Russia, Austria to Expand Gas Cooperation

Moscow, Russia (SCF) – Despite the European Commission’s stern warnings, Russia’s share of European energy market will grow in the coming years. According to Bloomberg’s experts, gas exports to Turkey and the EU have reached 162.6 billion cubic meters (5.7 trillion cubic feet) this year, up from about 159 billion in 2015 and 161.5 billion (then record high) in 2013.

Supplies are forecast to reach 166.1 billion cubic meters in 2017, and 166.3 billion in 2018. Most of the increase will account for the Nord Stream gas pipeline stretching from Russia to Germany under the Baltic Sea.

Exports of Russian gas to the ‘far abroad’ increased by 8 percent in 2015 (compared with the previous year) to reach 159.4 billion m3, Gazprom CEO Alexei Miller said January 11.

“I would like to mention the significant growth of Russian gas deliveries to our largest consumers. In 2015, exports to Germany rose 17.1 percent; to Italy – 12.6 percent; to France – 36.8 percent; to the UK – 10.2 percent; and to Austria – 11.5 percent. One should add that in 2015 Gazprom hit an absolute record of gas export to Germany – 45.3 billion m³”, Miller said.

This is how the things are in Europe. The data related to individual states is even more illustrative. Austria is a good example. Geography and the availability of infrastructure make it one of the most important European gas distribution centers.

On February 2, Gazprom hosted a working meeting between Alexei Miller, and Reinhold Mitterlehner, Austrian Vice Chancellor.

The parties stressed that the long-term strategic cooperation between Russia and Austria in the oil and gas sector had been successfully developing for many decades. Russian gas supplies to Austria had been constantly on the rise. Preliminary estimates indicate that in January 2016 the gas exports by Gazprom to the Austrian market grew by 76.2 percent compared with the same period last year. Throughout 2015 the gas deliveries increased by 11.5 percent compared to 2014. OMV is Gazprom’s main business partner in Austria. On September 4, 2015 Gazprom and OMV inked the Shareholders Agreement to construct the Nord Stream 2 gas pipeline system with an annual capacity of 55 billion cubic meters from Russia to Germany across the Baltic Sea.

The construction of cross-country pipelines is one of the ways to ensure European energy security. Underground gas storage facilities (UGSF) are also an important element of the European energy infrastructure. Haidach is an UGSF in the town of Haidach near Salzburg, Austria. It is the second largest gas storage facility in Central Europe that exemplifies the success of Russia-Austria-Germany energy cooperation. The UGSF is a joint project of Gazprom (the company owns 66.7% of capacity), Austrian RAG and German WINGAS. The facility provides for stable gas supplies from Russia to Austria’s Baumgarten hub – a major transit point for the Russian natural gas imported by Slovenia, Croatia, Hungary, Austria, Germany, Slovakia and Italy.


Image Source: Mitya Aleshkovsky, Flickr, Creative Commons

In 2015 the parties agreed to increase the aggregate working capacity of Haidach by 150 million cubic meters, or about 5 percent. It was stressed that the plan was to be fulfilled without additional investments.

The prospect of Iran becoming a major natural gas supplier to Europe and reshaping the continent’s energy market has been an issue on the radar screen recently. But this possibility is dim. According to the Publico, Russia has nothing to worry about.

True, Iran tops the list of the countries with proven natural gas reserves (18.2 percent), but it cannot compete with Russia as it has to overcome a lot of financial and economic problems.   According to experts, Iran needs at least $100 billion to modernize the infrastructure and build new pipelines.

To export gas to Europe, it needs a new pipeline going through the territory of Turkey. This is a far-fetched dream. The relations between Tehran and Ankara have greatly exacerbated over the Syria’s conflict.

This report prepared by Pyotr ISKENDEROV for Strategic Culture Foundation.