European sanctions imposed on Moscow in the Ukraine crisis will have no impact on the planned South Stream gas pipeline to bring Russian gas to Europe, the head of Austrian energy group OMV told Profil magazine. “I see no influence there,” OMV Chief Executive Gerhard Roiss said in an interview with the Austrian magazine, excerpts of which it released ahead of publication on Monday.
Sanctions adopted by the European Union last week include export bans on advanced oilfield equipment and steps to prevent Russian banks from arranging long-term finance on European capital markets, but exclude any measures to curb gas flows. Roiss, whose company signed a deal with Russia’s Gazprom in June to extend the South Stream pipeline to Austria, said he was sure Brussels would accept the pipeline, despite reservations voiced by EU officials.
“Europe would shoot itself in the foot if it prevents construction” of the pipeline, he was quoted as saying. Austria’s economy minister said at the weekend that companies in the high-tech and agricultural sectors would feel the most impact from the sanctions. South Stream, which will cost an estimated $40 billion, is designed to carry Russian gas to the centre of Europe, on a route that bypasses current Ukraine.
Europe already depends on Russia to supply a third of its gas needs, and around half of that amount is piped through Ukraine. The European Commission has said South Stream as it stands does not comply with EU competition law because it offers no access to third parties. South Stream also goes counter to the EU policy of diversifying supply sources to reduce dependence on Russia. Roiss has said the Austrian part of the pipeline, which is planned to be built in 2016 and deliver its first gas supplies around the start of 2017, would comply fully with European law.
Gazprom and OMV said in June they would split the 200 million euro ($269 million) cost of building the 50-km (31- mile) Austrian stretch of South Stream, which in total will be 2,446 km long. The route travels across Russia, under the Black Sea and then through Bulgaria, Serbia, Hungary and Slovenia to Austria. Another branch may be built to Italy. Gazprom’s partners for the offshore part of the project are Italy’s Eni, Germany’s Wintershall Holding and France’s EDF.
($1 = 0.7447 Euros)