Identifier
Created
Classification
Origin
07VIENNA2980
2007-12-18 15:19:00
UNCLASSIFIED
Embassy Vienna
Cable title:
BACKGROUND AND PROSPECTS FOR RECENT OMV-GAZPROM DEALS
how-toVZCZCXRO4614 RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG DE RUEHVI #2980 3521519 ZNR UUUUU ZZH R 181519Z DEC 07 FM AMEMBASSY VIENNA TO RUEHC/SECSTATE WASHDC 9191 INFO RHEBAAA/DEPT OF ENERGY WASHDC RUEHZL/EUROPEAN POLITICAL COLLECTIVE
UNCLAS VIENNA 002980
SIPDIS
SIPDIS
E.O. 12958: N/A
TAGS: ENRG ECON PGOV EPET AU
SUBJECT: BACKGROUND AND PROSPECTS FOR RECENT OMV-GAZPROM DEALS
REF: VIENNA 2853
UNCLAS VIENNA 002980
SIPDIS
SIPDIS
E.O. 12958: N/A
TAGS: ENRG ECON PGOV EPET AU
SUBJECT: BACKGROUND AND PROSPECTS FOR RECENT OMV-GAZPROM DEALS
REF: VIENNA 2853
1. (U) In September 2006, Austria's OMV negotiated an extension of
its gas supply agreement with Gazprom that will guarantee that
Russian gas is routed through OMV's Baumgarten gas distribution
center until 2027. As part of that deal, Gazprom obtained the right
to market gas in three of the nine Austrian states. This agreement
was consistent with Austria's 2002 gas market liberalization, which
gave foreign suppliers equal access to the domestic gas market.
Marketing of Russian gas is handled by a consortium, GWH (Gas und
Warenhandels GmbH),owned by Gazprom subsidiary Gazexport (50%),the
Russian gas marketer Centrex (24.9%),and OMV (25.1%).
2. (U) In May 2007, in connection with President Putin's Vienna
visit, OMV and Gazprom signed a MoU allowing Gazprom to buy 50% of
OMV's year-old gas trading platform, the so-called Central European
Gas Hub (CEGH) (reftel). OMV's rationale for the sale was explained
by CEGH Managing Director Harald Wuestrich in November: The deal
"can only work on a parity basis. Gazprom has the gas," while OMV
has the physical hub and infrastructure for delivery of the gas.
OMV's strategic goal is to make the CEGH "the biggest gas (trading
floor) in continental Europe," and OMV apparently believes that it
can only do so by linking in Europe's main gas supplier. The now
almost two-year old CEGH has about 40 active traders trading about
1.8 bcm of gas per month. The CEGH also trades gas storage.
3. (U) OMV is apparently pulling back from participation in the GWH
gas distribution deal. In August 2007 OMV announced that it would
sell its shares in GWH, allowing the Russians to market gas
distribution on their own. This could be implemented next year.
OMV gas department director Werner Auli said that compensation for
OMV's share will not come from Gazprom. Apparently because of
Gazprom's lack of interest, OMV has also had problems completing the
sale of 50% of the CEGH to Gazprom. To date, the deal has still not
been completed. Wuestrich was hoping it would be completed "within
weeks." Two weeks ago, our contact in the OMV's gas department told
us that the deal should be still finalized in December.
KILNER#
SIPDIS
SIPDIS
E.O. 12958: N/A
TAGS: ENRG ECON PGOV EPET AU
SUBJECT: BACKGROUND AND PROSPECTS FOR RECENT OMV-GAZPROM DEALS
REF: VIENNA 2853
1. (U) In September 2006, Austria's OMV negotiated an extension of
its gas supply agreement with Gazprom that will guarantee that
Russian gas is routed through OMV's Baumgarten gas distribution
center until 2027. As part of that deal, Gazprom obtained the right
to market gas in three of the nine Austrian states. This agreement
was consistent with Austria's 2002 gas market liberalization, which
gave foreign suppliers equal access to the domestic gas market.
Marketing of Russian gas is handled by a consortium, GWH (Gas und
Warenhandels GmbH),owned by Gazprom subsidiary Gazexport (50%),the
Russian gas marketer Centrex (24.9%),and OMV (25.1%).
2. (U) In May 2007, in connection with President Putin's Vienna
visit, OMV and Gazprom signed a MoU allowing Gazprom to buy 50% of
OMV's year-old gas trading platform, the so-called Central European
Gas Hub (CEGH) (reftel). OMV's rationale for the sale was explained
by CEGH Managing Director Harald Wuestrich in November: The deal
"can only work on a parity basis. Gazprom has the gas," while OMV
has the physical hub and infrastructure for delivery of the gas.
OMV's strategic goal is to make the CEGH "the biggest gas (trading
floor) in continental Europe," and OMV apparently believes that it
can only do so by linking in Europe's main gas supplier. The now
almost two-year old CEGH has about 40 active traders trading about
1.8 bcm of gas per month. The CEGH also trades gas storage.
3. (U) OMV is apparently pulling back from participation in the GWH
gas distribution deal. In August 2007 OMV announced that it would
sell its shares in GWH, allowing the Russians to market gas
distribution on their own. This could be implemented next year.
OMV gas department director Werner Auli said that compensation for
OMV's share will not come from Gazprom. Apparently because of
Gazprom's lack of interest, OMV has also had problems completing the
sale of 50% of the CEGH to Gazprom. To date, the deal has still not
been completed. Wuestrich was hoping it would be completed "within
weeks." Two weeks ago, our contact in the OMV's gas department told
us that the deal should be still finalized in December.
KILNER#