"Nezavisimaya Gazeta": "Vienna balances on two pipes"
Gas from South Stream will be stored underground in Austria.
Russian Prime Minister Vladimir Putin held talks with Austrian Chancellor Werner Faymann yesterday, after the latter arrived in Moscow on a working visit. The two sides discussed prospects for bilateral relations in the trade and economic sphere, transport and investments. Particular attention was given to implementing joint energy projects.
Both Vladimir Putin and Werner Faymann were in a rather cheerful mood as they came out to face the media, and that may have something to do with their description of the talks on a wide range of bilateral trade and economic relations as successful. The Russian prime minister focused on ambitious joint projects which Russia was actively promoting, primarily the construction of the Austrian stretch of the South Stream gas pipeline. As Putin said, "The new route is extremely important for European consumers." The Austrian chancellor, after expressing Austria's readiness to participate in the Russian project, directed attention to railways, emphasising the importance for Austria of the construction of a 575 km wide-gauge railway from Kosice in Slovakia to Vienna, and the creation of a logistical centre on the Danube. Moscow, however, is especially concerned with Vienna's position on South Stream.
Currently, Austria gets 54% of its natural gas from Russia. Considering the high risks involved in Russian gas transit through Ukraine, this situation cannot possibly be satisfactory for Vienna. So the Austrians are seeking to diversify gas supplies to their market. But in taking on this task, Austria is attempting to reconcile two irreconcilables by pursuing two gas projects at the same time: Europe's Nabucco and Russia's South Stream. Experts all agree: these are not just alternative projects, they are mutually exclusive. Even with all the projected growth of gas consumption in the European Union, it could not possibly consume all the gas that would be supplied by the two pipelines. Yesterday, Putin did his best to persuade Faymann that the Russian project was good for Austria because it would increase the energy security of the European Union countries. His remarks about Nabucco were politically correct. Putin explained that the pipeline did not infringe on Moscow's interests and would indeed help discipline Gazprom.
During the course of the negotiations, first one-on-one and then in larger groups, which lasted longer than planned, the Russian prime minister and the Austrian chancellor discussed a draft intergovernmental agreement on the start of the Austrian section of South Stream's construction. They both quickly came to the conclusion that the project should be approved as soon as possible.
Yet, experts believe that the fate of the project depends more on the agreements between the companies than those between the governments. Mikhail Krutikhin, a partner with RusEnergy consultancy, believes that Gazprom could bolster its positions in the Austrian gas distribution hub by using its assets. The Russian company is also quite interested in gaining access to Austria's underground gas storage facility. "The facility may be the end point of South Stream, but for Austria it may also be the end point of Nabucco," Krutikhin stressed, adding that it makes no difference to Vienna which gas pipeline fills its reservoir. Gazprom, even if it gets its due stake in the facility's equity, will not become a monopoly, meaning it will be in no position to block the Nabucco project.
Aside from that, Moscow already expressed support for the plan to extend the Druzhba oil pipeline from Bratislava to the oil refinery outside Vienna.
No recent talks with European partners have been untouched by the subject of the dependability of gas supplies. At the final press conference, an Austrian journalist asked Putin if there was a new threat for European consumers. The Russian prime minister answered in the affirmative and cited the source of that threat: Ukraine. "If our Ukrainian partners pay for the gas supplied from Russia, Ukraine will not face any problems," Putin said. "If they do not pay, Moscow will start cutting supplies to the Ukrainian market." He didn't rule out that Ukraine would start to siphon off gas meant for European consumers. And if that happened, Russia would have to proportionately cut gas supplies to the EU.
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Austria depends on Russia for 54% of its natural gas needs.
Igor Naumov
