By Pavel Polityuk, Vladimir Soldatkin and Nina Chestney

(Reuters) – Russia told Austria it is suspending gas deliveries from Saturday in a development that signals a fast approaching end of Moscow’s last remaining gas flows to Europe.

The suspension means Russia will now only supply significant gas volumes to Hungary and Slovakia, in stark contrast with the decades of dominance that saw it meet 40% of the EU’s gas needs before Moscow’s 2022 invasion of Ukraine.

Austria was the first western European country to buy Russian gas when the USSR signed a gas contract in 1968, just months before the Soviet invasion of Czechoslovakia.

This year, the relationship will end following a contractual dispute between Russia’s Gazprom and Austria’s OMV.

In a notice published on the central European gas hub platform, OMV said Gazprom told it supply would stop on Saturday.

Gazprom declined to comment.

Austria is one of the few European countries still dependent on Russian gas as much of the rest of the continent has reduced imports following the invasion of Ukraine.

OMV said it has been preparing for the eventual cut-off of Russian gas and it can still deliver gas to its customers by importing via Germany, Italy and the Netherlands.

“We still expect this will exacerbate an energy crisis in Austria that has caused its gas demand to drop significantly, and has hit its manufacturing sector,” said analysts at Eurointelligence.

“Austria’s economy is currently stuck in recession. Germany is sneezing, and Austria is catching the cold,” they added.

Germany was also heavily reliant on Russian gas before the war, but shipments ceased when the Nord Stream pipelines under the Baltic Sea were blown up in 2022.

The notification of the end of supplies to Austria came as the Russian president, Vladimir Putin and Chancellor Olaf Scholz of Germany – Russia’s biggest gas customer until Moscow’s forces invaded Ukraine – held their first phone conversation since December 2022.

Russia was ready to look at energy deals if Berlin was interested, the Kremlin said.

“It was emphasized that Russia has always strictly fulfilled its treaty and contractual obligations in the energy sector and is ready for mutually beneficial cooperation if the German side shows interest in this,” the Kremlin said.

Russia shipped about 15 bcm of gas via Ukraine in 2023 – representing only 8% of peak Russian gas flows to Europe via various routes in 2018-2019, according to data compiled by Reuters.

In 2023, the transit route met 65% of gas demand in Austria and its eastern neighbours Hungary and Slovakia, according to the International Energy Agency. Ukraine has said it doesn’t plan to extend the transit agreement into 2025, which would have meant the loss of gas for Austria and Slovakia.

Hungary no longer gets much gas via Ukraine and imports volumes via the TurkStream pipeline which runs along the bed of the Black Sea. Slovakia still gets Russian gas via Ukraine.

EU energy commissioner Kadri Simson told Reuters on the sidelines of a UN climate conference in Azerbaijan that all EU countries receiving gas via the Ukraine route have access to other supply sources that could fill the gap.

“We have been very clear that alternative supply is available and there is no need for the continuation of Russian gas transiting via Ukraine to Europe,” Simson said.

(Writing by Nina Chestney and Miranda Murray; reporting by Pavel Polityuk, Yuliia Dysa, Thomas Seythal and Vladimir Soldatkin, Kate Abnett; Editing by Louise Heavens and David Evans)

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