VIENNA, June 19 (Reuters) - Austria's government agreed with utility Verbund (VERB.VI) on Sunday to convert a reserve, gas-fired power plant so that it can produce electricity with coal should restricted gas supplies from Russia result in an energy emergency.
The decision, taken by a "small crisis cabinet" led by Chancellor Karl Nehammer, came after neighbouring Germany announced steps to address reduced Russian gas deliveries including increased reliance on coal-fired power plants.
The European Union's reliance on Russian gas and the risk that Moscow could cut supplies in retaliation for economic sanctions imposed after its invasion of Ukraine has been a headache for the bloc, prompting it to build up inventories and seek alternative supplies.
Nehammer's office said that majority state-owned utility Verbund had agreed to convert the Mellach power plant in the southern Styria region, which has been shut down but kept on stand-by, for renewed use of coal.
It was Austria's last coal-fired power plant before being converted into a gas-fired plant for use when needed.
"The federal government and the energy group VERBUND have agreed to convert the Mellach (Styria) district heating power plant, which is currently shut down, so that in an emergency it can once again produce electricity from coal (not gas)," Nehammer's office said in a statement.
It added that the government was examining further legal measures to diversify gas supplies with the aim of reducing dependence on Russian supplies.
Russian gas flows to Europe fell short of demand on Friday, coinciding with an early heatwave gripping its south and boosting benchmark prices already lifted by concerns the continent may struggle to build up storage in time for winter.
Austria gets 80% of its gas from Russia and since the war in Ukraine it has been scrambling to find alternative suppliers.
Writing by Paul Carrel; Editing by Chizu Nomiyama