Two years of war

How we are being ripped off with Putin gas

Austria has to take the gas, regardless of whether it wants it or not.

(Bild: AP)

The war in Ukraine has been raging for two years now, but Austria still gets almost all of its gas from Russia. This not only makes us the absolute exception in Europe, but we are also paying for it. New data analyses show that gas imports from Russia in 2021 and 2022 were in some cases blatantly more expensive than those from other countries.

 

NEOS analyzed data from foreign trade statistics and found a significant price premium, with Russian gas even costing twice as much in some months. "The 'cheap Russian gas' was always a myth and a propaganda lie by Gazprom and its lobbyists," says NEOS energy spokesperson Karin Doppelbauer and calls on the federal government to take measures to phase out Russian gas.

(Bild: Krone KREATIV, stock.adobe.com)

At the beginning of the war two years ago, an exit from Russian gas seemed almost impossible, but a lot has changed in the meantime. An end to gas imports from the war-torn country is possible. Walter Boltz, former E-Control board member, explains how this can be done in an interview with the "Krone" newspaper.

In Austria, there is still a lack of willingness to put an end to gas imports from Russia, although the moment for an exit has never been better than now. "1.5 years ago it was still tricky, but today the concern about gas shortages is unfounded. But we have too many people in the country who are saying 'we're going to team up with the Russians again, we've done good business'. But that is not appropriate in the current situation. Russia has moved too far away from the circle of civilized countries. It will be years before we have a normal economic relationship with Russia again. To believe otherwise would be naive and wrong," says Boltz.

From a technical point of view, only the gas pipeline between Austria and Germany (Trans Austria Gasleitung - TAG), which used to transport gas from Austria to Germany and now flows more in the other direction, would have to be rebuilt to create the required higher capacity. It is important to prepare for the exit. Because a sudden interruption would lead to a market panic for two to three months. This would lead to significantly higher prices.

However, if the exit is controlled and prepared, the price effect would be minimal. It can be assumed that Ukraine will no longer extend the gas transit contract from Russia to Europe, meaning that gas will no longer flow at the end of 2024. "Austria can initially reduce the volume by half and then pull out completely six months later. But you have to say it four to five months in advance so that the market adjusts."

Walter Boltz speaks plainly.

(Bild: E-Control)

Across Europe, imports of Russian gas have fallen massively since Russia's invasion of Ukraine - from 40 percent in 2021 to eight percent for pipeline gas and 15 percent including liquefied natural gas (LNG). "By contrast, Putin's overpriced gas imports make us useful idiots who contribute billions to his cruel warmongering. We need clarification, disclosure and an exit from the Gazprom contracts. This federal government currently combines the worst of two worlds: The highest dependence on expensive Russian gas and high prices for Austria's businesses and unsettled consumers," says Doppelbauer angrily.

NEOS energy spokesperson Karin Doppelbauer

(Bild: APA/HERBERT NEUBAUER)

An important point in the exit plan is the termination of OMV's gagging agreement with Gazprom. This was signed in Vienna in 2018, four years after the annexation of Crimea, in the presence of the then Chancellor Sebastian Kurz and Kremlin leader Vladimir Putin. It obliges OMV, which supplies a large proportion of the gas in Austria, to purchase gas from Russia until 2040 and contains a take-or-pay clause: Austria must take the gas regardless of whether it wants it or not.

"The contract can be terminated, but not without cause," says Boltz. And there have been enough occasions, for example when Russia demanded payment in roubles. "Russia has often violated the treaty and blatantly misused gas as a weapon. The lawyers say we have a good chance of getting out of the contract, but OMV has not taken advantage of these opportunities so far." This was probably due to the fact that the situation was much more uncertain last year. Today, there is more gas in Europe than is needed, which is why prices are falling.

Austria is dependent on Gazprom.

(Bild: PIXSELL / EXPA / picturedesk.com)

The majority of the gas used in Austria comes from OMV. "Depending on the weather and price, it's six to seven billion cubic meters per year. It produces one billion itself, five to six are imported from Russia," says Boltz. However, OMV does not sell all of this in Austria. OMV sells half (three to four billion) to customers - regional energy suppliers, industry, power plant operators, etc. "What it doesn't need, it sells on the gas exchange."

Any withdrawal from the contract will be decided by a court of arbitration - this will take place in Switzerland or Stockholm and will be set up on an ad hoc basis. Each side nominates an arbitrator and these two nominate a third chairman. Such proceedings last around two years. If one side does not abide by the ruling, the other begins to seize the other party's valuables. This is how Ukraine won an arbitration case against Gazprom. The Russians did not want to pay and the Ukrainians started to seize ships, company shares and embassies. Gazprom used to have many such things in Europe. But a lot of it has now been sold off.