Austria still relies on Russian gas to meet more than half of its needs, despite calls to diversify energy sources in EU countries away from Moscow, since it launched a war on Ukraine, according to a report seen by the specialized energy platform.

Ukraine, which was invaded by Russia in February 2022, is hosting pipelines that transport Moscow's gas to Vienna, Bloomberg reported on Monday, December 4, 2023.

Austria, located in the center of the Old Continent, has huge storage depots, and long-term gas contracts, through its company "OMV AG", with the Russian company "Gazprom" (Gazprom), force it to continue buying Russian gas.

A long relationship with Russian gas

The relationship between the Austrian companies "ohmv" and the Russian Gazprom stretches back at least half a century (50 years), and despite the war in Ukraine, it is clear that Vienna is still unable to make a decision to break that relationship.

Since the start of the war in Ukraine, Western countries-including the European Union - have taken an anti-Moscow position, imposing many sanctions on Russia, and setting price ceilings for Russian oil and its derivatives.

Europe has made enormous efforts to wean itself from Russian gas and other oil products, but initially the countries of the continent faced huge obstacles represented by the rise in energy prices to record levels, which led inflation rates to the highest level in almost 4 decades, causing pressure on citizens.

Austria has huge storage depots, which has allowed it to have large amounts of Russian gas in it so far, enabling it to supply its European neighbors, such as Germany, Hungary, Italy and Slovenia, with some of these quantities.

Austria is conducting an audit of its supplies, in order to implement its desire to diversify its imports away from Moscow, but trade data indicate that Russian gas flows to it continue at constant rates, and it meets more than half of the domestic demand in the European country.

A better market after the war

Former Austrian energy regulator, currently senior energy consultant at Baker & Mckenzie LLP Walter Boltz, said: "the volumes in storage and the continued flow of supplies indicate that the market is better after the invasion of Ukraine .. It is expected that it will not be difficult for Austria, even with the sudden cutoff of Russian gas supplies through Ukraine this year,"he said.

He warned of Austria's continued dependence on Russian gas, which makes it difficult to deal with the expiration of Moscow's contract with Kiev to transport gas through the territory of the latter, the end of next year (2024).

Although the contracts for the export of Russian gas to Austria are extended until 2040, the contracts for its transportation through Ukraine expire next December.

Also, although Ukraine has given indications that Russian gas can continue to flow through its territory to Europe, on individual conditions (for each individual case), the continuation of the war hinders the availability of any guarantees for these flows, as pipelines or station compressors may be damaged, for example.

A slow project

The company "Gas Connect Austria GmbH" ( Gas Connect Austria GmbH), responsible for the management of domestic pipelines in Austria, which connects the East and west of the country, said that it has begun expanding its network towards Germany, with pipelines 40 kilometers (25 miles) long.

She explained that this expansion will enable the country to add 27 terawatt-hours of gas, equivalent to a third of Austria's needs, but it will not become operational before 2027, as it is still in the stages of obtaining environmental and legal approvals for the project, which costs 200 million euros (217 million dollars).

An official spokesman from the company said that negotiations are currently underway on the new tariff, which, combined with legislative restrictions, the absence of financing commitments, and the lack of long-term contracts, all hinder the acceleration of work on the expansion of pipelines.

While the Austrian Ministry of climate and energy warned of the slow steps of the important project in ensuring gas flows to the country, "there are no reasons to wait long,"the ministry said in response to questions from Bloomberg.

The company involved in the expansion, together with the former Austrian energy regulator, who currently works as a senior energy consultant at the company "Packer & Mackenzie" Walter boltz, stressed that Austria can meet its needs until 2025, even in the absence of Russian gas, but the speed of implementation of the project ensures price stability.

"The risks in 2025 and 2026 are not related to the unavailability of gas and the cessation of its flow to Austria, but to its scarcity and instability, which threatens to raise prices again,"said Boltz.

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