By ALEXANDER WEBER
OAO Gazprom agreed with oil and gas producer OMV AG to extend a
planned natural gas pipeline into Austria, on the same day the
EU expanded sanctions against Russian officials.
As much as 32 billion
cubic meters per year of gas will be delivered to Baumgarten,
Austria, through a section of the South Stream pipeline. The
first gas deliveries are planned for 2017.
Europe imports about 30%
of its gas from Russia, and half of that amount flows through
Ukrainian pipelines, making it essential to European energy security. The EU,
along with the US, has said it may levy penalties on Russian
industries, including banking and energy, if Russian President
Vladimir Putin sends troops to eastern Ukraine.
Gazprom has pushed the
South Stream project to lower transit dependence
on Ukraine, which presently carries about 15% of Europe's gas through its pipes from
Russia, after repeated disagreements over pricing. Gazprom cut
supplies to Ukraine in freezing weather during disputes in 2006
and 2009, which led to disruptions in flows to
OMV, which began
importing Russian gas in 1968, said the deal will significantly
increase Austria's security of gas supply and strengthen
Baumgartens role as a gas hub for Central and Eastern Europe.
Gazprom, majority-owned by the Russian government, has declined
8% this year as tensions continue to escalate in
Austria's South Stream section will be jointly owned by Gazprom
and OMV. The companies will split the projects financing. Under the
agreement, the Austrian section of South Stream will run from
the Black Sea coast of Bulgaria, crossing Serbia, Hungary and
ending in Baumgarten, OMV said.