OMV says no ongoing talks to merge rival pipelines

Thu Mar 18, 2010 12:55pm GMT

Quotes

   

* Media speculation over merger of rival pipelines

* OMV says press reports show there is interest in Nabucco

By Selcuk Gokoluk

ANKARA March 18 (Reuters) - Austria's OMV (OMVV.VI) denied speculation on Thursday that talks were being held on combining a Russian natural gas pipeline with its EU-backed rival, both of which aim to deliver gas to Europe.

The price tag for Russia's South Stream pipeline is expected to be much higher than previously expected while analysts have questioned whether a predicted gas glut seen until 2015 and weak growth expected thereafter will leave room for both pipelines.

Russian partner ENI's (ENI.MI) chief executive officer Paolo Scaroni was quoted in a media report last week as saying combining the South Stream pipeline with the Nabucco pipeline project would save time and money.

But Nabucco partner OMV's head of gas and power Werner Auli said there were no ongoing discussions on a merger.

"We recognise that (the media report) shows very serious interest in the Nabucco project. There are no ongoing discussions about merging the projects," Auli told reporters at an energy conference in Turkey.

Analysts expect Russia's South Stream pipeline project to cost tens of billions of dollars as constructors lay pipeline across the bed of the Black Sea to bypass Ukraine whose past gas rows with Moscow have cut off supplies to Europe.

The 7.9 billion euro Nabucco pipeline was conceived to cut Europe's dependence on Russian natural gas, which makes up 25 percent of the continent's gas supplies, but has yet to secure solid supply agreements from potential suppliers.

Approximately 70-80 percent of the Nabucco's cost is expected to be met through financing, and international lenders such as the European Investment Bank have expressed possible interest in financing the project.

A Russian Gazprom official was quoted earlier this year as saying that talks were expected to start soon with banks to finance the South Stream, which plans to deliver as much as 63 billion cubic metres (bcm) of gas, but no financial details were given [ID:nLDE60S0KM].

The Nabucco project, which aims for a capacity of 31 bcm, has said it expects to start transporting gas by 2014, one year ahead of the South Stream target to become operational in 2015.

The Nabucco consortium includes OMV, Hungary's MOL (MOLB.BU), Romania's Transgaz TGNM.BX, Bulgaria's Bulgargaz, Turkey's Botas and Germany's RWE (RWEG.DE) (Writing by Thomas Grove; editing by James Jukwey)

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