Putin wins Austrian gas deal, scorns EU pipeline

* Austria grants signature needed for pipeline launch

* Putin says Austria will gain 2 bcm of gas/yr via pipeline

* Gazprom head says EDF to join South Stream within 2 months

By Darya Korsunskaya and Sylvia Westall

VIENNA, April 24 (BestGrowthStock) – Austria signed up to build part
of Russia’s South Stream gas pipeline on Saturday, and visiting
Prime Minister Vladimir Putin scorned the EU’s rival Nabucco
project as futile.

Politically neutral Austria has become a key battleground
for the competing pipelines, both of which are expected to cross
the alpine state before delivering gas to other European Union
members.

The 7.9 billion euro ($10.62 billion) Nabucco pipeline is
part of the EU’s long-term effort to diversify its natural gas
supplies and reduce dependence on Russia by bringing up to 31
billion cubic metres (bcm) of gas annually from the Caspian
regionto an Austrian hub via Turkey and the Balkans.

But it has no confirmed suppliers and has been hit by
numerous delays. [ID:nLDE63M0XM]

“Building a pipeline without supply contracts is pointless
and extremely dangerous,” Putin said in the Austrian capital.
“Name me one contract that has been signed for Nabucco.”

He was speaking after Austrian Chancellor Werner Faymann’s
government provided a key signature needed to launch South
Stream, Russia’s second post-Soviet gas pipeline project.

It will run under the Black Sea to the Balkans, with one of
its branches passing through Austrian oil and gas company OMV’s
(OMVV.VI: ) hub in Baumgarten, also Nabucco’s final destination.

Putin stressed that Russia’s abundant natural gas reserves
allowed it to ensure South Stream’s viability.

“We can guarantee Russia’s growing demand and that of
essentially all our clients in Europe for the next 100 years,”
the prime minister said.

He said South Stream would allow Austria to increase Russian
gas imports by 2 bcm per year.

DOWNPLAYING CONFLICT

Faymann sought to play down the conflict, stressing that
Austria would benefit from both systems.

“We do not know at all how and where exactly the gas
supplies for Nabucco will come from,” he said. “This is a
further proof that we are indeed interested in several
pipelines, several possibilities and a diversification. But
this does not at all mean that they are judged as being against
one another.”

Russia’s Gazprom (GAZP.MM: ), which would be the major
supplier to South Stream, is battling to maintain market share
in Europe as liquefied natural gas ports go on line and
potential shale gas projects take shape. [ID:nLDE60Q1CK]

Despite these threats, energy firms are eager to participate
in the new pipelines, with some, such as OMV, joining both.

The Vienna-based firm on Saturday signed a cooperation
agreement to build a section of the South Stream pipeline
through Austria despite the fact that it is already a
shareholder in Nabucco.

“The final investment decision should take place within the
next 18 months, the pipeline should start operating by the end
of 2015,” the Vienna-based group said in a statement.

French utility EDF (EDF.PA: ) is also expected to join South
Stream, with Gazprom chief executive Alexei Miller saying in
Vienna that it could become a stakeholder within the next two
months. EDF officials in February said they expect to take a 10
percent share in the project. [ID:nLDE61D07G]

South Stream is expected to go online in 2015, one year
after Nabucco currently plans to start operations.

(Writing by Alfred Kueppers, editing by Mark Trevelyan)

Putin wins Austrian gas deal, scorns EU pipeline