Gazprom’s Chairman, Alexei Miller, and his counterpart from OMV, Gerhard Roiss, signed Tuesday the agreement to establish a joint company which will be responsible for building the Austrian section of the South Stream pipeline, during the visit of Russian President Vladimir Putin in Austria, writes Reuters.
Amid tensions between Ukraine and Russia, earlier this month the European Commission urged Bulgaria to suspend work on South Stream, pending a decision whether the project complies with EU legislation. EU Energy Commissioner Guenther Oettinger said that the South Stream project is not canceled but stopped until it reaches the common legal agreement between Bulgaria and the European Union.
“This investment decision is an investment in the security of gas supply to Europe”, said Gerhard Roiss. “Europe needs Russian gas. Europe will need more Russian gas in future because European gas production is falling… I think the European Union understands this, too.”, he added.
South Stream pipeline, whose cost is estimated at $ 40 billion, would stretch over a length of 2,446 km, from Russia via the Black Sea to Bulgaria, Serbia, Hungary and Austria. Austrian section of South Stream would have a capacity of up to 32 billion cubic meters of gas per year, reaching the city of Baumgarten, according to Mediafax.
OMV is Petrom’s majority shareholder, with a 51.01% stake. Romanian Ministry of Economy holds 20.64% of Petrom shares, Property Fund SA holds 20.11%, the European Bank for Reconstruction and Development 2.03% and 6.21% is free-floats on BSE.
Gazprom, OMV to share 200 million euros Austrian building costs
Russia’s Gazprom is in constructive talks with the European Commission about its disputed South Stream gas pipeline, its chief executive said after signing the deal with OMV. Alexei Miller said he was in weekly if not daily contact with European Energy Commissioner. “We solve problems as they come up, and now the problem of construction of the pipeline is to be solved,” Miller told a news conference.
The Commission says South Stream as it stands does not comply with EU competition law because it does not offer access to third parties. South Stream also goes against the EU policy of diversifying supply sources to reduce dependence on Russia.
OMV’s Chief Executive Gerhard Roiss said the Austrian part of the pipeline, which is planned to be built in 2016 and deliver its first gas supplies at the start of 2017, would comply fully with European law. Gazprom and OMV said they would share equally the 200 million euros costs of building the 50-km Austrian stretch of South Stream.