Austrian Expert: OMV Could Legally End Gas Contracts with Gazprom
(Reuters) — Austrian energy firm OMV could legally terminate a gas supply deal that runs until 2040 with Russia's Gazprom, an Austrian legal expert who has been given access to the contracts said on Wednesday.
OMV was one of the few remaining buyers of Russian gas in Europe after Russia's full-scale invasion of Ukraine in 2022, but on Nov. 16 Gazprom halted supplies to OMV over a contractual dispute.
If a supplier "is in default, has been given a grace period and still fails to deliver, the contract can be terminated," law professor Andreas Kletecka told ORF radio, in a discussion of the Gazprom-OMV situation.
Five sources have told Reuters that the trigger that ended more than 50 years of gas flows from Gazprom to OMV was the Austrian group's seizure of Russian gas as payment to cover the value of an arbitration award.
Kletecka, who is on a review commission appointed by the Austrian energy ministry to examine the agreements, said the contracts are based on Swedish law which provides a cancellation option.
It was OMV's decision whether to make use of that, Kletecka said. A spokesperson for OMV declined to comment on the company's legal strategy and ongoing legal proceedings.
In the summer of 2018, 10 years before the supply contract's original expiry date of 2028, OMV and Gazprom extended the deal until 2040.
Details of the contract were not published, but according to the company it contains a ‘take-or-pay’ clause that obliges OMV to make payments regardless of whether they take the gas or not.
The early extension of the contract has been a politically sensitive issue since the start of the war in Ukraine.
In July the Austrian government set up a commission, of which Kletecka is a member, to review the contract with OMV's consent, focusing on the question of whether an early exit is legally possible. The report is due by the end of January.
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