Why Austria Is Struggling to Break Away From Russian Gas

Within the 17 months since Moscow ordered troopers into Ukrainian territory, nations throughout Europe have moved with stunning pace to scale back their longstanding dependence on low-cost Russian fuel.

Germany, which acquired 55 % of its provide from Russia earlier than the warfare, now imports zero. Poland, Bulgaria and the Czech Republic have halted or are near halting flows. And Italy has been steadily trimming imports, and pledges to be freed from Russian pure fuel by the top of this 12 months.

Against this, Austria, which obtained practically 80 % of its fuel from Russia earlier than the invasion, nonetheless acquired greater than half its total from Russia in Might. And in March, when demand was increased, the determine reached 74 %. So long as Russia is promoting fuel, Austria will purchase it, the chief govt of the Austrian vitality firm OMV Group stated this month.

The federal government’s difficulties in weaning itself off Russian fuel, which it has pledged to do, have drawn complaints from critics who say Austria’s fuel funds are serving to to finance Moscow’s warfare machine.

“I don’t assume they’re doing sufficient,” stated Anne-Sophie Corbeau, a analysis scholar on the Middle on International Power Coverage at Columbia College’s College of Worldwide and Public Affairs. “The federal government is among the many friendliest towards Russia.”

Austria, the primary Western European nation to signal a fuel contract with the Soviet Union in 1968, has for many years been closely reliant on fuel piped in from Russia.

A significant motive the European Union has not initiated any formal sanctions in opposition to Russian fuel imports, like those who apply to Russian oil and coal, is that Austria and different enormous consumers have argued they want it. And a few European nations stay consumers of Russian liquefied pure fuel, which arrives by ship, though the general quantity bought is a small fraction of the volumes that used to reach to the continent by pipeline.

An instantaneous cutoff would result in financial damage and mass unemployment, Chancellor Karl Nehammer of Austria warned final 12 months.

Leonore Gewessler, the vitality minister and a member of the progressive Inexperienced Celebration in Austria’s coalition authorities, stated the federal government remained dedicated to ending imports of Russian pure fuel by 2027.

However “it’s not straightforward to undo years and many years of flawed insurance policies in only a few months or in a 12 months,” Ms. Gewessler added. And as a landlocked nation, Austria, not like Germany, Italy or Greece, can not merely construct terminals for ships to hold in liquefied pure fuel.

The query of whether or not the federal government in Vienna is working quick sufficient is as a lot a political downside as it’s a logistical and financial one.

Austria stays formally impartial — a precept written into its Structure since 1955, when the top to its postwar occupation was finally negotiated with the Soviet Union. Because of this, it isn’t a member of the army alliance the North Atlantic Treaty Group.

The nation has strongly condemned the invasion of Ukraine, taken in refugees and permitted weapons shipments to Ukraine to cross its borders. However whereas the Russian vitality large Gazprom abruptly stopped supplying many European nations, Austria has continued to obtain its full allotment and secured approval from Russia to pay with euros as an alternative of rubles.

Prime Minister Viktor Orban of Hungary is clearly Russia’s closest ally within the European Union. However Vienna’s reluctance to modify extra rapidly to different vitality sources has prompted issues that Austria stays too carefully tied to Russian pursuits.

“The political elite in Austria is, for my part, among the many most sympathetic to Russia,” stated Grzegorz Kuczynski, director of the Eurasia program on the Warsaw Institute. “Due to this fact, I believe Vienna will attempt to affect a much less confrontational E.U. coverage towards Moscow.”

Mr. Kuczynski referred to figures like Karin Kneissl, a former overseas minister who, at her wedding ceremony in 2018, triggered a sensation by dancing with Vladimir V. Putin, the Russian president, and accepted his present of sapphire earrings price 50,000 euros. In 2021, she joined the board of Rosneft, Russia’s state-owned oil firm, although she left beneath stress after sanctions had been proposed in Might 2022.

Different Austrian political figures additionally had ties to Russia earlier than the invasion final 12 months. A number of former top national leaders served on the boards of Russian companies and organizations. Wolfgang Schüssel, a former chancellor, was on the board of Lukoil, the most important non-public company in Russia. He resigned a month after Russia invaded Ukraine in February 2022.

The far-right Freedom Celebration, which has had close links to Mr. Putin’s United Russia social gathering and has been gaining floor in public opinion polls, walked out of Parliament in March throughout a speech from Ukraine’s president, Volodymyr Zelensky.

“There are political gamers which aren’t absolutely on board” in the case of denouncing Russian coverage or hastening the transition to renewable vitality, Ms. Gewessler, the vitality minister, stated.

The present take care of Gazprom, whose signing in 2018 was attended by Sebastian Kurz, the Austrian chancellor on the time, and Mr. Putin, requires Austria to purchase six billion cubic meters of fuel per 12 months, and stays in impact for an unusually lengthy interval — till 2040. The corporate was additionally a financial backer of the now-defunct Nord Stream 2 pipeline between Russia and Germany,

For the reason that invasion started, OMV, the Austrian vitality firm, has spent €7 billion, about $7.7 billion, on Russian fuel.

Alfred Stern, the chief govt of OMV, stated in a current interview with The Financial Times that “we’ll proceed to take these portions from Gazprom” so long as they’re out there.

OMV didn’t reply to repeated requests for remark. However on Friday the company announced a 10-year settlement to purchase fuel from the vitality large BP starting in 2026, to “drive ahead our ongoing diversification of provide supply,” Mr. Stern stated in an announcement.

The Austrian authorities owns roughly 30 % of OMV. The United Arab Emirates owns 25 %.

Georg Zachmann, a local weather and vitality professional on the Bruegel assume tank in Brussels, stated strategic selections in regards to the nation’s vitality provide needs to be made in authorities places of work, not boardrooms.

“OMV is a non-public firm, and so they’re making an attempt to make as a lot cash as attainable for his or her shareholders,” Mr. Zachmann stated. “It might be within the curiosity of the Austrian authorities and European policymakers to constrain their capability to do enterprise.”

He acknowledged that lowering provides from Gazprom would inevitably imply increased costs.

Official selections could also be overtaken by occasions in any case. The present five-year contract, which has allowed Gazprom to proceed delivery pure fuel from Russia to Europe in pipelines that run by Ukraine regardless of the warfare, expires on the finish of subsequent 12 months, and the federal government in Kyiv has indicated it won’t renew that deal.

The Ukrainian pipelines carry about 5 % of the European Union’s fuel imports, in line with Ms. Corbeau, from the Middle on International Power Coverage. Ending their use would depart TurkStream, the direct hyperlink between Russia and Turkey, as the one entry level for piped fuel into Europe.

“The clock is ticking,” Ms. Corbeau stated in regards to the Ukrainian transit association. On the subject of fuel provides from Russia, Austria “has been dwelling on borrowed time.”