Austria announced on Friday that Russia will halt gas deliveries via Ukraine starting Saturday, marking a significant reduction in Moscow’s gas flows to Europe. This suspension comes as Russia’s oldest gas-export route to Europe, a pipeline established during the Soviet era, is set to close by the end of the year.
Background:
Ukraine has decided not to extend its transit agreement with Russian state-owned Gazprom, aiming to cut off profits that fund the ongoing conflict against it.
Following this suspension, Russia will primarily supply gas to Hungary and Slovakia, with Hungary receiving gas through a pipeline mainly running through Turkey. Prior to the 2022 invasion of Ukraine, Russia supplied around 40% of the EU’s gas needs.
Austrian Response:
Austrian Chancellor Karl Nehammer stated that the end of supplies was anticipated and that the country is well-prepared, assuring citizens that “no home will go cold” due to sufficient gas storage.
OMV, Austria’s largest energy supplier, confirmed it has made preparations to import gas from Germany, Italy, and the Netherlands to meet demand.
Political Implications:
The gas supply cut is seen as a political maneuver by Russia, especially following the exclusion of the Russia-friendly Freedom Party from coalition talks after the recent elections in Austria.
Ukrainian Foreign Minister Andrii Sybiha condemned Russia’s use of energy as a weapon and emphasized that Europe must reject reliance on Russian gas.
Market Dynamics:
The announcement has raised concerns about heating during the winter months in Austria, though the EU’s energy commissioner assured that alternative supply sources are available.
In 2023, gas transit through Ukraine accounted for 65% of gas demand in Austria and neighboring countries.
Historical Context:
Austria was one of the first Western European countries to engage in gas trade with Russia, signing a contract in 1968. In contrast, Germany’s reliance on Russian gas has also diminished following disruptions in 2022.