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Gerhard Roiss: South Stream could become exception from EU pipeline requirements

June 23, 2014, 19:13 UTC+3 VIENNA

South Stream Austria was created by Gazprom and OMV on a parity basis

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OMV CEO Gerhard Roiss

OMV CEO Gerhard Roiss


VIENNA, June 23. /ITAR-TASS/. The South Stream gas pipeline could become an exception from the EU pipeline requirements, Gerhard Roiss, CEO of the Austrian company OMV, told the WirtschaftsBlatt financial daily on Monday, June 23.

“Clearly, everything must be done in accordance with European law but there can be exceptions,” he said.

Roiss believes that the European Union should discuss such exceptions with Russia’s Gazprom and that negotiations on the project should be accelerated not put on hold.

The construction of the South Stream pipeline will be discussed during Russian President Vladimir Putin’s visit to Austria on June 24. The shareholders of the joint company South Stream Austria are expected to sign an agreement. As presidential aide Yuri Ushakov said, the document “regulates a wide range of issues relating to the operation of the joint company, determines the management structure and concrete rights and obligations of the participants as well as records the rules of financing and distribution of income among the shareholders”.

He believes that the new agreement will be signed as a follow-up to the memorandum on the implementation of the South Stream project in Austria which calls for building the Austrian section of the pipeline with a throughput capacity of up to 32 billion cubic meters a year, ending in Baumgarten. The Austrian section is to start operating at full capacity by January 2018.

Infographics Russian gas in Europe

Russian gas in Europe

One-third of gas consumed in EU comes from Russia. Infographics ITAR-TASS
South Stream Austria was created by Gazprom and OMV on a parity basis.

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 meters 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 meters of gas to OMV.

Gazprom CEO Alexei Miller met with Austria’s OMV CEO Gerhard Roiss in late April to discuss the possibility of building am extension of the pipeline to Austria.

“With a view to optimizing 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.

Austrian Minister of Economy Reinhold Mitterlehner said diversification of gas transportation routes and the construction of the South Stream gas pipeline were in line with present-day international trends.

“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.

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.

The South Stream Offshore Pipeline will run through the Black Sea from Russia to Bulgaria and have a total length of 930 kilometers. 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 meters 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 kilometers, the maximum depth — over two kilometers and the design capacity — 63 billion cubic meters. 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 kilometers 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 meters a year. Its cost is about €16 billion.

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