Austria and Russia have signed an agreement that grants permission for Russia’s South Stream natural gas pipeline to cross Austrian territory. The deal was signed by Energy Minister Sergei Shmatko and Austrian Economy Minister Reinhold Mitterlehner on 24 April.
The E20 billion (US$ 26.7 billion) South Stream pipeline, which is backed by Russia’s Gazprom and Italy’s ENI, will transport Russian gas under the Black Sea through Bulgaria, and then on to Austria and Greece. According to Russian Prime Minister Vladimir Putin, the pipeline will increase supplies of Russian gas to Austria by 2 billion m3/yr.
Austria, which obtains 60% of its gas from Russia, is the seventh country to join the 900 km South Stream pipeline project, following Croatia, Bulgaria, Serbia, Hungary, Greece and Slovenia.
Austria is also a supporter of the Nabucco natural gas pipeline; a competing project to the South Stream. The 3300 km Nabucco pipeline is funded by the US and the European Union. While, South Stream will allow Russia to strengthen its market share in Europe, the Nabucco pipeline will bypass Russia in an effort to reduce Europe’s dependence on Russian gas.
Austria’s Chancellor Werner Faymann has said he believes that Austria can play a role in both pipelines and that Austria is interested in different ways of diversifying its gas supplies.
Both the South Stream and Nabucco pipelines have bypassed Ukraine as a result of its price disputes with Russia and this has been causing supply difficulties to some EU countries.
South Stream is expected to completed in 2015 at an estimated cost of US$ 20 billion. Nabucco is also is also scheduled for completion in 2015, at a cost of US$ 12.3 billion.
Putin has said Russia is ready to start construction of the South Stream projects as quickly as it began working on Nord Stream. Construction began on the Nord Stream pipeline, which will run under the Baltic Sea from Vyborg, Russia, to Greifswald, Germany, in April.