Pipeline still full

Expert on gas supply stop: Prices remain stable

(Bild: Proxima Studio - stock.adobe.com)

Following the gas supply freeze to OMV from Russia, Austrian consumers do not have to expect any noticeable price increases in the upcoming heating season. "Such a situation has already been expected on the markets. In addition, suppliers have largely hedged their prices for this winter," says E-Control economist Johannes Mayer. 

The consequences of the supply freeze are also likely to be minimal for customers with variable contracts. "If you have such a contract, you will feel the effects slightly. But the impact will be permanent." Consumers with so-called float tariffs will face a maximum increase of one to two euros per month as things stand, Mayer estimates.

Gas price increased briefly
The wholesale gas price rose to just under 47 euros per megawatt hour (MWh) on Friday, but over the course of the day the price settled back down to the level before the announcement of the supply freeze to OMV, which has been in force since 6 a.m. today.

Following Gazprom's supply freeze, the wholesale gas price rose briefly, but quickly returned to the level prior to the announcement.

(Bild: AFP)

The suspension of deliveries had little impact on prices on the European market anyway. "OMV is only a contractual partner of Gazprom. What's more, the transit contract through Ukraine runs until the end of the year," the expert pointed out.

Longer-term forecast difficult
In the longer term, i.e. beyond the winter of 2024/2025, the development of the price level is currently difficult to predict. "We can already see that the markets are nervous," said Mayer. From today's perspective, however, the market is assuming that prices will remain stable in the fourth quarter of next year. "That's good news for households."

However, the supply freeze is only likely to affect OMV. Russian gas continues to flow to Europe via Ukraine, which is also traded in Austria, the regulatory authority E-Control announced in a press release. It is not known to whom this gas belongs, "but gas is coming in", explained Mayer.

OMV resorts to alternative sources of supply
It initially remained unclear whether OMV could obtain Russian gas from alternative sources in the future, for example from Slovakia or other market participants. "Over the past three years, we have made great efforts to diversify our supply sources and transportation capacities with non-Russian gas. In the event of an interruption in supply from Gazprom, we will primarily fall back on our alternative sources of supply and supply our customers reliably and without interruption," it said.

The background to the gas supply freeze to OMV is the ruling of an arbitration court, which awarded OMV 230 million euros in damages. OMV subsequently announced that it would cease payments to Gazprom in order to recover the millions awarded. Federal Chancellor Karl Nehammer (ÖVP) emphasized on Friday evening that the delivery stop was manageable for Austria in view of its full gas storage facilities. OMV itself and E-Control also sought reassurance in this regard.