Read news from:
Austria
SHARE
COPY LINK

ENERGY

Austrians warned as country remains dependent on Russia for gas supplies

Despite almost two years of Russia's war against Ukraine, Austria continues to receive over half of its natural gas supplies from the aggressor, according to new data.

Published: 20 November 2023 11:06 CET
Austrians warned as country remains dependent on Russia for gas supplies
A worker operates equipment at the Baumgarten an der March in Lower Austria, that receives natural gas from Russia. Photo: JOE KLAMAR / AFP

Sixty percent of natural gas used in Austria is sourced Russia, according to data from the nation’s energy regulator, E-Control. That figure rose to around eighty percent in September, echoing pre-war levels, 

The continued reliance on Russian gas is due to an existing supply contract between the Austrian government and the state-owned Russian energy company, Gazprom. It is not known whether an exit from this contract was attempted since the outbreak of the war. 

In a DPA interview with Walter Boltz, the head of E-Control. Indicated that this reliance on Russian natural gas leaves the country open to the risk of supply issues. should the conflict affect the pipelines bringing gas from Ukraine.

“That then results in high prices”, he said. 

He also warned that regional energy providers could find themselves in for a shock.

“I have the impression that the companies are burying their heads in the sand and hoping that things won’t get that bad,” he said.

Despite Boltz’s warnings, the head of E-Control’s gas department, Carola Milgramm, stated that she believes that Austria’s gas supply would remain secure throughout the coming winter, and in the case of emergency, enough gas could be sourced from existing pipeline connections to Germany and Italy.

Together with the former head of state-owned energy company OMV, Gerhard Roiss, Boltz criticised Austria’s lack of action in expanding those pipeline connections to Germany. Following international criticism, Austria’s neighbour divested from Russian natural gas in mid-2023, and now sources it mostly from Norway.

Austria has long been seen as having close uncomfortably close links with Russia. Several politicians have been condemned for their close links to Gazprom and government figures in Moscow, with former Foreign Minister Karin Kneissl even pictured dancing with Russian President Putin at her 2018 wedding.

Furthermore, Austrian Chancellor Karl Nehammer is the only western leader to have visited the Russian capital since the war began, and members of several parties walked out when Ukrainian President Volodymyr Zelenskyy addressed federal parliament earlier this year. 

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

ENERGY

EXPLAINED: Why are gas prices still so high in Austria?

Austrian households are paying more for gas than elsewhere in Europe. So why are prices so high?

Published: 6 March 2024 10:39 CET
EXPLAINED: Why are gas prices still so high in Austria?

Gas prices in Austria reached their highest peak in early 2023 and have since remained at around the same level.

The significant increase in gas prices in the country sets it apart as a special case compared to other European countries. The reasons behind this situation lie in a combination of different factors, including the dominance of a few suppliers, increased margins of energy suppliers, and customers unwilling to change suppliers or because they are locked into long-term contracts.

Here we go into detail about the different factors.

Dominant suppliers

The energy market in Austria is dominated by a few state-owned or semi-state-owned suppliers, such as Wien Energie, OMV, and EVN. This lack of competition allows the dominant suppliers to control pricing, potentially leading to higher prices for customers.

Increased margins of suppliers

It has been possible for Austrian energy suppliers to increase their profit margins in response to the rise in gas prices. They have adjusted their pricing indexes to correspond to the higher cost of gas, and therefore maintained or sometimes even increased their profit margins.

READ MORE: Where in Austria will electricity and gas prices rise and fall in 2024?

Delayed price adjustment

The fluctuations of gas prices in Austria are passed on to customers but there is a longer delay compared to other European countries.

This delay, in combination with long contract lock-ins and backward-looking pricing, creates a situation where customers may continue to pay a higher price even if the market prices drop. For example, in autumn 2023, Wien Energie made an offer to its gas customers if they committed for one year. Since then, gas prices have decreased, but the customers were still locked into their contracts.

Low customer switching rate

Customers in Austria show low willingness to change energy suppliers. This results in them sometimes staying with their current provider despite higher prices, a situation which reduces competition in the market and allows suppliers to maintain higher prices.

Impact of gas supplier contracts

Even if long-term gas supply contracts with Russia may have been intended to secure cheaper gas prices, market changes and disturbances in supply have led to increased costs for energy suppliers and thereby also for customers.

SHOW COMMENTS