- OMV pioneering role since1968: First Western European gas supply agreement with Gazprom
- Two thirds of natural gas consumed in Austria come from Siberia
- Long-term supply agreements constitute the backbone of domestic natural gas supply
On June 1, 1968 OMV became the first Western European company to conclude a natural gas agreement with the former Soviet Union. This long-standing partnership, which celebrates its 40th anniversary this year, has played a pioneering role for the European gas supply business and represents a milestone in securing supply in Austria. On the basis of the long-term supply agreements with the Russian Gazprom an overall gas volume of 150 bcm has been imported into Austria since 1968. The extension of the gas supply agreements to 2027 in autumn 2006 secured a further volume of 150 bcm of natural gas for Austria. A 50/50 joint venture between OMV and Gazprom, which was realized in January 2008, aims at expanding and further developing the Central European Gas Hub - a virtual trade platform - into the leading trading hub of its kind in continental Europe. Moreover, it should further contribute to securing supply by strengthening the trade of liquid volumes.
Wolfgang Ruttenstorfer, CEO of OMV, said: "OMV and Gazprom can look back on a successful partnership aimed at securing gas supply. The signing of the supply agreements, which celebrate its 40th anniversary this year, represented and still represents a milestone for the stable and secure supply of natural gas in Austria and in Europe. Thus, the continuation of this successful partnership is a consistent step: natural gas will become increasingly important due to its environmental friendliness and the ever rising energy consumption." According to estimates of energy experts of the International Energy Agency (IEA), gas consumption in Europe will increase from a current year volume of 500 bcm to almost 800 bcm in the next 20 years. Russia will continue to play a significant role as Europe's dependable partner.
The Minister of Economic Affairs Martin Bartenstein said: "For four decades the traditionally good relations between Austria and Russia have been reflected in the reliable gas supply of Austria from Russia. This partnership between our two countries will be further expanded. Supply agreements have been extended for many years - in any case until 2027. At the same time OMV is realizing jointly with Gazprom a trading platform for the Central European Gas Hub. This will clearly strengthen Austria's role in safeguarding Europe' gas supply security.
On the occasion of the 40 year celebration of the first natural gas supply contacts, Alexej Miller, Chairman of the Board of Directors of OAO Gazprom, said: "In 1968 OMV became the first Western European company to conclude a gas supply contract with the former Soviet Union. Since then, our cooperation has developed with great success and it now includes new business areas such as the further expansion of the Baumgarten trading hub, the realization of joint storage projects along with natural gas supply and transport. By forging ahead with such vigour, Gazprom and OMV are not only strengthening their own positions on global markets but they are also making an inestimable contribution to the security of Europe's gas supply."
International Role Model
The signing of a partnership agreement in 1968 became a role model for all European corporations, with companies like Ruhrgas or Gaz de France soon following suit. OMV currently imports a gas volume of roughly 5.4 bcm per year from Russia. Since 1968, a total of 150 bcm has been imported, a quantity, which is 15 times larger than the volume of Austria's highest mountain, the Großglockner with a height of 3,798 m.
A roughly 5,000 km long pipeline connects Western Siberia with Baumgarten at the Slovakian-Austrian border crossing over Ukraine and Slovakia. Natural gas takes four up to five days to reach the Austrian households and large customers. With a surface of 3.8 million km² Western Siberia is 45 times larger than Austria and, as the major Russian gas producing region, accounts for roughly 90% of Russia's total natural gas production.
Supply Security
OMV gas business field can rely on a roughly 2,000 km long gas network and three natural gas storage facilities via its subsidiary OMV Gas GmbH. The company was able to sell a total of 13 bcm of natural gas in 2007. Russia provides 60% of the gas volume consumed in Austria and is therefore the most important supplier.
In order to meet the seven times higher gas demand in winter than in the summer, OMV operates three natural gas storage facilities in subterranean deposits - mostly depleted gas caverns - at depths of 500 up to 1,500 meters. These natural deposits store a total volume of 2.1 bcm, which corresponds to roughly a quarter of Austria's natural gas consumption per year.
EconGas as new contract partner of Gazprom export
The import agreements stipulated by OMV 40 years ago to secure Russian natural gas supply were extended in September 2006 until the year 2027. Within the framework of the new structure of OMV gas business field, these import agreements were transferred to OMV 50% subsidiary EconGas, which is fully consolidated in the group and is responsible for the gas trading activities in Austria and in the neighboring countries within the OMV gas business unit "Marketing and Trading".
Significant Transit Function
OMV also plays a central transit role in Europe. Roughly one third of the Russian natural gas exports to Western Europe are transported via the OMV gas trading platform in Baumgarten. OMV sold transportation capacities amount to a gas volume of approximately 52 bcm, which is carried via transit lines over the gas trading hub in Baumgarten to Germany, Italy, France, Slovenia, Croatia and Hungary.
Cooperation on the Central European Gas Hub strengthens collaboration between OMV and Gazprom
The Central European gas supplier function of OMV will gain further importance in future through the expansion of the Central European Gas Hub (CEGH) - a virtual trading platform - jointly with Gazprom. At present, the CEGH is already the third largest trading hub in continental Europe. The cooperation agreement signed in February 2008 with Gazprom, which purchased a 50% stake in OMV virtual trading platform, should contribute to expanding and further developing the CEGH into the largest gas hub in continental Europe over the next years.