Austria energy regulator expects smooth transition as Ukraine gas deal ends

(Reuters) - Austria should not face supply disruption as it has prepared for the switch from eastern supplies of natural gas to western alternatives after Ukraine's contract with Gazprom expires on Tuesday, Austria's energy regulator E-Control said.

Ukraine has said it would end its gas transit deal with Gazprom, and this month energy company OMV also terminated its agreement with Gazprom following a contractual row with the Russian company.

Markus Krug, deputy head of the gas department at E-Control, said the regulator was following events closely but did not anticipate disruptions in gas supply because Austria had made provision to get it from elsewhere and built up reserves.

"It's a big adjustment in the gas flow, from east to west," Krug told Reuters, but said traders appeared well prepared and had already priced in the change.

Prices could rise temporarily after Jan. 1 but would likely drop again once the market saw things were working, he said.

Austria's OMV said it would not be directly affected by a termination of Russian gas transiting through Ukraine.

The company had taken measures to diversify its supplies to ensure customers were served, OMV said in statement.

Krug said Russian gas would likely continue to flow through Turkey, which would continue to supply Hungary, and noted that close attention was being paid to Slovakia.

He estimated that most of Slovakia's gas supply could come from Hungary, roughly a third from Austria and the remainder from the Czech Republic and Poland.

Slovakia has been arguing with Ukraine over keeping its transit route open due to worries about costs, and wants to maintain its own transit capacities. But with storage capacity and diversified transit routes, a loss of supplies from the east will not hit Slovak consumption demands, the government says.

(Reporting by Dave Graham; Additional reporting by Jason Hovet; editing by Barbara Lewis)