Austrian legal expert believes OMV can end gas contracts with Gazprom

Austrian energy company OMV can legally cancel a contract with Russia's Gazprom that lasts until 2040, according to an Austrian lawyer who was given access the contracts on Wednesday.

OMV had been one of the last European buyers of Russian gas after Russia invaded Ukraine on a full scale in 2022. But, on Nov. 16, Gazprom stopped supplies to OMV due to a contract dispute.

In a radio interview with ORF, Andreas Kletecka, a law professor, said that if a supplier is "in default, given a grace-period and fails to deliver", the contract could be terminated.

Five sources claim that the Austrian group's seizure and payment of Russian gas to cover an arbitral award was the trigger for the end of more than 50 years gas flow from Gazprom towards OMV.

Kletecka is a member of a review committee appointed by Austria's energy ministry to look at the agreements. She said that the contracts were based on Swedish Law, which allows for a cancellation.

Kletecka stated that it was up to OMV whether they would use this. OMV's spokesperson declined to comment about the company’s legal strategy or ongoing legal proceedings.

Gazprom and OMV extended the contract until 2040 in the summer of 2018. This was 10 years earlier than the original expiry date, which was 2028.

The contract was not made public, but the company said it contained a clause called 'take or pay' that required OMV to make payment regardless of whether the gas was consumed.

Since the beginning of the Ukraine war, the early extension of a contract has become a political sensitive issue.

The Austrian government, which Kletecka belongs to, set up in July a commission that would review the contract, with the consent of OMV, and focus on the legality of an early termination. The report must be submitted by the end January. Reporting by Alexandra Schwarz Goerlich, Writing by Madeline Chambers and Editing by Jan Harvey

(source: Reuters)