Why does this affect OMV?
The OMV trading subsidiary could be ordered to make its payments to Gazprom to the injured European energy company instead. And if Gazprom doesn’t receive money for its deliveries, it will probably stop them. This assessment “is based on the behavior of Gazprom Export in similar situations,” says the OMV release.
What will OMV do without Russian gas?
OMV has secured transport capacities in the European gas network and has assured that it will be able to supply its customers with its own production in Norway and liquefied gas imports in the event that Russian deliveries fail. Mind you, OMV has neither a monopoly nor a supply mandate for the entire country. The regulatory authority E-Control assumes that other energy companies have also prepared for possible delivery failures over the past two years.
Would supply be at risk?
Not from today’s perspective. The storage tanks hold more than a year’s supply and are 77 percent full. They could also be filled from other sources before the start of the heating season. The most important alternative import routes run through Germany and Italy. Italian transport capacities are expected to be significantly expanded by the end of the year. According to E-Control scenarios, supply should not be a problem in winter 2025/26.
What would a delivery failure mean?
Russia remains the most important supplier for Austria. If these quantities fail to materialize, rising gas prices would be expected. The German storage levy would also have a negative impact. This will make imports from Germany more expensive from July by 2.5 euros per megawatt hour, or around 7.5 percent at current wholesale prices. Several EU states consider this effective export tax to be illegal, but it is not yet clear whether it will be repealed.
Why does OMV still buy Russian gas?
Because in 2018 it committed to acceptance by 2040. As long as the quantities arrive as agreed, it is not economical for OMV to forego this.
What about the legal dispute between OMV and Gazprom?
OMV has turned to international arbitration courts in at least two cases, and the Russian state-owned company then turned to the St. Petersburg Commercial Court to stop this. According to the ruling on Wednesday, the OMV trading subsidiary will have to pay a fine of 575 million euros if it continues the proceedings. In April, a judgment was obtained against OMV Exploration & Production GmbH based on the same pattern, and against the German Uniper in March.
What power does the Russian court have?
OMV does not recognize the jurisdiction of the court. However, on the basis of the rulings, Gazprom could take action against the EU companies in Russia and in any third countries. Both Uniper and OMV have already written off their Russian business.