While Europe’s biggest gas field, near the Dutch city of Groningen, has just been shut down by the Dutch government, Romania is aiming to become Europe’s biggest gas producer. A major Romanian gas project in the Black Sea is now however caught up in a diplomatic spat over Austria’s opposition to Romanian entry into Europe’s border-free Schengen area. Meanwhile, also Bulgarian actions are increasing tensions.
OMV, an Austrian multinational integrated oil, gas and petrochemical company, is a part owner of the Neptun Deep gas field off Romania’s coast. This gas field is estimated to be able to pump 10bn cubic metres per year from 2027 on. It is controlled for 50 percent by OMV but also by 50 percent by the Romanian state.
In September, Romanian Prime Minister Marcel Ciolacu stated that his government was unwilling to modify a law governing offshore gas sales – which OMV prefers to see adapted – as long as Austria keeps vetoing Romania’s entry into Schengen:
“We will . . . move forward based on the current form of the offshore law, just as Romania will continue to support its arguments regarding the accession to the Schengen area, including in the European courts, if Austria does not change its position”
Romania threatens Black Sea gas project over Austria’s Schengen veto https://t.co/y26lS1Axa3
— FT Europe (@ftbrussels) October 6, 2023
Since last year, Austria’s intense dependence on Russian gas, and corresponding political implications, have come under the spotlight, revealing a delicate balancing act with far-reaching consequences for the nation’s energy security, also in the European context.
While the EU has reduced its Russian imports from 50% to less than 15% of the total, and countries like the Czech Republic and Bulgaria have even switched their entire supply in a few months, Austria still imports more than 70% of its gas from Russia, nearly as much as before the beginning of the war.
Remember when Martin Selmayr spoke of "blood money"? Well, check this out: Austria is reportedly considering bypassing Ukraine's scheduled end to Russian gas transits to secure future supplies from Gazprom.https://t.co/lKaEGfPjd2
— Jorge Liboreiro (@JorgeLiboreiro) November 3, 2023
The tensions over Schengen enlargement now add further hurdles for Austria’s energy diversification.
Observers have furthermore pointed out how the size of the gas payments flowing from Vienna to Russia for gas surpass the cumulative amount of aid Austria has provided to Ukraine since the start of the conflict. Worries have also been raised time and again about the strong ties between the former CEO of OMV, Rainer Seele and the Kremlin, witnessed by the fact that Seele was awarded the Russian Order of Friendship.
To compensate, there have been pledges by Austrian policy makers to make the country more energy-independent from Russia. For example, energy minister Leonore Gewessler stated in July that “We have a lot more to do to get to the root of the problem”, adding that “real independence” will only exist “when we free ourselves from dependence on Russian gas.” Then this Summer, Austrian imports of Russian gas have hit pre-war levels, so no major shifts have been evident, while the Austrian government is also hostile to nuclear power.
Outrageous. If countries like #Austria want to turn their back on nuclear, that's their choice. But then they need to own their failure to lead on decarbonisation, not demand special treatment. https://t.co/rOwfPOyRMI
— Michael Liebreich (@MLiebreich) November 3, 2023
Part of the reason for Austria’s opposition to Romanian Schengen entry is the success of the right-wing populist “Freedom Party” in opinion polls.
In September, in an unusual public intervention — the first one in Austria’s postwar history — Peter Gridling, who has led the Austrian intelligence service BVT between 2008 and 2020, warned that the Freedom party continued to have ties to the Kremlin, stating:
“We need to be very vigilant about who is put in charge of which ministries. Wherever we have the Freedom party in government, we need to look at their intentions and their activity.”
The tensions over the Neptune Deep project only raises the stakes of this for Austrian energy provision.
A similar diplomatic dispute is meanwhile playing out between Bulgaria and its Balkan neighbours, after the country decided to introduce new, huge transit fees of €10.2 per MW/h for natural gas passing through the Bulgarian extension of the Turkish Stream gas pipeline to Western Europe – the so-called “Balkan Stream”. Not only Serbia, Hungary and North Macedonia receive all quantities of Russian gas through this “Balkan Stream” pipeline, but also Austria.
Bulgaria shocks Hungary, Serbia with huge transit fees on Russian gas https://t.co/gScj2wy7rO
— Euractiv (@Euractiv) October 16, 2023
The Bulgarian measure now threatens to directly hit Austrian end consumers. Commenting on the issue, Bulgarian newspaper 24Chasa explains how Bulgaria’s move, which has so far mostly angered Serbia and Hungary, is actually also aimed at Austria and its opposition to Schengen accession for Bulgaria. The newspaper writes:
“One country is silent for now, but the Bulgarian tax is probably aimed precisely at it – it’s Austria, which still receives half of its gas supplies from Russia. At the moment, these are passing through Ukraine, but we know that Gazprom’s contract with Ukraine expires in 2024 and that Kiev has no intention of renewing it. In other words, very soon, Bulgaria will remain the only route through which Russian gas can be imported into Europe, which raises our status.
As a result, Austria will become dependent on importing Russian gas through Bulgaria. Prime Minister Denkov has made it quite clear – if Austria wants energy security, it must accept Bulgaria into Schengen. Romania has also threatened to cut off gas supplies to Austria if it continues to veto Schengen.”
