Gas prices rise after Gazprom stops deliveries to Austria!
Gazprom Export has announced that it will stop gas supplies to Austria after more than 50 years, from November 16. This follows Austria's largest fossil fuel company, state-owned OMV, recently receiving an arbitration award against Gazprom Export over irregular German gas supplies, which were completely cut off in September 2022.
Dutch TTF gas prices fell 0.21% on Tuesday afternoon but rose 10.34% this week as energy markets experienced increased volatility.
OMV has disclosed that it plans to offset this arbitration award against payments owed to Gazprom Export under the gas supply contract in Austria, essentially withholding the payments. Gazprom Export is a subsidiary of the Russian gas company Gazprom.
This arbitration award was under the rules of the International Chamber of Commerce (ICC), upon the arbitration claim filed by OMV Gas Marketing and Trading GmbH (OGMT), in January 2023.
OMV said in a press release on the company's website: "OMV has taken the decision to recover damages awarded in the amount of 230 million euros plus interest and costs, which contributes positively to balancing the corresponding financial losses incurred in the year 2022.
"The company is taking the necessary further steps to implement the arbitration award with immediate effect. OGMT confirms the settlement of its claims against invoices under the Austrian gas supply contract with Gazprom Export to obtain compensation for its claims for damages awarded.”
The amount compensated is expected to go towards increasing OMV's operating cash flow results, as well as net carbon capture and storage figures. After the Russia-Ukraine war, the risk of continuing to do business with Russian oil and gas companies such as Gazprom and Lukoil, among others, has been significantly higher.
Austria has also been much more dependent on Russian gas than other European countries such as Germany and the UK in recent years. Other countries such as Slovakia and Hungary have also been relatively more dependent on Russian gas despite the war.
However, in the face of this growing uncertainty about Russian gas supplies, the country has made more efforts to increase its ties with other suppliers, such as Turkey and Norway. It has also used its large gas storage facilities to ensure that even if Russia were to cut gas supplies this winter, its citizens would be minimally affected.
Austria has also continued to invest in its pipeline capacity for the same, while OMV has also confirmed that the country's gas storage is currently over 90% full. SPP, Slovakia's largest energy supplier, has also tied up with Azerbaijan to buy natural gas in a short-term pilot contract.
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