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 its 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 are the key strategies OMV is implementing to ensure stable gas supplies amidst geopolitical uncertainties with Gazprom?
**Interview with Alfred Stern, CEO of OMV**
**Interviewer:** Thank you for joining us today, Alfred. Recent developments with Gazprom have raised concerns about the future of Russian gas deliveries to Austria. Could you explain the current situation regarding OMV’s contract with Gazprom?
**Alfred Stern:** Certainly. We have recently won an arbitration case against Gazprom regarding irregular gas deliveries that occurred last year, particularly the complete cessation of deliveries in Germany. The compensation awarded to us will now offset our payment obligations to Gazprom. However, we have warned that this situation could lead to an interruption of gas supplies, but I want to reassure our customers that we are well-prepared for this potential scenario.
**Interviewer:** You mentioned that OMV is prepared for a potential interruption. What measures have you implemented to ensure a stable gas supply?
**Alfred Stern:** OMV has significantly diversified its energy sources. Currently, our gas storage facilities are over 90% full, and we have arranged for alternative supplies, particularly from Norway and liquefied natural gas (LNG). This means that even if Gazprom stops its deliveries, we will still be able to meet our contractually guaranteed supplies to our customers without relying on Russian gas.
**Interviewer:** It’s been noted that OMV is no longer dependent on Russian gas. Can you elaborate on this shift?
**Alfred Stern:** Yes, indeed. We have been actively reducing our dependence on Russian gas for some time now. As part of our strategy, we have sought to increase our procurement from alternative sources. However, we are still bound by the terms of our long-term supply contract with Gazprom, which poses certain challenges. If Gazprom halts its deliveries, it would give us a legitimate ground to reassess our long-term obligations and potentially withdraw from an increasingly unpopular arrangement.
**Interviewer:** What would be the financial implications for OMV if Gazprom ceases its deliveries in response to the arbitration ruling?
**Alfred Stern:** If Gazprom does stop supplies, we would incur a small one-off hedging loss. However, this would be clearly outweighed by the damages awarded to us through arbitration, which is designed to compensate for the financial impacts we faced due to previous interruptions in gas supplies. In essence, while there might be short-term challenges, the overall financial outlook remains positive for OMV.
**Interviewer:** Lastly, how do you foresee the future of gas supply in Europe with the current geopolitical tensions?
**Alfred Stern:** The future landscape for gas supply in Europe is certainly evolving. We anticipate that the transition toward more diversified and sustainable energy sources will continue. As companies like OMV adapt and invest in alternatives, it will ultimately enhance energy security for the region. Our commitment to ensuring reliable and contractually guaranteed gas volumes is a testament to our proactive approach in these uncertain times. Thank you for having me.
**Interviewer:** Thank you, Alfred, for sharing these insights. We appreciate your time and look forward to seeing how OMV navigates this complex situation.
