Published by Global Banking and Finance Review
Posted on December 11, 2024
VIENNA (Reuters) - Austria's OMV said on Wednesday it had terminated its long-term gas supply contract with Gazprom after the Russian firm stopped deliveries last month amid a row that has been highly politicized due to the war in Ukraine.
The step formally ends the moribund contract since Gazprom halted 50 years of gas flows to the Austrian firm after OMV won an arbitration case against Gazprom over a separate contract and said it would recoup its 230 million euros ($241 million) in damages by not paying Gazprom's invoices for the main contract.
"OMV today announced the termination of its long-term natural gas supply contract with Gazprom Export in reference to multiple fundamental breaches of contractual obligations by Gazprom Export. This termination takes immediate effect," OMV said in a statement, referring to Gazprom's delivery stop.
The contract was due to run until 2040.
OMV was among the few remaining large, long-term buyers of Russian pipeline gas in Europe after Gazprom lost almost all its customers there after Russia's invasion of Ukraine in 2022.
Before the war, Russia was Europe's single biggest supplier of natural gas.
Russian gas has kept flowing into Austria via pipeline through Ukraine and Slovakia, albeit at lower volumes now OMV has been cut off. The spat has placed the spotlight on Austria's continued reliance on Russian gas even though it has made contingencies for a cut-off and has large volumes in storage.
"Gazprom did not abide by the contracts, which is why OMV is immediately terminating the contract," Austrian Chancellor Karl Nehammer said on X after OMV's announcement.
The Austrian state owns 31.5% of OMV.
"Our energy supply is secured because we are well prepared. Austria will not be blackmailed by Russia," Nehammer added, accusing Russia of trying to weaponize its energy supplies.
($1 = 0.9541 euros)
(Reporting by Francois Murphy and Alexandra Schwarz-Goerlich in Vienna and Brijesh Patel in Bengaluru. Editing by Jane Merriman and Dave Graham)
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