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Gazprom negotiates purchase of almost 25% of shares in Austrian OMV

June 26, 2014, 18:46 UTC+3 MOSCOW
OMV has been Gazprom’s main partner in Austria for over 40 years
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MOSCOW, June 26. /ITAR-TASS/. Gazprom is negotiating a possible purchase of 24.9% of shares in Austrian OMV from the Abu-Dhabi-based IPIC company, Reuters reported on Thursday, June 26, quoting a source familiar with the situation.

Gazprom and OMV are parity shareholders of the company South Stream Austria which will build the Austrian section of the gas pipeline with a throughput capacity of up to 32 billion cubic metres a year and ending in Baumgarten. It should start operating at full capacity by January 2018.

President Vladimir Putin, who visited Austria earlier this week, said his trip was “substantive”. “You know that we agreed to advance South Stream, which is an important part of the work to implement the whole project. We can say that we took a significant step forward to implement our strategic plans to support our partners in Europe and ensure stable energy supplies to Europe,” he 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 CEO Gerhard Roiss in late April 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.

Infographics Russian gas in Europe Russian gas in Europe
One-third of gas consumed in EU comes from Russia. Infographics ITAR-TASS
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.

The construction of South Stream began 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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