By Nina Chestney, Francois Murphy and Dave Graham
LONDON/VIENNA (Reuters) -Russia told Austria on Friday it would suspend gas deliveries through Ukraine on Saturday, signaling an increasingly rapid end to the last gas flows from Moscow to Europe.
Russia’s oldest gas export route to Europe, a gas pipeline dating back to Soviet times through Ukraine, will close at the end of this year.
Ukraine has said it will not expand the transit agreement with Russian state-owned company Gazprom (MCX:) to deprive Russia of profits that kyiv says help finance the war against it.
Moscow’s suspension of gas to Austria, the main recipient of gas through Ukraine, means that Russia will now only supply significant volumes of gas to Hungary and Slovakia, in the case of Hungary via a gas pipeline that mainly passes through Turkey. By contrast, Russia covered 40% of the European Union’s gas needs before Moscow’s invasion of Ukraine in 2022.
Austrian Chancellor Karl Nehammer said Gazprom’s notice about the end of supplies was long expected and that Austria has made preparations.
“No house will cool down… the gas storage facilities are full enough,” he told reporters.
Gazprom declined to comment.
Ukrainian Foreign Minister Andrii Sybiha, writing in X, said Russia’s action showed that it “once again uses energy as a weapon.” But Austria, he said, will find a way to ensure energy security and “reject blackmail.”
“The era when Europe depended on Russian gas is over,” he said. “It’s time to completely cut Russian energy profits…and war financing.”
OMV, Austria’s largest energy supplier, said it has been preparing for an eventual Russian gas cutoff and can deliver gas to its customers by importing it through Germany, Italy and the Netherlands.
Austria’s gas imports from Russia will end following a contract dispute between Gazprom and OMV.
In a notice posted on the central European gas hub platform, OMV said Gazprom said supplies would stop on Saturday.
EUROPEAN COUNTRIES ADAPT
Gazprom’s move may stoke concerns in Austria over winter heating and served as Moscow’s rebuke to its political class since the Russia-friendly Freedom Party was excluded from coalition talks after winning the election. in Austria in September, said Ulrich Schmid, a professor of Eastern Europe. Studies at the University of St. Gallen.
Gas prices in Europe and the world soared after a drop in supply from Russian pipelines in 2022, but some European countries found alternative sources, including liquefied gas from the United States. The United States has become the world’s leading gas producer and is expected to increase its production.
Austria was one of the first Western European countries to buy Russian gas when the Soviet Union signed a gas contract in 1968, months before the Soviet invasion of Czechoslovakia.
Germany was also heavily dependent on Russian gas before the war, but shipments ceased when the Nord Stream gas pipelines under the Baltic Sea exploded in 2022.
Russia’s notice to end gas supplies to Austria came as Russian President Vladimir Putin and German Chancellor Olaf Scholz held their first telephone conversation since December 2022.
Russia was willing to consider energy deals if Berlin was interested, the Kremlin said.
“It was stressed that Russia has always strictly fulfilled its contractual and treaty obligations in the energy sector and is ready for mutually beneficial cooperation if the German side shows interest in it,” the Kremlin said.
Russia shipped about 15 billion cubic meters of gas through Ukraine in 2023, about 8% of peak Russian gas flows to Europe via various routes in 2018-2019, according to data compiled by Reuters.
In 2023, Ukraine’s transit route covered 65% of gas demand in Austria and its eastern neighbors Hungary and Slovakia, according to the International Energy Agency. Ukraine has said it does not plan to extend the transit agreement until 2025.
Hungary no longer receives much gas through Ukraine and imports volumes through the TurkStream gas pipeline that runs along the floor of the Black Sea. Slovakia still receives Russian gas through Ukraine.
Gazprom’s move showed Russia flexing its muscles to the West as pressure mounts for a ceasefire in Ukraine, said Schmid of the University of St. Gallen. Russia probably felt emboldened after Donald Trump won the US presidency this month by promising to quickly end the war in Ukraine, he added.
EU Energy Commissioner Kadri Simson told Reuters on the sidelines of a UN climate conference in Azerbaijan that all EU countries that receive gas via the Ukrainian route have access to other sources of supply that They could fill the void.
“We have been very clear that alternative supply is available and that there is no need for Russian gas to continue transiting through Ukraine to Europe,” Simson said.
The European gas reference price fell 0.63 euros to 45.72 euros per megawatt hour at the close of the session.