At the European Business Congress in the French city of Deauville, the head of Gazprom, Alexey Miller, announced that Austria and Slovenia are joining the South Stream gas pipeline project
The Russian-Italian South Stream project is supported by Greece, Serbia, Hungary and Bulgaria. The South Stream gas pipeline will pass from Russia under the Black Sea to Bulgaria, where it will split into two branches. One of them will go to Italy and Greece, the other to Austria and Hungary.
According to some reports, during a meeting at the St. Petersburg forum between Miller and Austrian Economics Minister Martin Bartenstein it was agreed that the Austrian oil company OMV will determine the structure of equity capital in the future joint venture with Gazprom, which will transport gas to the Austrian city of Baumgarten. The Central European Gas Hub in Baumgarten is today the largest area for the trade, storage and sale of gas, as well as an end node gas distribution pipeline for Nabucco. Back in January 2008, an agreement was signed between Gazprom and Austria's OMV providing for the sale a 50% stake in the Central European Gas Hub to the Russian company.
Participating in the hub will allow Gazprom to influence the distribution of gas coming to Europe from Nabucco. In all probability, Baumgarten will also receive Russian gas from South Stream. This casts serious doubts on the prospects of Nabucco, the main competitor to the Russian project.
One of the main driving forces of the Nabucco project was Austria, which not only conducted consultations with Turkey, Hungary and the Balkan countries to enlist their support for the project, but also played a significant role in EU negotiations with Azerbaijan, Turkmenistan and Uzbekistan, which in the future could supply gas to the Nabucco pipeline.
However, the Nabucco project is currently experiencing significant problems. "The biggest issue is ensuring a sufficient supply of gas to fill the pipeline. But the political issues around gas supplies in the Middle East and the Caspian Sea region present a problem," Stephen O'Rourke, an analyst at the consulting company Wood McKenzie, told Expert Online. In particular, experts doubt that Azerbaijan will be ready in 2014 to extract enough gas to fill the pipeline.
It is highly likely that the problems in implementing the Nabucco project were the reason that Austria, which was invited to participate in South Stream back in August 2007, decided to join the Russian project. Perhaps Nabucco will have prospects in the future, but the success of South Stream in the short term is more tangible.
With the Russian South Stream project, besides guarantees of a gas supply to match their needs, Austria will be able to count on a share in the storage and further distribution of gas. In fact, this is what Austria's OMV hoped to get in the Nabucco project, but the costs and, most importantly, the risks (especially political) in South Stream were lower. As a result of cooperation with Gazprom, based on the hub in Baumgarten, Austria will automatically become an important centre for gas distribution, thereby preserving its dominant position in south-east Europe.
Alexander Koksharov
Photo: Reuters
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