FSUOGM: Russian gas transit via Ukraine stable despite cut-off in supply to OMV

Russian natural gas transits continued to flow to Europe through Ukraine as of November 19, despite Gazprom cutting off supply to Austria’s OMV at the weekend, indicating that the latter may still be receiving Russian supplies indirectly. 

Gazprom said it would deliver 42.4mn cubic metres of gas to Europe through Ukraine’s pipelines on November 19, according to Reuters, which was the same amount on November 18 and November 15. Gazprom halted deliveries to OMV, one of its largest remaining customers in Europe, on the morning of November 16, after the Austrian buyer said it would claim damages from Gazprom’s past contract violations from outstanding invoices to the Russian company.

Nominations for Russian gas supplies to Austria and Slovakia actually increased by 6% on November 19 versus the level on the previous day, Reuters said, although they remained 12% below the volume prior to Gazprom cutting off OMV. Nominations for gas flow to Slovakia via Ukraine and from Slovakia to the Czech Republic were about the same as in previous days this month, according to the news agency.

As Reuters noted on November 18, OMV had been getting around 17 mcm per day of gas from Gazprom before supplies were terminated, with those volumes now going to other buyers or middlemen in Europe.

This helps explain why European gas prices have now risen higher in reaction to Gazprom ending ties with one of its biggest remaining customers in Europe. Put in contract, OMV received about 166 GWh per day of Russian gas in the third quarter, according to company data, which is equivalent to roughly 20 mcm daily. That is about a quarter of total remaining Russian pipeline gas flow to Europe, and 3% of total European gas imports.

The front-month TTF contract rose to €46.9 per MWh ($528 per 1,000 cubic metres) on November 18, up from €40.3 per MWh at the start of last week. In addition to Gazprom cutting off supply to OMV, prices have also been buoyed by low wind power output in recent weeks which has driven up demand for gas as a baseload source of electricity supply.

With Gazprom no longer serving OMV, the Russian company’s largest remaining customers in Europe include Hungary’s MOL and Slovakia’s SPP. In line with their support for continued economic ties with Russia, both Hungary and Slovakia have insisted they have no plan to stop importing Russian gas. But at least in Slovakia’s case, it may lose its supply anyway at the end of this year if Moscow and Kyiv’s gas transit contract expires without renewal, as is widely expected. Hungary receives most of its Russian gas via the TurkStream pipeline.

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