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UKRAINE

UPDATED: How Austria could be impacted by the war in Ukraine

Leaders around the world, including in Austria, condemned the Russian invasion of Ukraine. We take a look at Austria’s stance on the crisis and how the country could be impacted.

Ukraine
Ukrainian servicemen attend a drill near Lviv. Photo: AFP

On Thursday morning, Europe woke up to the news that Russia has launched a full military attack on Ukraine with bombardments and troops invading the country.

This follows weeks of diplomatic negotiations and the recent introduction of economic sanctions on Russia by the EU, UK, USA and other countries around the world.

So far, Austria has taken a cautious political approach to the situation as European neighbours and other western nations have publicly spoken out against a Russian invasion of Ukraine.

This all changed earlier this week when on Tuesday Chancellor Karl Nehammer said: “We [Austria] are neutral, but not without opinion.”

On Thursday, in a reaction to the military action in Ukraine, Nehammer went further and said: “What we are witnessing is a breach of international law.”

Again, Austria’s status as a neutral country is in the spotlight and Nehammer highlighted how Austria has offered to serve as a platform for diplomatic dialogue in the crisis, especially as the host country of the Organisation for Security and Cooperation in Europe (OSCE), which is headquartered in Vienna.

READ MORE: EXPLAINED: The history behind Austria’s neutrality

What does “neutral” mean?

Austria has a long standing neutral political stance that is rooted in the 1955 Austrian State Treaty and binds Austria to a position of neutrality.

This neutrality also means Austria is not a NATO member, unlike other European countries like Germany and France, so is not bound to support NATO in the event of political and military action, although Austria does support NATO on peacekeeping operations.

But there is more to Austria’s approach to the current crisis than just political neutrality, as Austria is heavily dependent on Russian gas to fulfil its energy demands, just like many other countries across Europe.

What has Austria said about the crisis?

On Thursday, Nehammer reiterated Austria’s solidarity with Ukraine and support of the EU sanctions against Russia. He said the sanctions will be discussed further on Thursday evening at a special EU summit.

As a result, he warned there could be “consequences” for Austria, but confirmed Austria’s energy supply for the remaining winter months is secure.

Austria’s Foreign Minister Alexander Schallenberg (ÖVP) has previously publicly stated that he is against EU sanctions on gas from Russia because Europe is dependent on Russian gas.

READ ALSO: How does Austria’s presidential election work?

However, on Thursday morning Schallenberg took to Twitter to condemn Russia’s attack on Ukraine.

He added in a separate Tweet: “The #EU and its partners will respond swiftly and decisively to this blatant breach of international law.”

Additionally, Schallenberg has previously said the Russian-owned – and controversial – Nord Stream 2 pipeline should be excluded from any possible sanctions on the grounds that it is not yet operational.

On Tuesday, when asked whether Austria and Germany are opposed to sanctions on Nord Stream 2, Chancellor Nehammer dismissed it as a rumour and confirmed Austrian support for the EU. Germany has since announced certification for the pipeline has been put on hold.

READ MORE: How reliant is Austria on Russia for energy?

Nord Stream 2 is a new pipeline by Gazprom that will further supply gas to Europe via the Baltic Sea. Ukraine is against the pipeline on the grounds that less gas would be transported through the country, resulting in less money flowing into the Ukrainian economy.

Austria’s previous rejection of sanctions against the Nord Stream 2 pipeline was criticised by the former Ukrainian Ambassador to Austria who described the move as “cold hearted”.

Could Austria’s economy be impacted by the crisis?

Elisabeth Christen, Senior Economist at the Austrian Institute of Economic Research (Wifo) told The Local that 80 percent of Austria’s gas is currently imported from Russia and that most of the EU is heavily dependent on Russian gas.

This means Austria is in a delicate position, which goes deeper than Austria’s commitment to neutrality.

However, Christen said Russia’s economy is also very reliant on capital from exporting gas, so while Austria – and Europe – relies on Russia to meet energy demands, it is a “mutual dependence”.

Apart from gas supplies though, Austria’s economy is not closely tied to Russia with just 1.5 percent of imports and 1.5 percent of exports flowing between the two countries.

READ MORE: Cost of living in Austria: 2021 inflation at highest level in a decade

Christen told The Local: “There are just €2.2 billion exchanged in trade flows between Austria and Russia, so Russia is not a huge trading partner. 

“Russia used to be more important for Austria before 2014 [the annexation of Crimea], but due to the subsequent economic sanctions, the importance of Russia to the Austrian economy has diminished.

“Russia is still important for tourism as Russian tourists spend more than the average tourist, especially in the ski resorts, but Russian tourism levels are currently lower in Austria than in recent years.”

Across the EU, 47 percent of all gas supplies come from Russia. Norway is the second largest gas importing country to Europe, supplying 21 percent of all gas to EU countries.

Could Austria’s gas supply be affected? 

One big question is whether Austria could run out of gas due to supplies being interrupted by military conflict in Ukraine or harsh sanctions imposed on Russia. 

Currently, gas is supplied from Russia to European countries (including Austria) on a long-term contractual basis. Russia is still fulfilling existing contracts within Europe but has ruled out providing any additional supplies, even as energy prices continue to rise and supplies are constrained.

As a result, Christen ruled out the possibility of Austria running out of gas in the short term and said Austria also has a reserve storage of gas, although it is currently at just 25 percent.

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Christen said: “Compared to other years the storage level is lower because the winter has been cold and there is a huge supply issue at the moment due to the rebound of economic activity [following Covid-19 lockdowns], so Austria’s gas storage is not as good as in previous years.”

In the worst case scenario of gas reserves running low, Christen said existing supplies could be limited within Austria and Liquified Natural Gas (LNG) could be sourced from other countries.

The Kurier reports that the supply of energy in Austria is protected by the Energy Control Act which means, in the event of gas shortages, large commercial customers would be asked to reduce their consumption before households would be impacted. 

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ENERGY

ENERGY: How Austria has drastically reduced imports of Russian gas

Austria is no longer heavily dependent on Russian gas. How has this happened and how will it impact Austria’s gas supplies this winter? Here’s what you need to know.

ENERGY: How Austria has drastically reduced imports of Russian gas

Austria’s gas supply looks very different today compared to earlier this year when Russia invaded Ukraine.

Back in February, Austria sourced around 80 percent of all gas from Russia, with 10 percent coming from Norway, five percent from Germany and the remainder from other sources.

This put Austria in a delicate position as the EU began placing sanctions on Russia and experts voiced fears about Russia turning off the gas supply to Europe. This also took place at a time when Austria’s gas reserve tanks were only around 12 percent full.

READ MORE: Can British people in Austria claim the winter fuel payment from the UK?

However, as the first snowfall now covers more parts of the country, E-Control (the government regulator for electricity and gas markets) has confirmed that Austria reduced imports of Russian gas to 21 percent in September. 

The country’s gas tanks are also well stocked at just over 95 percent following a mild autumn. Although around a third of the gas belongs to neighbouring countries.

So how did this happen and where is Austria getting gas from now? The Local took a closer look to find out.

How did Austria reduce imports of Russian gas?

The biggest change to how Austria sources natural gas was by booking line capacity on pipelines that flow from Germany and Italy, reported Die Presse.

The gas now flowing to Austria is mostly coming from Norway or is liquefied natural gas (LNG).

At a recent press conference in Vienna, Johannes Schmidt from the Institute for Sustainable Economic Development, said: “Actually, it’s incredible what Europe and Austria in particular have achieved here over the summer.”

Austria’s partially state-owned OMV has also booked 40 terawatt hours (TWh) of gas transport capacity from Norway and non-Russian LNG suppliers for the period from October 2022 to September 2023. This gas is delivered to a tank in Oberkappel, Upper Austria, via Germany.

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Additionally, Austria has confirmed LNG shipments from Dubai, which further helps to boost the country’s energy security.

Picture taken on May 3, 2022 shows a general view of the largest Austrian refinery OMV at Schwechat near Vienna, Austria. (Photo by JOE KLAMAR / AFP)

A statement released from the Federal Chancellery said: “The United Arab Emirates are a strategic partner of Austria and will make a contribution to the security of supply with LNG deliveries next winter, as agreed between OMV and the Emirati ADNOC.

“Furthermore, the Austrian and Emirati governments will intensify cooperation on energy issues and climate protection.”

However, purchasing gas from new sources hasn’t been the only tactic to reduce Austria’s dependency on Russian gas.

In July, Austria and Germany finalised a solidarity agreement to secure gas flows between the two countries in the event of an energy crisis. And in September, the Austrian Federal Government launched the “Mission 11” campaign to encourage consumers to save energy. 

Finally, there are long-term plans to expand renewable energy infrastructure across Austria to reduce the overall dependency on natural gas. But the results of this part of the plan will not be seen until the coming years.

READ MORE: How expensive are gas and electricity in Austria right now?

Is Austria’s gas supply now secure?

Experts are positive about Austria’s ability to get through the coming winter without running out of gas.

However, they are now concerned about winter 2023/2024 with plans already being hashed out about how to secure gas supplies next spring and summer to fill up the tanks again.

The procurement of gas has also come at a big cost to Austria with the government spending €3.95 billion alone on securing the recently implemented strategic gas reserve of 20 percent of overall consumption, reports ORF.

And with energy prices set to skyrocket again for the next storage season, it’s likely the Austrian government will have to dig deep into the financial reserves once more in the spring.

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