Russia to Suspend Gas Deliveries to Austria via Ukraine, Signaling End of Moscow’s Last Gas Flows to Europe
Europe Adapts to Russia’s New Energy Reality
Russia told Austria on Friday that it will suspend gas deliveries via Ukraine on Saturday, a development that signals a fast-approaching end of Moscow’s last gas flows to Europe.
Russia’s Oldest Gas-Export Route to Europe
Russia’s oldest gas-export route to Europe, a pipeline dating back to Soviet days via Ukraine, is set to shut at the end of this year.
Ukraine’s Refusal to Extend Transit Agreement
Ukraine has said it will not extend the transit agreement with Russian state-owned Gazprom in order to deprive Russia of profits that Kyiv says help to finance the war against it.
Austria Prepares for the Cut-Off
Austrian Chancellor Karl Nehammer said Gazprom’s notice of ending supplies was long expected and Austria has made preparations.
“No Home Will Go Cold”
“No home will go cold… gas-storage facilities are sufficiently full,” he told reporters.
Gazprom’s Decline to Comment
Gazprom declined to comment.
Ukraine’s Foreign Minister Reacts
Ukrainian Foreign Minister Andrii Sybiha, writing on X, said Russia’s action showed it “once again uses energy as a weapon”. But Austria, he said, would find a way to ensure energy security and “reject blackmail”.
OMV’s Preparedness
OMV, Austria’s biggest energy supplier, said it has been preparing for the eventual cut-off of Russian gas and can deliver gas to its customers by importing via Germany, Italy, and the Netherlands.
European Countries Adapt
Gazprom’s move may fan concerns in Austria about heating through the winter and served as Moscow’s rebuke to its political class since the Russia-friendly Freedom Party was cut out of coalition talks after winning Austria’s election in September, said Ulrich Schmid, a professor of Eastern European studies at the University of St. Gallen.
European and Global Gas Prices
European and global gas prices spiked following a drop in Russian pipeline supplies in 2022 but some European countries found alternative sources, including liquefied natural gas from the United States. The U.S. has become the world’s top gas producer and is expected to expand production.
Austria’s Dependence on Russian Gas
Austria was one of the first western European countries to buy Russian gas when the Soviet Union signed a gas contract in 1968, months before the Soviet invasion of Czechoslovakia.
Germany’s Dependence on Russian Gas
Germany was also heavily reliant on Russian gas before the war, but shipments ceased when the Nord Stream pipelines under the Baltic Sea were blown up in 2022.
Russia’s Notice of Ending Gas Supplies to Austria
Russia’s notice of ending gas supplies to Austria came as Russian President Vladimir Putin and Chancellor Olaf Scholz of Germany held their first phone conversation since December 2022.
Russia’s Readiness to Look at Energy Deals
Russia was ready to look at energy deals if Berlin was interested, the Kremlin said.
“It Was Emphasized That Russia Has Always Strictly Fulfilled Its Treaty and Contractual Obligations in the Energy Sector”
“It was emphasized that Russia has always strictly fulfilled its treaty and contractual obligations in the energy sector and is ready for mutually beneficial cooperation if the German side shows interest in this,” the Kremlin said.
Russia’s Gas Flows to Europe
Russia shipped some 15 billion cubic metres of gas via Ukraine in 2023, about 8% of peak Russian gas flows to Europe via various routes in 2018-2019, according to data compiled by Reuters.
Ukraine Transit Route
In 2023, the Ukraine transit route met 65% of gas demand in Austria and its eastern neighbours Hungary and Slovakia, according to the International Energy Agency. Ukraine has said it doesn’t plan to extend the transit agreement into 2025.
Hungary’s Gas Imports
Hungary no longer receives much gas via Ukraine and imports volumes via the TurkStream pipeline that runs along the bed of the Black Sea. Slovakia still receives Russian gas via Ukraine.
Russia’s Move as a Rebuff to the West
Gazprom’s move showed Russia flexing its muscles at the West as pressure builds for a ceasefire in Ukraine, said Schmid at the University of St. Gallen. Russia likely felt emboldened after Donald Trump won the U.S. presidency this month pledging to quickly end the Ukraine war, he added.
EU Energy Commissioner’s Comment
EU energy commissioner Kadri Simson told Reuters on the sidelines of a UN climate conference in Azerbaijan that all EU countries receiving gas via the Ukraine route have access to other supply sources that could fill the gap.
“We Have Been Very Clear That Alternative Supply Is Available”
“We have been very clear that alternative supply is available and there is no need for the continuation of Russian gas transiting via Ukraine to Europe,” Simson said.
European Benchmark Price for Gas
The European benchmark price for gas edged down 0.63 euro to 45.72 euros per megawatt hour at the trading close.
Conclusion
Russia’s decision to suspend gas deliveries to Austria via Ukraine marks the end of an era in which Europe relied heavily on Russian gas. While some countries may experience temporary disruptions, the EU has been working to diversify its energy sources and is well-equipped to handle the change. As the global energy landscape continues to evolve, it is clear that the era of European dependence on Russian gas is coming to an end.
FAQs
Q: Why is Russia suspending gas deliveries to Austria via Ukraine?
A: Russia is suspending gas deliveries to Austria via Ukraine because Ukraine has refused to extend the transit agreement with Russian state-owned Gazprom.
Q: What will happen to gas supplies in Austria?
A: Austria has made preparations for the eventual cut-off of Russian gas and will import gas from other sources, including Germany, Italy, and the Netherlands.
Q: What does this mean for the EU’s energy security?
A: The EU has been working to diversify its energy sources and is well-equipped to handle the change. The European benchmark price for gas has edged down 0.63 euro to 45.72 euros per megawatt hour at the trading close.
Q: What are the implications of this move for Russia and Ukraine?
A: This move signals a significant shift in the energy landscape between Russia and Ukraine, with Ukraine refusing to extend the transit agreement and Russia flexing its muscles at the West.