ice, next month’s gas supply from the Dutch TTF hub reached $505 per thousand meters cubic. At the same time, in the Austrian Baumgarten they exceeded $514, and in the virtual point of the Czech Republic, $529, according to EEX. Over the course of the day, quotes increased between 20 and 24 dollars per thousand cubic meters.
On the one hand, the risks of stopping Ukrainian transit of Russian gas have already been factored into prices, which are more than double what they were before the crisis. On the other hand, the interruption of some supplies (to Austria) became more real than ever this month.
The Austrian OMV reported that in an arbitration it obtained compensation from Gazprom Export under a German contract and that it will receive 230 million euros for payments made to the Russian company for supplies to Austria. Every month OMV imports about 480 million cubic meters and its cost can be around 200 million euros.
OMV’s warning about its plans and the message that the company does not rule out cutting supply caused a new rise in prices.
The experts pointed out EADaily that Gazprom is obliged to stop exports if they are not paid. This is the procedure for reaching agreements with hostile countries by presidential decree. At the same time, supplies may remain, but at the level at which payment will be made.
Tom, ICIS analyst Marzek-Manser believes that the next payment should be made on November 20 and that on November 21 Ukrainian transit could already be reduced by half.
Austria receives about 480 million cubic meters from Gazprom every month, i.e. 5.7 billion cubic meters per year. OMV is the largest customer of the Russian company for supplies through Ukraine – 40% of transit. OMV stated that they have sufficient alternative sources, but price increases in the event of a supply interruption still carry risks. For every price increase of 52 euros per thousand cubic meters, the company expects losses of 25 million euros. They are planning to cover them with the compensation amount.
Deputy Director of the National Energy Security Fund (NESF) Alexey Grivach noted EADaily that from OMV’s point of view it makes no sense to talk about stopping the supply.
“If they are allowed to pass on the likely price increases to consumers, they could certainly benefit in the short term from the transit crisis. But European consumers, European industry and the European energy system will definitely lose if traffic physically stops.” – said the expert.
As reported EADaily The Austrian OMV announced that it had received an arbitration award in a lawsuit against Gazprom Export under a contract under which gas was supplied to Germany. In the summer of 2022 they decreased and in September they stopped completely. The company demanded compensation of 230 million euros and filed an arbitration appeal in January 2023, as it was forced to buy the lost volumes at a much higher price on the market.
The company explained that there are no claims under the contract for the supply of Russian gas to Austria, but they do not rule out that they will cease due to the arbitration decision.
In April, Gazprom filed a lawsuit against OMV Gas Marketing & Trading with the Arbitration Court of St. Petersburg and the Leningrad Region, prohibiting the Austrian company from participating in international arbitration proceedings. Gazprom Export did not acknowledge the violation of contracts or the legality of the declared damage claims. Obviously, we are talking about the supply of gas to Germany via Nord Stream. In the summer, due to the restrictions imposed by the sanctions on the repair of the turbines of the compressor stations, the supply through the gas pipeline decreased, stopped at the end of August, and on September 26, saboteurs blew up the gas pipeline in the Sea Baltic.
