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South Stream to strengthen Austria’s position as European energy hub

April 30, 2014, 20:00 UTC+3 VIENNA

“The current international trends indicate that in the long term we should diversify not only the sources of energy but also its supply routes,” Austrian Minister of Economy Reinhold Mitterlehner says

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VIENNA, April 30. /ITAR-TASS/. Diversification of gas transportation routes and the construction of the South Stream gas pipeline are in line with present-day international trends, Austrian Minister of Economy Reinhold Mitterlehner said on Wednesday, April 30.

“The current international trends indicate that in the long term we should diversify not only the sources of energy but also its supply routes. We will come closer to this goal when the South Stream gas pipeline comes to Baumgartner. The project will not only ensure Austria’s energy security but will also strengthen its positions as a European energy hub, which is provided for in our energy strategy,” he said after signing a memorandum on the construction of a section of the pipeline in Austria.

Austria is already the fourth largest producer and consumer of renewable energy in the European Union, but it takes time to restructure the energy sector. Gas will serve as a transitional fuel. Over the past several years, additional gas pipelines such as Nord Stream were built and underground gas storage facilities increased their capacities. But in order to become less dependent on non-renewable energy in the future, Austria has to improve energy efficiency and keep developing renewable energy production, the minister said.

Austria has made the decision to rejoin the South Stream project. Initially, in 2010, Austrian OMV signed a basic agreement on cooperation with Russia’s Gazprom. Subsequently it was reported that OMV was engaged in negotiations with Gazprom on a contract for the supply of gas by the South Stream pipeline in the amount of 6 billion cubic metres a year.

However later OMV joined the alternative Nabucco project, which was supposed to bring gas to Austria and Germany from CIS countries. When the project was suspended, Gazprom began considering Austria’s participation in it again, but Italy remains the final destination for the time being.

OMV has been Gazprom’s main partner in Austria for over 40 years. In 2013, the Russian company supplied 5.23 billion cubic metres of gas to OMV.

Gazprom CEO Alexei Miller met with Austria’s OMV Director-General Gerhard Royce on April 22, to discuss the possibility of building am extension of the pipeline to Austria.

“With a view to optimising the South Stream project and considering Gazprom’s current portfolio of contracts, we have agreed with the Austrian side’s proposal to consider such a possibility within the framework of the effective inter-governmental agreement in parallel with the ongoing work to build the gas pipeline in Slovenia,” Miller said.

Unlike Nord Stream, which runs entirely along the seabed and thus does not fall under European legislation, South Stream will be built across the Black Sea to South and Central European countries to diversify gas supplies to Europe and reduce the dependence on transit countries.

To build the onshore sections of the pipeline, Gazprom has signed agreements with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia, and Austria.


South Stream Pipeline

The South Stream Offshore Pipeline will run through the Black Sea from Russia to Bulgaria and have a total length of 930 kilometres. An environment impact assessment (EIA) in accordance with national environmental legislation is being conducted in Russia, Turkey and Bulgaria. In addition, South Stream Transport is undertaking an Environmental and Social Impact Assessment (ESIA) in alignment with the standards and guidelines of international finance institutions. This will involve an ESIA Report for each Sector of the Project and a consolidated document for the entire South Stream Offshore Pipeline to ensure a consistent approach.

South Stream, initially conceived ENI and Gazprom, later joined by Electricite de France and German Wintershall AG, will eventually take 30 billion cubic metres of Russian natural gas a year to southern Europe.

The project stipulates for the offshore gas pipeline section to run under the Black Sea from the Russkaya compressor station on the Russian coast to the Bulgarian coast. The total length of the offshore section will be around 900 kilometres, the maximum depth - over two kilometres and the design capacity - 63 billion cubic metres. There are two optional routes for the onshore gas pipeline section: either northwestward or southwestward from Bulgaria.

In order to feed the required amount of gas to South Stream, Russia’s gas transmission system throughput will be increased through the construction of additional 2,446 kilometres of line-pipe and 10 compressor stations with the total capacity of 1,473 MW. This project has been named South Corridor and will be implemented in two phases before December 2019.

The construction of South Stream started on December 7, 2012 is scheduled to be completed by 2015. The overall capacity of the marine section of the pipeline will be 63 billion cubic metres a year. Its cost is about 16 billion euro.

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