Austrian regulator under pressure to keep current gas transport tariff methodology

• Gas companies oppose new transmission tariff calculation methodology from 2025
• Changes would lead to soaring costs and block supply diversifcation
• New consultation on the cards, depending on regulator board’s decision

LONDON (ICIS)–Gas companies have opposed proposals by the Austrian regulator to change the transmission tariff methodology from 2025 amid concerns the move would lead to ‘massive’ cost increases and block supply diversification efforts, according to responses published by E-Control on 23 February.

If approved, the new tariffs at critical interconnection points with Germany and Italy could increase by 206% and 331% respectively.

The proposals, which would see tariffs calculated according to booked capacity and distance, has sparked concerns from companies active in Austria.

In one of the letters sent to E-Control, Austrian, German and Slovak producers and storage operators OMV, RAG, Uniper, Nafta and Pozagas said: “The massive and unforeseeable increase in tariffs will lead to a massive decline in capacity bookings which will inevitably lead to even higher tariffs. […] This is detrimental to the political aim to diversify gas supply sources.”

Anglo-Dutch Shell echoed the views: “[The proposed methodology change] can greatly affect the economics of using the Austrian gas.

“[It] risks to jeopardise the ambition to diversify away from Russian import, since it negatively impacts exactly the points Austria should leverage to diversify import routes.”

The consultation ended on 21 February and the regulator’s board is now expected to review the responses in the next two weeks.

The source close to E-Control said the board could temporarily extend the existing methodology.

A new consultation may be organised following the board’s decision but the survey would have to take place before annual capacity auctions in July.

UKRAINE GAS TRANSIT

E-Control launched the consultation at the end of December, explaining the tariff review was necessary because the current regulatory period was coming to an end.

Furthermore, the region is braced for major changes as the existing gas transit contract held by Ukraine with Russian producer Gazprom expires at the end of this year.

Ukrainian officials said incumbent Naftogaz, which currently organises the transit, was unlikely to renew it, as the country has been fighting Russia’s all-out invasion since February 2022.

Austria has been dependent on the Russian gas transiting Ukraine not only because it covers most of its internal demand but also because it helps bring in transit revenue.

TRANSIT CONTRACTS

Since Russia reduced its gas supplies to Europe, including to major buyers Germany and Italy, Austrian transit flows to these countries have nearly stopped.

Nevertheless, many of the transmission contracts remain in place, even if they are not serviced.

For example, there are around 20 companies currently holding long-term capacity on the Austrian TAG pipeline transiting gas to Italy which are due to expire in 2027 or 2028.

There are reportedly another 10 on the line heading west and operated by Gas Connect Austria, which are due to expire in the early 2030s.

These contracts are ship-or-pay, which means that the company booking capacity will have to pay for it regardless whether it is used or not.

This could give network operators some flexibility in extending the current methodology.

Nevertheless, the source close to E-Control said it would be reasonable to review the situation in 2025 once there is greater clarity regarding the Ukrainian gas transit.