Austria’s dependence on Russian gas rises to 98%, two years after Ukraine war

Austria’s dependence on Russian gas has increased from 80% to 98% in two years, prompting the country’s energy minister to ring the alarm bell ahead of a national election due to take place in the Autumn. When Russia attacked Ukraine on 24 February 2022, Austria was importing 80% of its natural gas from the state company Gazprom, a figure that has now risen to 98%.

The country’s energy minister, Leonore Gewessler, is urging rapid action to reverse this.

“The diversification of our gas imports is progressing far too slowly. This culminates in a new record share of Russian natural gas in December of 98%,” the Green minister told the press in Vienna on Monday (12 February).

The 98% figure is a massive increase compared to the 17% achieved in October 2022, when Russia itself restricted gas flows to Europe. But the trend was soon reversed and the share of Russian gas was already back at 43% in August last year. The high share of Russian gas is partly caused by rapidly falling gas consumption in Austria – from 100 TWh down to 75 TWh in 2023, according to figures from the energy ministry.

Another reason is the contractual ties. Austrian utility OMV committed to a “take-or-pay” arrangement with Gazprom for up to 60 TWh a year, nearly enough to meet the country’s entire gas demand. These supplies, contracted in 2018 until 2040, come at a likely cheaper price than neighbouring Germany, which must rely on global markets to secure liquefied natural gas (LNG) shipments.

“Gazprom delivers, OMV has to practically take it,” said Christoph Dolna-Gruber, an expert at the country’s energy agency.

And local energy utilities in Austria, most of which are part-owned by municipalities or cities, are all too happy to snap it up. Alternatives are available, but they tend to be more expensive. “There is enough non-Russian natural gas but the energy companies are not buying it,” said Gewessler. Meanwhile, imports from countries other than Russia are usually more expensive.

“Imports via Germany are subject to a gas storage levy of €1.86/MWh. Italy is also planning to levy a charge of €2.19/MWh for gas exports from 1 April 2024,” said Dolna-Gruber.

Financing Russia’s war effort
When EU envoy to Austria, Martin Selmayr, said in late 2023 that Austria’s continued high levels of gas imports were tantamount to sending “blood money” to Russia, he was firmly reprimanded. But Gewessler had no qualms about stating that obvious fact.

“With our energy bills, we are indirectly financing a heinous war in Ukraine,” she told the press.

In 2022, Austria imported gas to the tune of some €7 billion. In 2023, given that prices fell, that number is expected to come in at around €3 billion.

Gewessler’s three-step plan
By 2028, the EU hopes to eliminate Russian gas entirely. A 2023 review by Brussels found that Vienna had yet to even begin planning for that. Gewessler has three key actions in mind to tackle this.

First, local utilities must prove they can cope without Russian gas – similar to the Basel system for banks – and begin increasing their share of non-Russian gas. Preferably via the EU’s joint purchasing platform, AggregateEU.

Second, she wants to de-facto break the long-term contract with Gazprom that obliges Austria to taking the gas no matter what. This is likely to face resistance from Austrian conservatives. Chancellor Karl Nehammer, a centre-right politician, said in 2023 that continuing the contracts was in the interest of taxpayers. “It is a matter of securing state assets and keeping existing contracts as long as possible,” Nehammer explained then, referring to the governments 31.5% stake in OMV.

Third, the Green’s energy minister wants to embed natural gas – and independence from Russia – in the review of the country’s national security strategy.

Shaken by Russia’s attack on Ukraine, the militarily neutral Austria has struggled to rethink its security architecture and hastily signed up to the German sky shield initiative in response. Due to Austria’s political peculiarities, Gewessler’s plans would require a two-thirds majority in Parliament, which mean the ruling centre-right and Greens coalition would depend on support from the centre-left.

“We therefore call on all those involved to take further steps in the interests of Austrian independence,” the energy ministry wrote in a paper shared with the press.

These debates are taking place as Austria prepares to hold a national election in Autumn 2024 and with European elections scheduled in June.