Gas prices rise after Gazprom halts supplies to Austria

Austrian company OMV suspended payments to Russia’s Gazprom after an arbitration tribunal awarded it EUR 230 million in compensation. In response, Gazprom announced that it would halt natural gas supplies to Austria from 6:00 CET on Saturday. The news caused a stir in the markets, with the gas price at the TTF trading hub reaching its highest level this year, Montel News reports.

Austrian company OMV announced on Thursday, November 14, that it had won an arbitration case against Gazprom, which was initiated in January 2023 and concluded under ICC rules with a ruling on November 13, 2024. The arbitration tribunal awarded OMV EUR 230 million in compensation for irregular gas supplies and the complete halt to supplies to Germany in August 2022.

In response to the ruling, OMV suspended payments to Gazprom to secure payment of the awarded amount, and said it is currently pursuing other arbitration cases against Gazprom as well.

OMV warned that the arbitration could lead to Russian gas supplies via Ukraine being halted before the end of the year, a development also linked to the imminent expiry of the five-year transit agreement between Russia and Ukraine, which is valid until December 31, 2024.

Austria has so far covered more than 90% of its gas consumption with supplies from Russia, while a long-term contract between OMV and Gazprom obliges Austria to take 6 billion m³ of gas a year until 2040. However, Austria has been looking for ways to terminate the contract for some time.

In response to the situation, Gazprom informed OMV that it would stop supplying natural gas to Austria from 06:00 CET on Saturday, November 16. Austrian Chancellor Karl Nehammer said Gazprom’s announcement that it would end supplies had been expected for a long time and that Austria was prepared. The country has sufficient gas reserves, with OMV’s storage facilities more than 90% full.

OMV has expanded its supplier portfolio to include Norwegian gas and LNG, diversifying its sources. It also confirmed that it can provide its customers with the full contracted volumes even if supplies from Gazprom are interrupted.

Impact on gas prices and flows in Europe

European gas prices had already risen at the end of October. The main drivers were production outages at Norwegian company Equinor, a key supplier, alongside rising tensions in the Middle East and increased demand for LNG in Asia, which is intensifying competition between European and Asian markets.

After gas supplies to Austria were halted, prices at the TTF trading hub, the most liquid market and Europe’s price benchmark, rose to EUR 47.49/MWh.

Gazprom did not comment on halting supplies to Austria, but confirmed that it would send the same volume to Europe on Saturday as in previous days, namely 42.4 million m³.

The unchanged volumes of gas flowing through Ukraine despite the interruption of supplies to Austrian OMV demonstrate strong demand for gas in the region, according to Slovak state-owned company SPP. SPP told Reuters that it continues to receive gas from Russia.

“The situation, in which a large consumer has stopped taking gas from the east but the same volume continues to flow through Ukraine, shows that there is still strong demand for this gas in Europe,” the company said in a statement.

Demand for Russian gas is also reflected in the situation in the Czech Republic, where gas previously flowed primarily from Germany, while now it mainly comes via Slovakia through the Lanžhot border point.