Pledge strategy

What happens if Kiev turns off Putin’s gas?

Ukrainian soldiers on the Gazprom site in Sudscha

(Bild: Krone KREATIV/Kirill MOROZOV, AFP)

Ukraine has announced its intention to build a military base in the occupied Russian gas town of Sudzha. These developments are particularly relevant for the domestic energy supply. Austria is highly dependent on the hub - at least until now.

"The search for and destruction of the enemy in the town of Sudzha has been completed," announced Ukrainian President Volodymyr Zelensky in his video address on Wednesday. What sounds like an insignificant village is in fact one of the most important hubs of Kremlin boss Vladimir Putin's gas empire.

According to military observers, Ukraine is now proceeding according to the pledge principle. The Ukrainian leadership hopes that the mass imprisonment of Russian soldiers and the occupation of critical infrastructure will improve its negotiating position. Selensky himself speaks of an "exchange fund", which has filled up dramatically, especially with the conquest of Sudzha. 

Important transportation route in limbo
The small Russian town in the Kursk Oblast is home to a major gas hub of the Gazprom empire, through which Putin's gas is pumped through Ukraine to Slovakia, Austria and other EU countries. In 2023, around 14.65 billion cubic meters of gas were supplied via Sudzha. This corresponded to around half of Russian natural gas exports to Europe or around five percent of EU consumption.

The Gazprom trap

• The gas supply contract between OMV and Gazprom, which was due to expire in 2028, was ceremoniously extended until 2040 in 2018.
• The consequence: Gazprom supplies, OMV has to pay, even if it no longer needs the gas. Payment guarantees were entered into here according to the "take or pay" principle.
• It is unclear how the gas is to reach Austria from 2025, as Ukraine has not extended a transit contract with Putin.
• The Ukrainian invasion and the occupation of Sudzha are now adding to the uncertainty.

Austria is particularly dependent on this transport route. To put this into perspective: in 2024, the majority of all domestic gas imports still came from Russia - with peaks of up to 97% (January). According to NEOS, Austria has transferred more than 11 billion euros to the Kremlin for Russian gas up to and including May. 

Ministry believes Austria is well positioned
So what does the Ukrainian campaign mean for domestic consumers? In response to an inquiry from the green energy ministry, "Krone" reports that our energy supply is secure according to "current forecasts". 

"There is sufficient transport capacity available for non-Russian natural gas to Austria. This summer, the gas pipeline from Italy to Austria will also be expanded - then even larger quantities of gas can be transported to Austria," explains the ministry of Leonore Gewessler (Greens).

Situation harbors risks
But now there are no more excuses for energy suppliers. "OMV has therefore also procured large quantities of non-Russian natural gas." There is currently only one certainty: "Russian gas supplies are uncertain." Due to the route of the pipeline through a war zone, damage to the infrastructure can never be completely ruled out.

Regardless of what happens in the Ukrainian-Russian conflict, Putin has already proven that he uses his gas for blackmail. The message to the coalition partner ÖVP and other political rivals is: "That is why the Climate Protection Ministry has also submitted a legislative proposal to phase out Russian natural gas. This can be adopted at any time." 

Austria wants to rely on Germany and Italy
According to the Energy Ministry, Austria has now created enough alternatives to ensure a secure supply. In addition to the full storage facilities, the import capacities for non-Russian natural gas via Italy and Germany are also large enough.

Putin massively curtailed gas supplies to Austria at the end of 2022.

(Bild: AFP/Kirill MOROZOV)

This would allow liquefied natural gas (LNG) or Norwegian gas, for example, to be brought to Austria. "The expansion of the gas pipeline from Italy, which will be completed in the summer, will further increase the safety cushion." However, there will only be a definitive easing of the situation with complete independence from Russian gas.

How cheap is "cheap" Russian gas?
Due to the uncertain development, price fluctuations cannot be ruled out. In a "highly liberalized gas market, the price tag depends on many factors" - albeit to a lesser extent than in 2022.

The most important thing is: "The myth of cheap Russian gas has nothing to do with reality. If you compare the exchange prices in Austria and Germany, you can see very clearly that Germany no longer imports Russian gas and the prices are still lower than in Austria."