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.
What steps is OMV taking to ensure energy supply stability amidst ongoing disputes and changes in gas supply agreements?
**Interview with Alfred Stern, CEO of OMV**
**Interviewer:** Thank you for joining us today, Mr. Stern. OMV has recently received a substantial arbitral award from the International Chamber of Commerce, amounting to over $243 million. Can you explain how this award influences OMV’s obligations to Gazprom?
**Alfred Stern:** Thank you for having me. Yes, the ICC’s decision to award OMV damages in response to Gazprom’s irregular gas supplies is a significant development for us. This award will be offset against our payment obligations under the existing supply contract with Gazprom Export. While this situation might lead to interruptions in our Russian gas supplies, I want to assure our customers that we are well-prepared for that eventuality.
**Interviewer:** Speaking of preparation, how has OMV adjusted its gas supply strategy in light of this dispute and the overall energy landscape?
**Alfred Stern:** We have taken proactive steps. Currently, our gas storage facilities are over 90% full, and beyond that, we’ve diversified our supply sources significantly. We’ve established alternative gas supplies, including imports from Norway and liquefied natural gas (LNG). This strategy ensures that we can meet our contractual obligations to our customers even if Gazprom decides to halt supplies in retaliation.
**Interviewer:** The issue stems from a history of irregular deliveries that ceased entirely in Germany in September 2022. How does OMV view this past experience?
**Alfred Stern:** The irregularities in deliveries have indeed caused substantial financial damage to us, which this arbitral award will help mitigate. Our focus has been to learn from this situation and minimize our reliance on any single supplier, particularly from Russia. This experience has accelerated our transition to more stable and secure energy sources.
**Interviewer:** You mentioned that OMV is no longer dependent on Russian gas. Can you elaborate on that?
**Alfred Stern:** Certainly. While we are still bound by long-term contracts that require us to purchase gas from Russia, we have drastically reduced our intake. Should Gazprom halt deliveries, it would create a scenario where we could potentially withdraw from these less favorable contracts. This would mark a significant shift in our procurement strategy, moving us firmly away from Russian supplies.
**Interviewer:** What potential challenges do you foresee if Gazprom were to stop deliveries in response to this arbitration outcome?
**Alfred Stern:** Naturally, there would be challenges, including potential short-term hedging losses. However, we believe these would be outweighed by the benefits of the damages awarded, as they help offset our losses from irregular deliveries. It’s a complex landscape, but we’re confident in our current position and future strategies.
**Interviewer:** Thank you for your insights, Mr. Stern. It sounds like OMV is positioning itself for a more resilient and diversified future.
**Alfred Stern:** Thank you. We are committed to ensuring a reliable energy supply for our customers while navigating these challenges effectively.