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Russia’s Gazprom PJSC has decided to play its favorite game: pipeline politics. Starting November 16, Austria is off the guest list for Russian natural gas, following a €230 million ($242 million) arbitration spat between Gazprom and Austria’s OMV AG. OMV, refusing to let that cash slip away, decided to withhold payments to Gazprom.
As one might have guessed, that ended poorly.
Unsurprisingly, European gas prices didn’t take the news well. Futures climbed 2.7% to €47.49 per megawatt-hour, as traders braced for yet another disruption in a continent that’s seen enough energy drama already. Europe’s gas supply has been teetering on a knife’s edge since the 2022 energy crisis, with any whiff of trouble sending markets into a frenzy.
To OMV’s credit, they’re keeping calm and carrying on. The company has proffered assurances that it will still be able to meet supply obligations through “alternative sources”—clear evidence that Europe’s increasingly interconnected gas network means that Austria is no longer entirely at Gazprom’s mercy.
Still, the timing stings, with winter breathing down Europe’s neck. Even the mere hint of a supply squeeze has governments nervous about heating bills and energy security.
Gazprom’s move is a reminder of Russia’s waning-but-still-potent energy influence in Europe. Sure, the continent has spent the last two years diversifying its energy sources—snapping up LNG cargos and tapping alternative pipelines—but Gazprom’s ability to cause a stir is alive and well.
As Europe’s heating season kicks off, this spat between Gazprom and OMV highlights just how fragile the energy landscape remains. If nothing else, it’s a timely reminder for Europe to keep working on those contingency plans—and maybe stockpile a few extra blankets. Winter is here, and with it, more geopolitical games.
The news comes as Gazprom raised in October its 2024 investment plans by 4% to $16.9 billion, and as Europe’s benchmark natural gas prices surged on Thursday to the highest levels since last November.
