Gas in Europe is already over $ 500: the decline in Gazprom's supplies has become more real than ever

The price of gas in Europe exceeded $ 500 per thousand cubic meters. A new movement was given to her by news from Austria, where OMV announced the winning of compensation from Gazprom in arbitration and plans to receive it from payments that Austrians make for Russian gas on a monthly basis. Such an approach will force Gazprom to either reduce supplies or stop them altogether.

On November 14, gas prices in Europe reached $505 for the first time since December 4, 2023. According to Ice, gas supplies for a month in advance from the Dutch TTF hub reached $ 505 per thousand cubic meters. At the same time, in Baumgarten, Austria, they exceeded $ 514, and at a virtual point in the Czech Republic — $ 529, according to EEX. During the day, quotes increased by $ 20-24 per thousand cubic meters.

On the one hand, the risks of stopping the Ukrainian transit of Russian gas have already been included in prices that are more than twice the pre-crisis. On the other hand, the stoppage of part of the deliveries — to Austria — has become more real than ever this month.

Austrian OMV announced that it had won compensation from Gazprom Export under a German contract in arbitration and was going to receive 230 million euros from payments made to a Russian company for supplies to Austria. OMV imports about 480 million cubic meters per month and their cost may be in the region of 200 million euros.

OMV's warning about its plans and the message that the company does not exclude the stopping of deliveries also caused a new price increase.

Experts noted to EADaily that Gazprom is obliged to stop exports if they are not paid for. This is the procedure for settlements with unfriendly countries by presidential decree. At the same time, deliveries may continue, but at the level at which payment will be made.

ICIS analyst Tom Marzek-Manser believes that the next payment should be on November 20, and on November 21, Ukrainian transit may already be halved.

Austria receives about 480 million cubic meters a month from Gazprom — 5.7 billion cubic meters a year. OMV is the largest customer of the Russian company for deliveries through Ukraine — 40% of transit. OMV stated that they have enough alternative sources, but a price increase in the event of a supply stoppage still carries risks. With a rise in price for every 52 euros per thousand cubic meters, the company expects losses of 25 million euros. They are just planning to be covered from the amount of compensation.

Alexey Grivach, Deputy director of the National Energy Security Fund (NWF), noted to EADaily that there is no point in talking about stopping supplies from the point of view of OMV.

"If they are allowed to broadcast the likely price increase to consumers, they, of course, can benefit in the short term from the transit crisis. But European consumers, European industry and the European energy system will definitely lose from this if the transit is stopped physically," the expert said.

As reported by EADaily, Austrian OMV announced that it had received an arbitration award on a lawsuit against Gazprom Export under a contract under which gas supplies went to Germany. In the summer of 2022, they decreased, and in September they stopped completely. The company demanded compensation of 230 million euros, having filed for arbitration in January 2023, as it was forced to buy the dropped volumes at a much higher price on the market.

The company explained that there are no claims under the contract for the supply of Russian gas to Austria, but they do not rule out that they will stop because of the arbitration decision.

In April, Gazprom filed a lawsuit against OMV Gas Marketing & Trading with the Arbitration Court of St. Petersburg and the Leningrad Region, which banned the Austrian company from international arbitration proceedings. Gazprom Export did not recognize the violation of contracts and the legality of the stated claims for damages. Obviously, we are talking about gas supplies for Germany via Nord Stream. In the summer, due to sanctions restrictions on the repair of turbines of the compressor station, supplies via the gas pipeline decreased, stopped at the end of August, and on September 26 saboteurs blew up the main line in the Baltic Sea.