EU state could lose Russian gas – energy giant's CEO
There is a significant risk of Russian gas transits through Ukraine being terminated, the head of energy giant OMV, Alfred Stern, has said.
In an interview with the Die Presse newspaper this week, the Austrian company’s chief executive raised concerns over the fact that the gas pipelines pass through a country where “military operations take place daily.” He added that EU officials have strong doubts that the current transit contract between Russia and Ukraine ultimately will be extended.
However, even as Austria remains largely dependent on Russian gas and thus vulnerable to stoppages, Stern said that measures had been taken to protect the country from a possible disruption: “The risk is high, and we have hedged against it through diversification. We are ready,” Stern assured.
The current five-year contract between Russia and Ukraine was signed in 2019 just 24 hours before the previous agreement was due to expire. Under the deal, which was brokered by the EU, Russian energy giant Gazprom agreed to deliver 65 billion cubic meters (bcm) of gas through Ukraine in 2020, and 40 bcm annually between 2021 and 2024. However, actual delivery volumes have come in far below these figures.
A key factor in the reduction was Ukraine's closure in May 2022 of the key pumping station of Sokhranovka. Kiev shut down the facility, which handled about a third of Russian gas flowing through the country to the EU, citing “interference by the occupying forces.”
The agreement is valid until the end of 2024. According to Ukrainian officials, the chances that a new deal will be negotiated are slim.
In November, Ukrainian Deputy Prime Minister Olga Stefanishina pledged that Russian gas will flow through Ukraine to Austria even if the current transit contract between Moscow and Kiev isn’t extended. She assured Vienna that Ukraine is a “reliable partner.”
OMV covers around 30% of Austria’s gas needs. The company was among the first to agree to pay for Russian gas in rubles under a new settlement mechanism that Moscow introduced for the ‘unfriendly countries’ that have imposed sanctions on Russia. Stern said at the time that abandoning Russian gas was impossible for Austria and would have dire consequences for its economy and energy security.
Stern told Die Presse that OMV will adhere to its long-term contract with Gazprom and does not plan to exit the agreement anytime soon. The contract with Gazprom was signed in 2018 and runs until 2040.
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