Gazprom Confirms Flows to Italy via Austria Have Resumed

Valves near a drilling rig at a gas processing facility, operated by Gazprom company, at Bovanenkovo gas field on the Arctic Yamal peninsula, Russia, on May 21, 2019. Maxim Shemetov/Reuters

Russia’s Gazprom said on Wednesday that it is resuming transportation of Russian gas to Italy via Austria after the state-controlled energy company held up supplies over the weekend amid regulatory issues.

In a statement, the company said that together with the Italian buyers, it had managed to find a solution to gas sales following regulatory changes in Austria in late September.

Those new regulations were the result of sanctions on Russia in response to its invasion of Ukraine.

“The Austrian operator has signaled its readiness to confirm the transport nominations of Gazprom Export, making it possible to resume the supplies of Russian gas across Austria,” the company said.

Gazprom previously said in a statement on Telegram on Saturday that gas transit through Austria had been halted after its grid operator refused to confirm nominated transport volumes, or the amount of gas that Gazprom planned to ship.

Austria’s Energy Ministry said Gazprom had not signed the contracts needed, while the country’s regulator E-Control said the new regulations had been known to all market participants “for months.”

The majority of Russia’s gas to Italy passes via Ukraine through the Trans Austria Gas Pipeline, to Tarvisio in northern Italy on the border with Austria.

EU Energy Crisis Looms

Italy previously received around 40 percent of its gas from Russia.

Italian energy company Eni confirmed and welcomed the news of a resolution on Wednesday, stating that “the resumption of supplies was made possible by the resolution, by Eni and the parties involved, of the constraints deriving from the new legislation introduced by the Austrian regulatory authorities.”

Wednesday’s solution regarding gas sales from Russia to Austria will no doubt bring welcome relief to energy prices in Europe, which have surged this year on Russian sanctions and limited supplies ahead of what is expected to be a colder than normal winter.

The situation has been made even more volatile by repeated halts to flows of gas through the Nord Stream 1 pipeline to Germany, and most recently, ruptures to both the Nord Stream 1 and 2 gas pipelines under the Baltic Sea.

Kremlin spokesman Dmitry Peskov said that Russia is “extremely concerned” about the leaks, while EU officials have suggested it was an act of sabotage.

Italy has in recent months stepped up its efforts to secure additional gas supplies from alternative suppliers in Algeria, boosting total deliveries by nearly 20 percent.

Benchmark gas futures fell as much as 4.7 percent on Wednesday following news of the resuming of gas transportation, while European gas prices fell as low as 154.28 euros ($153.33) a megawatt-hour and were down 3 percent at 158.35 euros as of 10:33 a.m. Vienna time, Bloomberg reported.