Russia halts gas supplies to Austria

By Liz Hampton, U.S. Energy Editor 

Hello Power Up readers! There is no shortage of energy news to unpack today, from new restrictions on Russian natural gas flows into Europe to U.S. President-elect Donald Trump's pick to head the Department of Energy. Meanwhile, oil prices are up to start the week as fighting between Russia and Ukraine intensified over the weekend. Brent oil futures are trading around $71.66 a barrel, a gain of 62 cents. West Texas Intermediate (WTI) crude futures rose 50 cents to $67.52 a barrel. Henry Hub natural gas futures are up about 3%, trading at $2.904 per million British thermal units. 

A fisherman walks on the ice-covered Irtysh River near an oil refinery and a thermal power station in the Siberian city of Omsk, Russia, March 12, 2023. REUTERS/Alexey Malgavko/File Photo

Today we're going to take a look at Russia's energy sector following a string of major headlines on Friday, including a decision by Gazprom to suspend gas deliveries to Austria from this weekend amid a payment dispute.  

The news came from a notice published on the central European gas hub platform. Austria is one of the few European countries that still depends on Russian gas, as the rest of the continent reduced imports following Moscow's invasion of Ukraine in 2022. 

Austria's OMV said it had been preparing for the eventual cut-off of Russian gas and that it can still deliver supply to customers.

On Monday, gas still appeared to be reaching Austria, flows data showed. Shipments from Slovakia to Austria were around 27 million cubic metres per day before Gazprom halted supplies, and were around 22.6 mcm/day on Sunday - down 17%. Slovakia is the transit route mostly used for flowing Russian gas through Ukraine. 

Liquefied natural gas tankers are diverting to Europe from Asia following news that Russia would halt supplies to OMV. At least five cargoes had been diverted over the past few days, Marwa Rashad reports.

Russian President Vladimir Putin told German Chancellor Olaf Scholz on Friday that Russia was ready to look at energy deals, if Berlin was interested. The exchange marked their first phone conversation since December 2022. 

Also in Russia, oil refineries have cut runs or halted processing due to losses amid export curbs, rising crude prices and high borrowing costs, underscoring the troubles facing the country's energy sector. The refining sector has also been the target of Ukrainian drone attacks. 

Russia's Ilsky refinery on Monday said it has applied for government financial help amid high interest rates and facility modernization, adding there was no risk of shutting the facility down. 

Meanwhile, Trump has picked oil industry executive Chris Wright as his energy secretary nominee. Wright is the head of Denver, Colorado-based Liberty Oilfield Services. 

Wright has long touted the need for fossil fuels to help lift people out of poverty, and made a splash in 2019 when he drank fracking fluid. He's pushed back publicly against an anti-fossil fuel campaign by outdoor apparel company The North Face, and is likely to support Trump's push to maximize oil production, which was already at record highs. 

China's oil refinery throughput fell 4.6% in October compared with the prior year, as plant closures offset the ramp up of new facilities and demand from holiday travel. Refiners processed 59.54 million metric tons of crude, roughly 14.02 million barrels per day.

TotalEnergies, BP, Equinor and Shell have committed $500 million to boost energy access in sub-Saharan Africa, South Asia and Southeast Asia, America Hernandez reports. That represents about 0.7% of the $70 billion in net profits those four companies earned in 2023. 

Britain's domestic energy price cap will rise 1% in January as geopolitical tensions and weather disruptions keep wholesale energy prices high, according to analysts at Cornwall Insights. 

Norway's massive Johan Sverdrup oilfield - the largest in Western Europe - has been shut by a power outage, Equinor said on Monday. It was not immediately clear when production would resume. 

On Friday, Hungarian Prime Minister Viktor Orban said the European Union needs to reconsider sanctions against Russia because they are keeping energy prices elevated.  

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