OMV: GAZPROM HOLDS SHARES IN GAS TRADING PLATFORM; NO

UNCLAS VIENNA 000242

SIPDIS

SIPDIS, SENSITIVE

E.O. 12958: N/A
TAGS: ENRG ECON PGOV EPET AU
SUBJECT: OMV: GAZPROM HOLDS SHARES IN GAS TRADING PLATFORM; NO
SPECIFIC PLANS FOR GAS STORAGE PROJECTS

REF: 07 VIENNA 2853


1. Charge and Emboffs met 2/19 with Werner Auli, board member of
the Austrian oil and gas company OMV, and with Gottfried Steiner,
head of the gas section's International Affairs unit, to inquire the
latest developments in OMV's relations with Gazprom. Auli
reconfirmed that Gazprom acquired a 50% stake in an OMV-founded
trading platform, called "Central European Gas Hub" (CEGH) in
January 2008 (as agreed in a MoU in May 2007). Gazprom owns no art
of OMV's physical infrastructure property - neither the natural gas
station in Baumgarten, through which mainly Russian gas is
distributed to western purchasers (reftel). OMV has no intention to
sell any infrastructure assets to a Russian company, our
interlocutors emphasized.


2. Auli outlined OMV's hopes to make the trading platform the
number one trading gas hub in Europe, focused on Central Europe --
with another hub in Zeebrugge, Netherlands, or a new hub in France
responsible for western/southwestern Europe. Eventually, they would
like to see the trading platform become a fully fledged commodity
market for gas. Given these goals, a joint venture with Gazprom
makes sense, because "we have the infrastructure, and they have the
gas". However, OMV and Gazprom would not act as traders but put the
trading platform to the disposal of other gas traders.

3. Confronted with reports that the trading platform involved
handing over physical infrastructure to Gazprom, as well as
speculation about a Gazprom ownership in Nabucco, the OMV
representatives blamed Hungarian MOL for "spreading these false
rumors". This is part of the MOL managements' efforts to fend off
OMV's hostile takeover, they asserted. OMV also has information
that MOL is trying to discredit OMV vis-`-vis the EU Commission,
they claimed. (Note: after the notification with the EU, the OMV
takeover bid is subject to examination by the Commission.) Auli
opined that the Russians' intention in Europe is to sell gas but not
to control the infrastructure. Otherwise, Gazprom would not have
extended its long-term gas delivery deal with OMV until 2027, he
argued.


4. Auli confirmed that part of the OMV deal with Gazprom includes
exploring new, joint gas storage facilities in the east of Austria
(near Baumgarten) and across the border in Slovakia. He emphasized
again that this is would not give Gazprom control over OMV's
existing extensive gas storage facilities, but was rather intended
to provide new short-term capacity for gas that would be traded
through the trading platform. Because the platform must have gas
available for trading year-round, it was appropriate to have
specific gas storage available for this reason. As of now, however,
Auli said that there has been no agreement reached on specific new
projects.


5. Comment: As in earlier meetings, our OMV contacts did
everything to diffuse rumors that Gazprom would try to get control
over OMV or OMV-controlled Central European gas infrastructure.
Auli suggested that OMV's naming the trading platform "Central
European Gas Hub" was probably a mistake. We believe that OMV is
serious in intending to remain an independent central European
energy company, with hopes, notably through the MOL takeover and
through cooperation with Gazprom, of becoming the dominant regional
energy firm. Gazprom's intentions, of course, may be another
matter. End comment

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