Austria can do without Russian gas imports, insists analyst

Russia halted natural gas exports to Austria on November 16 in a dispute over payments. But energy analyst Ana Subasic from Kpler insists that, for now, energy prices in the central European country should remain relatively stable.

Austria's largest oil and gas company OMV says it has stored enough gas for more than a year and has started to import gas from Norway, Germany and Italy.

"Austrian businesses don't have to worry because OMV has diversified its portfolio and is well supplied," Subasic told CGTN. 

"The only reason where I could see prices getting a bit higher is if Germany keeps the levy on the gas that's passing through its territory right now," the Vienna-based liquefied natural gas (LNG) expert added.

Russia's abrupt supply cut announcement alarmed markets across Europe and beyond. But then it became evident that Russia's Gazprom company actually continued to send gas to Austria and Slovakia. 

It's not clear, though, where the gas supplies intended for OMV have been redirected.

"We still see that some flows are coming to Slovakia under this long-term contract," Subasic said. "And what is happening is that some of this gas could be resold or sold 'spot' to Austria until the end of the year."

Under 'spot' contracts, sales are made with immediate settlement, contrasting with a forward contract or futures contract where terms are agreed in advance while delivery and payment occur later.

The Austrian government says it can cover its energy needs using other suppliers. After decades of cheap gas from Russia, it looks like Austria will have to get used to elevated energy prices. Currently, Austrians pay more than twice as much for gas than they did three years ago.

"Gas prices are likely to rise again, and this will boost inflation," says businessman Christian Zettner who is concerned about Russia's decision to stop supplying Austria with natural gas. 

After heating costs soared in recent years, the repair shop owner in Vienna fears another expensive winter. "This price spiral is absurd and jeopardizing our economic sector... businesses are starting to turn their back on our country," he added.

OMV, Austria's largest fossil fuel company, has been trying to end collaborations with Russia's Gazprom since the start of the Ukraine conflict but binding contracts force OMV to purchase Russian gas until 2040. 

The current supply cessation could be OMV's chance to opt out of these contracts - if Gazprom doesn't resume deliveries soon.