Moscow - Gazprom has returned to the option of building the South Stream gas pipeline to Europe to the Austrian city of Baumgarten instead of to Ratece on Slovenia's border with Italy. This will reduce costs from 6.6 billion euros to 5.8 billion euros (in 2010 prices) and bring nearer the completion times for the final links of the gas transport system.
Route
Gazprom CEO Alexei Miller and the head of Austria’s OMV, Gerhard Roiss signed a letter of intent on Tuesday to implement the South Stream project in Austria, the Russian gas giant said. Roiss also gave Miller a letter from Austria’s economy minister that expresses support for the parties’ efforts to implement the project within Austria’s borders.
It was reported earlier that routing the pipeline to northern Italy through Slovenia – considered the basic version – ran the risk of triggering contract reviews due to changes in the acceptance and delivery points. That compelled Gazprom to return to the idea of laying the pipeline to the Baumgarten hub in Austria.
The pipeline will have capacity to ship 32 billion cubic meters of gas a year, which indicates that Gazprom has decided against laying the pipeline through Slovenia.
The memorandum also provides for Gazprom’s participation in the Central European Gas Hub, and providing Gazprom with space in OMV’s gas storage facilities in Austria.
Timetable
The option of a pipeline route terminating at Ratece threatened to significantly draw out the duration of the project. It turned out that, taking into account procedures stipulated by Italian regulations, it could take four to five years to build the Italian section of the system and bring it up to design capacity.
As for the Austrian option, Gazprom said that all the necessary permits for construction are expected to be received by the end of 2015. “The first deliveries of gas are expected in 2017, the Austrian section is scheduled to reach full design capacity by January 2018,” the company said.
