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№ 4 (April 2007)

Gazprom, Austrian Leading Oil&Gas Group Sign MOU

Gazprom Chairman Alexei Miller signed a memorandum of understanding with Wolfgang Ruttenstorfer, CEO of OMV, Austria’s largest energy company and Central Europe’s leading oil and gas group.

By Sergei Balashov: [email protected]

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This move is expected to deliver a setback to the Nabucco pipeline project which was supposed to pump Caspian gas directly to Europe bypassing Russia with OMV being one of the major companies involved. The memorandum is set to step up cooperation in gas business between the two companies. 

In accordance with the memorandum, which was signed during Russian President Vladimir Putin’s official visit to Vienna, Gazprom will take a stake in Central European Gas Hub, a 100% subsidiary of OMV and one of the three largest in mainland Europe handling 1.3 bcm of gas per month.

“Our joint purpose is to develop this gas hub into the most important in continental Europe. The agreement signed today once again shows that Gazprom’s development strategy corresponds with the dynamic development of the energy sector in the European Union,” said Alexei Miller, Chairman of Gazprom’s Management Committee.

The Memorandum of Understanding also covers joint storage projects that will further boost the position of the Central European Gas Hub. OMV and Gazprom will cooperate in relation to a planned OMV storage facility close to the gas hub in Baumgarten and are also considering joint storage projects in neighboring countries. Miller’s counterpart from OMV Wolfgang Ruttenstorfer stated that “these integrated projects mark another milestone in the cooperation between our companies and will make a significant contribution to security of natural gas supply in Europe.”

The Central European Gas Hub (CEGH) provides an international gas trading platform at Baumgarten, which is set to be the terminus for Nabucco and other bordering points of the Austrian network. After Gazprom’s latest move it seems that the Nabucco project will not be viable without Russian gas giant’s involvement. Alexei Miller said earlier he did not “see any resources for the Nabucco project,” clarifying, however, his comments “should not be seen as a threat to any particular project,” as quoted by Thomson Financial.

Gazprom is the world’s largest gas company engaged in natural gas, gas condensate and oil prospecting, production, transmission, processing and marketing both inside and outside Russia. Gazprom possesses the richest natural gas resources in the world, with its share in the overall global and Russian explored gas reserves making up some 17% and over 60%, respectively.  The explored gas reserves of Gazprom Group are estimated at some 29.1 tcm.

OMV conducts explorations and Production activities in 20 countries on five continents with sales amounting to EUR 18.97 billion and market capitalization reaching EUR 12.84 billion.

In 1968, OMV became the first Western European company to conclude a gas supply agreement with the former Soviet Union. This partnership, dating back nearly 40 years, was greatly strengthened in September 2006 with the extension of the gas supply agreements to 2027. In all, the agreements secured a volume of nearly 150 bcm of natural gas for Austria.

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