(Bloomberg) — OMV AG warned Russian natural gas supplies may be curbed after it was awarded €230 million ($243 million) in an arbitration with Gazprom PJSC, boosting the Austrian firm’s profit while potentially ending procurement from the Kremlin-controlled company.
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The award under International Chamber of Commerce rules was related to “irregular” German gas supplies in the months leading to September 2022, according to a statement late Wednesday. OMV said it will offset that amount against invoices under its long-term Gazprom supply contract, potentially setting up a “halt of gas supply” from Russia.
While Russian pipeline flows over Ukraine are expected to end in December, when a transit agreement with Kyiv expires, the region’s gas market has been particularly sensitive toward disruptions. Withdrawals from storage facilities have increased, adding pressure to the region’s supply balance and pushing benchmark prices to their highest in a year. Gas surged as much as 5.4% on Thursday.
“Austria can and will manage without Russian gas,” Energy Minister Leonore Gewessler wrote on X. “Nevertheless, it is clear that a sudden interruption in supply could cause tension on the gas markets.”
OMV said it can meet gas supply obligations via alternative sources, in case Russian deliveries under the long-term contract running through 2040 are obstructed. It’s gas-storage deports are more than 90% full heading into the winter.
Gazprom didn’t immediately respond to a request for comment outside regular business hours.
Austria has maintained one of Europe’s oldest and deepest connections to Russian energy, and in 2018 extended a long-term gas contract to 2040. State-owned OMV AG, the country’s biggest fossil-fuel company, grew out of Austria’s post-World War II independence treaty that handed over Soviet-controlled energy assets in return for the nation’s neutrality.
Europe has made efforts to wean itself off Russia’s piped gas since the country’s invasion of Ukraine, but a supply cutoff would still push up prices for consumers and industry.
–With assistance from Olga Tanas and Priscila Azevedo Rocha.
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