Russia's state-owned natural gas company Gazprom will cut off supplies to Austria's OMV utility early Saturday, following OMV's decision to stop paying for Gazprom gas due to a 230 million-euro arbitration award. Austria's Chancellor announced that the country's underground gas storage is full and it has alternative non-Russia supplies, ensuring no shortage of gas for its citizens.
The cutoff will cost Gazprom around $2.5 billion annually in revenue, impacting Russia's economy significantly as oil and gas exports are crucial for the Kremlin's finances. This move comes after Russia cut off most natural gas supplies to Europe in 2022, leading to soaring gas prices and inflation.
European countries like Austria, Slovakia, and Hungary have been receiving Russian gas through a pipeline via Ukraine, but with Ukraine planning to halt gas transit, these nations are seeking alternative sources. Austria, heavily reliant on Russian gas, is exploring ways to reduce this dependence, with the EU aiming for member countries to stop importing Russian gas by 2027.
In 1968, Austria became the first Western European country to import gas from the Soviet Union, gradually increasing its reliance on Russian energy. A long-term gas supply agreement signed in 2018 between Gazprom and OMV obligates Austria to pay for gas regardless of delivery, prompting a commission to review the contract's terms.
