Gas prices in Europe hit a one-year high after OMV warned of a possible supply disruption from Russia. The Austrian company received 230 million euros in arbitration against Gazprom and plans to deduct them from its accounts.
European gas prices reached their highest level in a year on Thursday after Austrian group OMV warned of a possible disruption in supplies from Russia, the Financial Times reports, UNN writes.
Details
European benchmark gas futures on the TTF rose 5 percent to 46 euros per megawatt hour in early trading in Amsterdam before falling slightly.
The jump came after OMV warned late Wednesday night of a "possible gas supply shutdown" from Russia after the Vienna-based energy and chemicals group received €230 million in an arbitration award against Gazprom.
OMV complained about "irregular" gas supplies from the Russian company to Germany before the supply was completely cut off in September 2022.
OMV said it would "set off" the awarded amount from its accounts under the contract with Gazprom with "immediate effect". However, it warned that its move could lead to a "deterioration of the contractual relationship".
Europe's gas market has become sensitive to supply disruptions since Russia began cutting supplies to Europe in 2021 before its invasion of Ukraine. In recent years, events that disrupt or threaten to disrupt global gas supplies have led to sharp price fluctuations in Europe.
Austria and Slovakia continue to receive Russian gas via Ukraine under a transit agreement that expires at the end of the year. This route is one of the two Russian routes through which gas flows to Europe and accounts for about 5 percent of the EU's annual gas imports.
Analysts warn that the volumes transiting through Ukraine could be cut almost in half if Gazprom stops supplying due to OMV's decision, and the market will know about it in a week.
Tom Marzec-Mancer, head of gas analytics at ICIS, a consulting company, said that Gazprom's customers usually pay for deliveries on the 20th of the month.
"OMV may withhold the next payment, which will be about 213 million euros, but this could prompt Gazprom to immediately terminate the contract," he warned.
The announcement comes at a time when cold weather has set in and demand for heating gas has increased; according to industry data provider Gas Infrastructure Europe, EU gas storage facilities have had net withdrawals for 10 consecutive days.
OMV added that it will be able to fulfill its supply contracts because it has diversified its gas supplies by refusing to rely on Russian gas. Austrian Energy Minister Leonora Gevessler also wrote on social network X that OMV's actions "do not pose a direct threat to our security of supply.
However, she warned: "It is clear that a sudden interruption of supply could cause tensions in gas markets.
SPP, Slovakia's largest energy supplier, also said on Wednesday that it had signed a "short-term pilot contract for the supply of natural gas" with Azerbaijan's state oil and gas company Socar ahead of the expiration of its transit agreement with Ukraine.
"SPP supports the continuation of gas transportation through Ukraine as it is the most cost-effective solution for our customers," the statement said. – "However, due to the high risk of disruption of gas supplies through the eastern branch, we are taking steps to ensure the safe delivery of gas to our customers.
Gas production in Ukraine increased by 6% this year – NaftogazNov 14 2024, 08:05 AM • 13958 views
