OMV Joins South Stream Pipeline Project

Austria has formally joined the South Stream pipeline project, with the signing of an agreement between Austrian energy group OMV AG and Gazprom to build the Austrian section of the proposed project.

The signing in Vienna on Tuesday between OMV CEO Gerhard Roiss and Gazprom CEO AlexeyMiller, co-incided with a visit to Vienna by Russian President Vladimir Putin to hold discussions with Austrian President Heinz Fischer about the South Stream pipeline and Ukraine’s crisis.

The joint venture will build and operate the 50-kilometer (30-mile) with capacity to carry upto 32 billion cubic meters of gas a year, which is approximately 20 percent of Russian exports to Europe, Gazprom said in a statement.

The agreement includes the final investment decision based on approved criteria for the pipeline construction in Austria. The parties expect all the construction permits to be obtained until late 2015. South Stream in Austria is scheduled for commissioning in late 2016.

The Austrian link “isn’t very long, but that doesn’t diminish its importance because it is the endpoint of South Stream,” commented Gazprom's Miller  Today’s agreement will strengthen the role of Baumgarten, the gas hub where the pipeline will terminate, in central and eastern Europe, he said.

OMV's Roiss said the deal will increase Europe’s security of gas supply and will comply with EU legislation, which seeks to increase competition in the market.

“Europe needs Russian gas and it will need more Russian gas as its own supply dwindles,” commented Roiss.

Earlier, the OMV CEO had called for the European Commission to accelerated negotiations to approve the pipeline project, saying that it was unrealistic to think Europe could entirely wean itself off of Russian energy supplies