Austrian chancellor says Ukraine policy firm despite Russia’s gas cut

Austria will stick to its Ukraine policy despite Russia halting natural gas deliveries to the country starting from the weekend, Chancellor Karl Nehammer said on Friday.

“We will not be blackmailed and will not be brought to our knees,” he said in a speech to the country.

Gazprom Export, a subsidiary of Kremlin-controlled energy giant Gazprom, informed Austrian oil and gas group OMW that it would stop natural gas deliveries from Saturday.

The move is a response to an arbitration ruling by the International Chamber of Commerce, which awarded OMV €230 million ($242 million) in a contractual dispute with Gazprom.

Nehammer said Gazprom had on several occasions in the past not fulfilled its delivery obligations in order to exert pressure on Austria for its support of EU sanctions against Russia.

“No one in Austria has to freeze. The apartments can be heated,” the chancellor continued, emphasizing that there are sufficient natural gas reserves available and that Austria’s consumption is not relevant to the broader European market.

Austria has remained heavily reliant on Russian gas even as other EU countries, like Germany, have worked to end their dependence following Moscow’s all-out invasion of Ukraine in February 2022.

The share of Russian supplies has accounted for over 80% of Austria’s total gas imports recently.

However, OMV said earlier it has been preparing for the total cut-off scenario for three years, and Austria’s position is significantly better now that it was on 2022, due to lower gas consumption and more sources of supply.

The alternative supplies are to come from Norway, from Austria’s own production, or in the form of liquefied natural gas by ship via Germany or Italy.

Furthermore, all storage facilities are currently around 90% full, providing enough gas for Austria’s needs for around a year.

The latest dispute centres on an earlier interruption to gas supplies, which resulted in the arbitration case.

When the case went OMV’s way, the partially state-owned company said it would stop paying Gazprom until it received an amount of gas equivalent to the €230 million arbitration award.

Even without current developments, the energy co-operation between Austria and Russia, which dates to 1968, would probably have come to an end. The transit contract for the delivery of Russian natural gas via the pipeline through Ukraine and Slovakia ends at the end of the year, and is not expected to be extended.

Within the EU, Hungary and Slovakia continue to receive large volumes of Russian gas flows.