Austrian energy company OMV said on Wednesday it has terminated its long-term gas supply contract with Russia’s Gazprom with immediate effect due to “several fundamental contract breaches”.
The agreement was originally scheduled to expire in 2040.
Gazprom had stopped gas supplies to OMV in mid-November, following a €230 million ($245 million) legal dispute between the two previous contract partners, which a commercial court ruled in OMV’s favor.
Controversial clause in the gas supply contract
The contract between OMV and Gazprom, which was concluded in 2006, was initially praised by politicians, but subsequently came under fire for its long-term nature and conditions.
The contract requires that the gas be paid for even if it is not purchased. This scenario was contrary to the European Union’s intention to rapidly phase out Russian gas, following the Russian invasion of Ukraine in February 2022.
OMV, which supplies exclusively to industrial customers in Austria, ruled out the possibility of a supply bottleneck. “Today we can fall back on a diversified portfolio of alternative gas sources and thus guarantee security of supply for our customers,” said OMV CEO Alfred Stern.
This includes gas from our own production in Norway and Austria, but also from external gas producers and liquid gas. In addition, the company’s gas storage facilities are currently approximately 85% full.
