European gas prices soared to their highest levels in a year on Thursday following Austrian energy giant OMV’s warning of potential supply disruptions from Russia. The European benchmark TTF futures witnessed a 5 per cent surge, reaching €46 per megawatt hour during early Amsterdam trading.
The price spike emerged after OMV announced its €230 million arbitration victory against Gazprom, citing “irregular” gas deliveries to Germany before the complete cessation in September 2022. The Viennese energy and chemicals group declared its intention to immediately offset the awarded amount against Gazprom invoices, whilst acknowledging the risk of deteriorating contractual relations.
Since Russia began reducing supplies to Europe in 2021 prior to the Ukraine invasion, the continent’s gas markets have remained particularly sensitive to supply disruptions. Austria and Slovakia continue receiving Russian gas through Ukraine under a transit agreement set to expire at year-end, representing approximately 5 per cent of annual EU gas imports.
Market analysts predict that volumes through the Ukraine transit route could decrease by half if Gazprom halts supplies in response to OMV’s decision. Tom Marzec-Manser, head of gas analytics at ICIS, highlighted that Gazprom’s customers typically settle payments on the 20th of each month, suggesting OMV might withhold its next €213 million payment, potentially triggering an immediate contract termination.
Despite these developments, OMV reassured stakeholders of its ability to honour energy delivery commitments, citing diversification away from Russian gas sources. Austrian Energy Minister Leonore Gewessler emphasised that whilst OMV’s actions pose no immediate threat to supply security, a sudden supply interruption could create market tensions.
SPP, Slovakia’s primary energy provider, has proactively secured a short-term gas supply contract with Azerbaijan’s Socar, preparing for the potential expiration of the Ukraine transit deal. The company maintains support for continued gas transportation through Ukraine whilst implementing measures to ensure reliable supply to its customers.
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