Austria proposes to sign long-term gas contract with Azerbaijan

The signing of new long-term contracts for the supply of natural gas with Azerbaijan, Algeria or Norway will lead to a decrease in world gas prices, head of the Austrian energy regulator E-Control Wolfgang Urbantschitsch said, Report informs citing the Austrian media.

“How long will Austria be able to hold out, where only 12% of natural gas is left in storage facilities, if Russia suddenly cuts the lines? The filling level roughly corresponds to the time of the year,” he noted, stressing that in case of problems with Russian gas supplies, there are other options.

As the head of E-Control explained, the current goal should be to fill the gas storage tanks so that there is enough fuel for next winter.

“In Austria, gas is used for heating one million households, as well as for electricity. The main goal, of course, is to keep the power supply running, otherwise there may be power outages.”

He noted Austria’s inability [80% of gas consumed in Austria comes from Russian fuel] to reduce its dependence on fossil fuels and Russian gas: “Now this should be a goal both at the European and national level.”

It is noted that energy prices have risen sharply since the conflict broke out in Ukraine, and there are fears that the phase-out of gas in Russia will lead to even greater price increases.

He added that new long-term contracts can now be signed with other gas suppliers, such as Algeria, Azerbaijan or Norway: “Then I am sure that the price situation will normalize and gas prices will fall.”

He considers the decision of the National Council to create the so-called strategic reserves of gas to be correct: “This is a reserve equal to a monthly consumption. In case of a crisis, it can be used.”

Germany has set the goal of becoming completely independent of Russian gas within two years. The head of E-Control considers this unrealistic in the case of Austria. However, he notes that renewables already provide 80% of electricity: "100% should be achieved by 2030."

On March 25, the countries of the European Union agreed to jointly buy and store gas, hydrogen and liquefied natural gas in order to solve the problem of reducing energy dependence on Russia and protect Europeans from soaring energy prices. However, they did not set a ceiling on energy prices.

Ukraine, Georgia and Moldova, as well as the countries of the Western Balkans, can join collective gas purchases.

The storage facilities can be divided so that all EU countries are ready for next winter. The leaders also approved a proposal by the European Commission, the bloc's executive arm, to fill 80% of its underground storage facilities by November and 90% by 2023, which will require bulk purchases in the coming months. According to the commission, this will be a big jump from the current storage rate, which is currently around 25%.

The capacity of the Trans Adriatic Pipeline (TAP), the European part of the Southern Gas Corridor, through which gas from Azerbaijan is supplied to the South of Europe, is 10 billion cubic meters of gas per year.

The Trans Adriatic Pipeline AG (TAP) consortium is considering three scenarios for expanding the capacity of TAP: limited - up to 14.4 billion cubic meters, partial - up to 17.1 billion cubic meters and full - up to 20 billion cubic meters per year.

Initially, the TAP project included the possibility of doubling the throughput capacity, and at the moment the TAP consortium is evaluating the demand for additional gas pipeline capacities. Market testing is a regulated process through which shippers can access new long-term TAP capacity.

The construction of TAP was completed in October 2020. The total length of TAP is 878 km, of which 550 km passes through the northern part of Greece, 215 km through the territory of Albania, 105 km - along the bottom of the Adriatic Sea and 8 km - through the territory of Italy.

Azerbaijani gas supplies via TAP to consumers in Italy, Greece and Bulgaria began on December 31, 2020.

The total supply of Azerbaijani gas via TAP to Europe reached 10 billion cubic meters. Currently, over 28 million cubic meters of gas are supplied to Europe daily via TAP.

Azerbaijani Energy Minister Parviz Shahbazov earlier said that in 2022 gas exports from Azerbaijan to Turkey will amount to 8.2 billion cubic meters, to Europe - 9.1 billion cubic meters.

In 2021, Azerbaijan exported 19.2 billion cubic meters of gas, including 8.2 billion cubic meters to Europe.