(Bloomberg) -- Gazprom PJSC is sending natural gas to Europe via Ukraine at normal levels even after cutting off one of its longest partners, Austria’s OMV AG.
The Austrian energy company confirmed its Gazprom deliveries were reduced to zero as scheduled at 6 a.m. on Saturday. The cut comes after OMV said on Wednesday it would stop payments to the Russian firm to recoup a €230 million ($242 million) arbitration reward.
The impact of the move for the European gas market may be limited at least for now as Russian flows into the region as a whole continue as normal. Gazprom supplies gas into Ukraine for transit, from where it travels to Slovakia for own consumption as well as further into Austria and other neighboring countries.
Gazprom confirmed transit flows via Ukraine at usual levels for Saturday. It declined to comment further. Usual volumes are also set to cross the Russia-Ukraine border on Sunday, data from Ukraine’s gas transport operator show.
Flows from Ukraine into Slovakia continued as normal at the Velke Kapusany border point on Saturday, according to Slovakia’s gas transport operator Eustream, with similar volumes scheduled for Sunday.
Deliveries from Slovakia into Austria at Baumgarten continue even if they declined by 17% compared to Friday.
With OMV cut off, gas is being taken or moved by other buyers, according to people with direct knowledge of the situation.
“It could be sold by anyone who – unlike OMV – is still receiving gas from Gazprom under long-term contracts,” said Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Studies. “In turn, anyone could buy it, including OMV.”
She added that while this arrangement could continue in the future, supply would be exposed to spot price fluctuations and hence more volatile.
Slovakia’s Slovensky Plynarensky Priemysel AS is receiving supplies in accordance with its contract and ordered quantities, a spokesperson said when contacted by Bloomberg.
Hungary’s MVM Zrt. declined to comment on whether it’s using upward tolerances in their contracts with Gazprom.
Russian gas flows to central Europe may adjust at the start of next week, given it takes about three days for the gas to move from Russia to Austria’s Baumgarten and the cut to OMV came abruptly, said Karel Hirman, former Slovak economy minister.
Leo Lehr, a competition regulator at Austria’s E-Control, confirmed in a statement on X that Russian gas for now is still arriving in Baumgarten.
“Russian gas will continue to end up in Austria without an import ban; that’s market dynamics,” he said. “However, an end to the OMV contract means a severance of the long-term commercial ties with Gazprom - which is ultimately much more important than where the individual gas actually comes from.”
Meanwhile, OMV said it can meet supply obligations through 2025 and beyond via alternative sources in the event that Russian deliveries under its long-term contract are halted. The company is producing from its own assets in Norway and buying more liquefied natural gas, Chief Executive Officer Alfred Stern said in an interview on Thursday.
Austria may accelerate the use of domestic inventories, which already dipped below levels seen in the previous two years at the same time of the year amid colder weather.
“For this winter gas supplies are ensured,” OMV’s former CEO, Gerhard Roiss, said in an interview on Austrian public radio ORF. “Storage is full and demand is significantly down.”
--With assistance from Daniel Hornak, Elena Mazneva, Veronika Gulyas and Ewa Krukowska.
(Updates with Sunday flows in 4th, analyst comment in 8th paragraph)
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