Austrian energy firm OMV terminates natural gas supply contract with Russia’s Gazprom
Date
12/12/2024 6:16:02 AM
(MENAFN) Austrian energy company OMV confirmed on Wednesday that it had immediately terminated its long-term natural gas supply contract with Russian energy giant Gazprom. The decision was made due to what OMV described as "several fundamental breaches of the contract." The agreement, originally set to last until 2040, has now come to an abrupt end, signaling a significant shift in the energy relations between the two companies.
The dispute began in mid-November when gazprom halted gas supplies to OMV, following a €230 million (USD245 million) legal dispute. A commercial court ruled in favor of OMV, leading to the termination of the contract. The legal battle was centered around the breach of terms, with OMV arguing that Gazprom had failed to uphold its contractual obligations. The decision to cut off gas supplies was seen as a response to the legal ruling, further escalating tensions between the two parties.
The contract, originally signed in 2006, had initially been celebrated by politicians, as it secured a long-term supply of natural gas for Austria. However, as time passed, the agreement came under increasing scrutiny due to its long-term nature and unfavorable terms. One of the key issues with the deal was that it required OMV to pay for the gas even if it was not purchased, which posed a significant financial risk, particularly in the context of growing political tensions and the European Union's shift away from Russian energy supplies.
The termination of the contract comes at a time of heightened geopolitical uncertainty. The EU's efforts to phase out Russian gas have gained momentum, especially after Russia's invasion of Ukraine in February 2022. OMV's decision to cut ties with Gazprom is aligned with the broader European strategy to reduce reliance on Russian energy, which has been a central part of the EU's response to the ongoing war and its desire for greater energy security.
MENAFN12122024000045015839ID1108985615
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.