The West Austria Gas Pipeline (WAG) is one of the most important natural gas pipelines in Austria. As part of the "WAG Loop 1" project, the section between Oberkappel and Bad Leonfelden is being expanded with a parallel pipeline stretch of 40 kilometers. This investment is crucial to ensure that if gas deliveries via Ukraine are disrupted, more gas can flow to us from the west.

The ongoing tense geopolitical situation and the impending expiration of transport contracts between Russia and Ukraine pose a risk of gas shortages for Austria and the Southeast European region in extreme situations. The fast and decisive expansion of the WAG in a west-east direction is thus of great importance for the long-term security of energy supply for households, businesses, and industry. It will allow better access to gas sources from north-western Europe, such as Norway, and to LNG delivered along the coast in Germany, Belgium, the Netherlands and France. It also offers the prospect of a carbon-neutral future, as the pipeline will be able to transport climate-friendly hydrogen.

The WAG was initially optimised for east-west gas transport. This involved laying a parallel pipeline after the compressor stations, but not along the entire length. As a result, the capacity of the pipeline in the reverse direction (from west to east) is much lower than in the original east-west flow direction. Over the years, however, there has been an increasing demand for transportation from west to east.

With the war in Ukraine in 2022, the reverse flow compressors reached their limits as they were operated close to capacity to fill storage tanks and compensate for lost volumes from Russia. Operating a pipeline in reverse flow is inefficient, like driving a car in reverse. The gradual expansion of the WAG is essential to increase the much-needed transport capacity for west-east operations. This increase in capacity will also provide more flexibility in feeding in and out of the Haidach and Seven Fields gas storage facilities in Upper Austria.

Politically, there is a widespread agreement in Austria regarding the necessity of constructing the "WAG Loop 1".

Nevertheless, there are ongoing discussions regarding the financing arrangements and state support requested by GCA.

From an economic standpoint, GCA is facing challenges as Austria shifts from its role as a transit country for natural gas to becoming a destination country. Previously, the gas infrastructure was predominantly funded by transit customers, constituting approximately 80% of the transit volume. However, with a decline in these volumes, particularly those directed towards Italy, this funding model is no longer sustainable. Additionally, the gas industry has suffered a significant downturn due to the conflict in Ukraine.

The current tariff system, presently under revision by E-Control, is four years old and fails to adequately address the current economic circumstances, particularly the associated risks.

The FID must be made this year to initiate substantial orders. However, it remains pending. Proceeding with the construction and operation of the pipeline based on the existing outdated tariff provisions poses considerable financial risks. Gas Connect Austria cannot shoulder this burden alone.

The Ministry of Climate Action and Energy consistently stresses that E-Control's approval of "WAG Loop 1" necessitates its construction. 

However, E-Control's approval merely indicates the project's fundamental grid benefit, not a mandate to build without ensuring the economic viability of long-term operation - a certainty that is currently lacking. 

Under the current regulatory framework, infrastructure projects such as "WAG Loop 1" rely on long-term bookings to recoup investments. The government's newly announced objective of achieving climate neutrality by 2040 signals the end of natural gas, jeopardizing the economic feasibility of projects such as WAG Loop, given the uncertainty surrounding the legal and economic landscape for future hydrogen transportation.

Additional details on WAG Loop 1 are available in our project folder, under project status and Q&A as well as in our graphics.

For our statement concerning the "Im Zentrum" programme, please refer to the link provided.