Gazprom winning pipeline war with EU

Gazprom has come a step closer to controlling the entire European gas supply chain after buying a 50% stake in a pivotal storage and transit route.

The half share in the Central European Gas Hub was sold by Austria’s OMV Group, which also leads the Nabucco pipeline project. It's financed by the EU to rival Gazprom's South Stream. OMV now refuses to rule out Gazprom taking a share in Nabucco as well.

The Austrian hub is playing a high-stakes game with Gazprom. OMV will get the three billion cubic meters of gas it wants to overtake Belgium within two years as the continent’s biggest trading platform.

A leaked transcript shows the U.S. is so worried about Gazprom’s power it held a top-level meeting to warn top Serb officials against Friday’s sale of their oil monopoly to Russia.

The U.S. side questioned whether Serbia took into consideration possible economic dependency and political control. They were especially concerned with Bulgaria’s decision to join Gazprom, because it undermines attempts to diversify European gas supplies.

By contrast the very existence of the U.S.’s rival Nabucco pipeline is in doubt. Gazprom chief Aleksey Miller claims Nabucco has “no resources, and no gas reserves either”.

Nabucco operator OMV claimed it did have a future, but admitted that may now lie with Gazprom. OMV cheif executive Dr. Wolfgang Ruttenstorfer says there are huge quantities of gas available to Europe from both the Middle East and teh Caspian area.

“As soon as the South Stream project is developed as far as the Nabucco project, it will be very natural that the two projects are discussed and if there are any synergies – we are not against using any of them,” Ruttenstorfer said.

Gazprom says Nabucco is not that attractive at the moment, but hinted it could step in with supplies if offered the right terms.

“We have been in discussion in respect of if it has sense to join Nabucco for Russia,  maybe for Nabucco it has sense, but we still don’t see any sense for us, but we will continue this discussion,” Aleksandr Medvedev, deputy CEO of Gazprom said.

Chief strategist at Uralsib Bank Chris Weafer says the current situation is a pipeline war, and it looks set to get even worse for Gazprom’s opponents. On Saturday Qatar’s Energy Minister Abdullah Al-Attiyah revealed the world’s leading gas-producing nations will meet in Moscow in June to discuss an Opec-style cartel.