Exclusive-Austria’s half-century bond with Gazprom ended by gas seizure, sources say By Reuters

By Alexandra Schwarz-Goerlich and Dmitry Zhdannikov

VIENNA/LONDON (Reuters) – The trigger that ended more than 50 years of gas flows from Russian state energy giant Gazprom (MCX:) to OMV earlier this month was the Austrian group’s seizure of Russian gas as payment to cover the value of an arbitration award, five sources told Reuters.

OMV was among the few remaining buyers of Russian gas in Europe after Gazprom lost almost all its customers there in the wake of Russia’s invasion of Ukraine in 2022. Before the war began, Russia was Europe’s single biggest supplier of .

On Nov. 13 OMV said it had won an arbitration case in Germany against Gazprom for 230 million euros ($239 million) in connection with irregular supplies to its German unit, and would take steps to immediately enforce it against Gazprom’s invoices.

Three days later, Gazprom suspended gas supplies to the Austrian company.

According to three sources close to Gazprom and OMV, the Austrian firm had impounded 230 million euros worth of gas deliveries for October. It was the first time a European Union customer had failed to pay for Gazprom’s gas, one of the sources close to Gazprom said.

A source close to OMV said it saw taking Gazprom’s gas supplies for October in lieu of the arbitration award as the last chance to do so if Ukraine, which plans to end a deal allowing Russian gas to transit its territory next year, stops Russian gas flows in January.

Gazprom considers the gas seizure as non-payment and hence stopped supplies, the source close to Gazprom said.

OMV had been buying Soviet and Russian gas since 1968, and the events signalled the Austrian firm is seeking ways to completely exit Russian gas purchases despite its contracts with Gazprom running until 2040, four of the five sources familiar with Gazprom and OMV operations said.

The stoppage of supplies last week gives OMV an opportunity to argue Gazprom has breached the contracts, one of the five sources said.

Gazprom declined to comment on future relations with OMV. An OMV spokeswoman said Gazprom’s deliveries had stopped, and that it did not expect the situation to change.

OMV’s seizure of the gas and resulting non-payment for Russia’s October gas supplies have not previously been reported.

LONGSTANDING INFLUENCE

The abrupt end to Gazprom and OMV’s relationship surprised many gas market insiders, and is a blow to Gazprom’s longstanding economic and political influence in central Europe.

Austria had been one of Gazprom’s most loyal…