The claim will now be offset against OMV‘s payment obligations to Gazprom Export from the Austrian supply contract, the Austrian company announced in the evening. This could lead to an interruption of Russian gas deliveries, warns OMV, but feels well prepared for this.
Memory 90 percent full
OMV has now set up alternative gas supplies from non-Russian gas as well as additional gas delivery capacities. Especially with gas from Norway and liquefied natural gas (LNG). “OMV confirms that the company can supply its customers with the contractually guaranteed gas volumes even in the event of a possible interruption in Gazprom Export’s supply,” the statement said. The OMV gas storage facilities are currently over 90 percent full.
This dispute concerned irregular deliveries from Gazprom Export and the complete cessation of deliveries in Germany in September 2022. The awarded damages will make a positive contribution to compensating for the financial damage incurred in 2022, OMV said today. If Gazprom were to stop deliveries in response to the settlement of the damages, OMV would incur small one-off hedging losses, which, however, would be “clearly outweighed” by the damages awarded. Gas deliveries of 5 TWh per month are potentially affected.
No longer dependent on Russian gas
OMV boss Alfred Stern had already said in July that OMV was no longer dependent on Russian gas. OMV has already significantly reduced its purchase of Russian gas. However, OMV says it cannot withdraw from the long-term supply contract, which obliges it to purchase gas from Russia in any case. If Gazprom were to stop deliveries, this would be an opportunity for OMV to stop purchasing Russian gas. Even if, as Ukraine threatened, no more Russian gas flows through Ukraine from the turn of the year, Russia would be in breach of contract and OMV could withdraw from the now unpopular long-term supply contract. The scenario that gas from Russia will no longer come to Austria has now lost its horror.
How is OMV planning to diversify its gas supply sources in light of geopolitical tensions affecting Russian gas deliveries?
**Interview with Alfred Stern, CEO of OMV, on Recent Arbitration Award and Gas Supply Dynamics**
**Interviewer:** Thank you for joining us today, Alfred. OMV recently won a $243 million arbitral award against Gazprom concerning the undelivered gas. Can you tell us a bit about the implications of this ruling?
**Alfred Stern:** Thank you for having me. The arbitral award is significant as it recognizes the irregularities in gas delivery from Gazprom, which we’ve faced particularly since September 2022. This amount will now offset our payment obligations under the existing supply contract. However, we are conscious that this could lead to interruptions in Russian gas deliveries, which is why we’ve proactively prepared alternative supply routes.
**Interviewer:** Speaking of preparation, you mentioned OMV is focusing on non-Russian gas sources. How is that going?
**Alfred Stern:** Absolutely, we have maximized our efforts in diversifying our gas supply. Our storage facilities are currently over 90 percent full, and we are actively securing gas from Norway and increasing our liquefied natural gas (LNG) capacities. This ensures that we can fulfill our commitments to our customers, even if Gazprom decides to halt supplies as a reaction to the arbitration outcome.
**Interviewer:** That’s reassuring to hear. In the context of your ongoing contract with Gazprom, how does this affect your dependency on Russian gas?
**Alfred Stern:** While we’ve significantly reduced our reliance on Russian gas, we are still bound by a long-term contract that obliges us to purchase a certain volume. However, should Gazprom cease deliveries, it might legally allow us to withdraw from this contract. We are closely monitoring the situation, especially with the impending geopolitical developments.
**Interviewer:** There are discussions about a potential cessation of Russian gas flowing through Ukraine. What would that mean for OMV?
**Alfred Stern:** If that were to happen, it would breach our contract with Gazprom, potentially allowing us to exit our obligations. We’ve always advocated for energy security and independence, and this scenario, while concerning, also presents an opportunity for us to reduce our dependency on Russian gas altogether.
**Interviewer:** how confident are you that OMV can navigate the upcoming challenges while maintaining a stable gas supply for your customers?
**Alfred Stern:** I am very confident. Our extensive preparations and storage strategies have put us in a strong position. We are committed to ensuring that our customers receive the gas volumes they need, regardless of external pressures. The combination of our strategic supply sources and this arbitral award positions us favorably moving forward.
**Interviewer:** Thank you for your insights, Alfred. It sounds like OMV is preparing for whatever challenges may arise.
**Alfred Stern:** Thank you. We are always looking ahead to ensure stability and reliability in our operations.
