Austria's OMV has no Russian LNG in its contracts, CEO says

Austrian energy company OMV has no Russian liquefied natural gas (LNG) in its contracts, its chief executive said, even as a large amount of LNG imports from Russia continue to flow to Europe.

“We have really diversified the supply sources and looked to make them as broad as possible [and] we have actually made sure that in the LNG contracts, we don't have any Russian LNG,” Alfred Stern told The National in an interview in Abu Dhabi.

Even as Europe seeks to reduce its dependence on Russian pipeline gas, it has seen a sharp rise in LNG imports from Russia this year.

In the first half of 2024, European LNG imports declined from several key suppliers such as the US, Qatar, and Nigeria. However, imports from Russia gained by 11 per cent during the same period, according to the Institute for Energy Economics and Financial Analysis (IEEFA).

OMV's LNG shipments are delivered to the Gate Terminal in Rotterdam, where Russian gas deliveries have surged this year, according to media reports, which have cited government officials.

“Up to this point there are no [sanctions in place] that prohibit the import of Russian gas, whether through [pipelines or in the form of] LNG,” Mr Stern said.

Meanwhile, the company is “fully prepared” to replace Russian pipeline gas delivered through Ukraine if Kyiv does not extend its transit agreement with Moscow when it expires this year, Mr Stern said.

About 15 billion cubic metres of Russian gas are transported through Ukraine, with a significant portion being purchased by Austria and Slovakia.

Ukrainian Prime Minister Denys Shmyhal informed Slovak Prime Minister Robert Fico last month that Kyiv will not renew its gas transit agreement with Russian state-owned gas company Gazprom once it expires on December 31, 2024.

“We have fully diversified our gas sources. We have also made the pipeline capacities available so that we can supply anytime if Ukraine transit stops. We are prepared to supply all our customer contracts,” Mr Stern said.

Since Russia significantly curtailed its gas exports to Europe following the start of Ukraine war last year, the Vienna-based company has been working to diversify its natural gas supply sources.

“We have [secured] long-term LNG contracts and [signed] third-party agreements, not only in Norway but also throughout Europe because the pipelines that have access to Austria is basically from the east,” Mr Stern said.

The company has signed long-term contracts for the supply of the supercooled fuel from various sources, including the US and the Middle East.

European gas prices hit a record high of about €343 ($367.8) per megawatt hour in August 2022 as Russia’s military offensive in Ukraine raised concerns of a major energy shortage in the region.

Dutch TTF gas futures, the benchmark European contract, was trading at €42.40 a megawatt hour on Friday, gaining more than 30 per cent since the beginning of 2024.

European gas prices have been volatile over the past few months due to concerns about supply shortages, fuelled by the conflict in the Middle East.

“Despite gas prices having come down [from 2022 levels], they are still significantly higher than they were before the Russian attack on Ukraine,” Mr Stern said.

“The only way to further improve the energy prices in Europe is to provide more differentiated supply sources. If the price is what it is today, it just means we don't have enough supplies,” he added.