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If Austria quits Gazprom contracts: 'Up to €30 billion in costs without gas'

Johannes Pleschberger

The slogan
The slogan "Gazprom - A National Treasure" was widely used in Russia from 2003 to 2016. REUTERS/Anton Vaganov/File Photo

The slogan "Gazprom - A National Treasure" was widely used in Russia from 2003 to 2016. REUTERS/Anton Vaganov/File Photo

Austria is still heavily reliant on Russian gas. Its dependence on supplies from the Moscow-based state company Gazprom has actually risen to 98 percent at the end of last year and currently amounts to 83 percent  - that's despite Brussels calling for a phase out of Russian fossil fuels.

Contracts that were signed before the start of the Ukraine conflict legally bind Vienna's main energy company OMV to buy gas from Gazprom until 2040, something Austria's government would like to change.

"The goal is to chart a course that would enable Austria to stop buying gas from Russia," Walter Boltz told CGTN. The former chief of Austria's energy regulating body now advises the country's energy minister.

"Austria is very well connected to other gas markets, to Italy, to Germany, so we would be able to replace Russian gas relatively easily."

But Italian gas and LNG are more expensive than Russian fuel. Price hikes would be likely and critics say, ending the contract with Moscow is impossible.

The Sudzha gas station is the only entry point for Russian natural gas into Ukraine's gas transmission system for onward transport to Europe. REUTERS/Yan Dobronosov/File Photo
The Sudzha gas station is the only entry point for Russian natural gas into Ukraine's gas transmission system for onward transport to Europe. REUTERS/Yan Dobronosov/File Photo

The Sudzha gas station is the only entry point for Russian natural gas into Ukraine's gas transmission system for onward transport to Europe. REUTERS/Yan Dobronosov/File Photo

"The most expensive outcome is if Austria unilaterally cancels the gas contracts with Russia," says the former head of OMV's gas division Otto Musilek. "That would cost Austria 20 to 30 billion euros (22 to 32 dollars) without us getting any gas in return, due to these take-or-pay obligations."

Austria's direct gas connection to Russia runs across Ukrainian territory. By the end of this year, Kyiv wants to end that partnership by not renewing its gas transition contract. This would mean no more cheap gas for Austria but - at the same time - could be Vienna's easy way out of its billion dollar obligations with Moscow. But it is still unclear whether Ukraine will actually stop the gas flow.

Given Ukraine's counter-offensive on Russian territory, Austria's main gas supply could be switched off, far more quickly than previously thought. Intensive battles between Moscow and Kyiv are dangerously close to Russia's pipeline to Central Europe.

"In a war not every shell hits the right position," says Boltz. "It's totally possible that the compressor station in Sudzha gets damaged and would result in an immediate stop of the gas flow."

No matter who or what stops the Russian gas flow - Austrian households and the country's industry will likely have to pay more.

If Austria quits Gazprom contracts: 'Up to €30 billion in costs without gas'

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