Gas Dispute -- OMV Sees No Short-Term Solution;

UNCLAS VIENNA 000015

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: ENRG PGOV EPET PREL AU
SUBJECT: Gas Dispute -- OMV Sees No Short-Term Solution;
Austria Planning for Industry Rationing

REF: VIENNA 4

Sensitive but Unclassified - not for Internet distribution.


1. (U) SUMMARY: Austrian energy company OMV announced early
January 7 that Russian natural gas deliveries to Austria
have come to a standstill. For the medium term (about
three months),OMV's subsidiary EconGas -- which supplies
customers -- can compensate from its storage (1.7 bcm),
domestic production, and via imports from Western Europe.
For the first time in the post-war era, the GOA is
considering rationing -- covering only industry for the
moment. END SUMMARY.


2. (SBU) A working-level contact at OMV Gas International
(Astrid Dolak) told us that OMV CEO Wolfgang Ruttenstorfer
is in constant contact with his counterparts at Gazprom,
but no results are visible. OMV expects no solution "in
the coming few weeks". All four lines of the "Brotherhood
Pipeline" were shut down and only small quantities are
delivered to the Balkan countries, whom OMV recognizes have
virtually no storage capacity. NOTE: OMV owns 51% of
Romanian energy firm Petrom and has substantial stakes in
Hungarian MOL and Croatian Ina -- END NOTE.


3. (U) Austrian Economics Minister Reinhold Mitterlehner
called an emergency meeting of the GOA Energy Steering
Committee for this afternoon to discuss further steps. The
GOA MinEcon is considering rationing steps for the first
time in the post-war era. Mitterlehner announced that if
the situation does not improve by Friday, peak industry
consumption may have to be reduced and some electricity
power stations may switch from gas to oil. As foreseen in
Austrian law (Energy Steering Act),next week the EconMin
would issue a government ordinance limiting industrial
production. Households and small/medium enterprises can be
supplied for "up to" three months according to
Mitterlehner, a calculation backed by Austrian energy
regulator E-Control.


4. (U) Mitterlehner suggested publicly that the EU provide
guarantees or loans to Ukraine to help solve the crisis,
but ruled out discharging Ukraine's debts. If all joint EU
efforts fail, Mitterlehner can imagine a GoA mediator role
since Austria "enjoys very good contacts with Russia and
Gazprom". Mitterlehner's predecessor, conservative MP
Martin Bartenstein, claimed in an interview that he and OMV
CEO Ruttenstorfer had met Gazprom director Alexander
Medvedev during the 2005/06 crisis "and brought about a
solution within 24 hours" (NOTE: at the time, Austria held
the EU presidency).


5. (SBU) Our MFA contact on this issue (Yvonne Desmedt-
Toncic from the Environment and Energy department)
emphasized that Austria will coordinate its diplomatic
response through the EU. The GoA is not/not planning
bilateral initiatives right now, she said (in contrast to
Mitterlehner's public remarks). Desmedt opined that the EU
has made substantial progress in recent years in
harmonizing, though not formalizing, a common EU foreign
energy policy, which she hoped would be used in this
conflict.


6. (U) Austria currently uses 8-9 bcm of natural gas per
year, distributed as follows:

Industry 37% of consumption
Electricity 30%
Households 23%
SME's 10%

Every fourth household in Austria uses gas for heating. In
addition to the 1.7 bcm of storage under OMV's control,
there is a 1.2 bcm storage facility at Haidach (in Austria,
near the German border) but it is connected primarily to
the German network and is under the control of German
companies Wingas/Wintershall, in partnership with Gazprom.

GIRARD-DICARLO