Russian Gas No Longer Flows to Austria, a Long-Term Challenge Ahead
As of January 1, 2024, no Russian gas has been flowing to Austria, a development that initially seemed like a shock, but could ultimately prove to be a long-term challenge.
Austria was heavily reliant on Russian gas, with around 86% of its gas needs met by Russian imports as of the end of 2023. This close dependence was not only due to geopolitical realities, but also a matter of economic convenience. Austria had built up its gas ties with Russia over decades, establishing itself as a key transit country for Russian gas. The abrupt end of these supplies now requires a rapid reorientation, which is not an easy task to accomplish.
The Austrian government had prepared for this eventuality, filling gas storage facilities in recent months and diversifying energy sources. OMV, a state-owned energy company, has, for instance, acquired gas fields in Norway and secured alternative supplies, such as liquefied natural gas imports.
While the gas price has not skyrocketed since the cutoff, the European energy market remains under pressure, with prices still around 40% higher than in February 2022. This has led to increased costs for households and industry, posing a significant burden for Austria’s energy-intensive industries.
In addition to the price increase, the long-term security of Austria’s energy supply is now a pressing concern. To fill the gap left by Russian gas, Austria must invest more in diversifying its energy sources, including the development of infrastructure for liquefied natural gas and the increased use of renewable energy.
This shift will take time, and until then, Austria will continue to rely on imports, albeit not on Russian gas. The stop of Russian gas supplies also marks a turning point in Austria’s foreign and security policy, as the country has traditionally enjoyed a privileged relationship with Russia, which has also been reflected in its energy policy. However, the geopolitical developments of the past years require a fundamental re-evaluation of this approach.
Austria will not freeze or collapse economically in the short term, but the challenges are significant. Higher energy prices and a greater dependence on other international actors are the consequences. The gas supply cutoff from Russia presents a challenge, but also an opportunity to diversify energy policy in the long term. It would be premature to isolate Russia in a hasty reaction, as the country has proven to be a reliable partner over the years, and a sudden departure could not only exacerbate geopolitical tensions but also burden economic relations.