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Austrian firm confident controversial pipeline will go ahead

OMV not thinking in terms of Nord Stream 2 being 'inhibited'

New pipeline 'extremely important' to Europe's gas supply

London — Austria's OMV sees its position as a financial backer of the planned 55 Bcm/year Nord Stream 2 gas pipeline from Russia to Germany as strengthened by the recent guidance from the US government on the possible implementation of sanctions against Russian energy infrastructure.

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Speaking on a conference call following OMV's third-quarter results, CFO Reinhard Florey said the company continued to back the controversial project despite US and EU objections that it gave Russia too much influence over the European gas market.

"From the legal side and after clarifications from the US Secretary of State, we feel that OMV's position is confirmed and strengthened," Florey said.

The US State Department last month published new guidance on the potential implementation of the discretionary sanctions, which would target entities investing in Russian pipelines, including Nord Stream 2 and TurkStream.



The guidance -- which was not a sanctions action and was designed to bring clarity to the US measures -- suggested that the financing agreements made with five European companies in April 2017 for helping to fund Nord Stream 2 would not be impacted as the agreement was signed ahead of the US sanctions law passed in August this year.

The guidance update also made clear that the sanctions were discretionary and that the Secretary of State, in consultation with the Secretary of the Treasury, would "coordinate with allies of the US" in imposing the sanctions.

"There are still many topics to be discussed," Florey said with regard to the US measures.

"But we are confident it [Nord Stream 2] will go ahead," he said.

Asked whether the project could be "inhibited" by the political opposition, Florey said: "We're not thinking of that scenario. Nord Stream 2 is extremely important for Europe's energy supply."

He added that for OMV, its investment in Nord Stream 2 was a "purely financial engagement" but added that was a strategic element, namely that OMV would be given the ability "to supply more gas and stable gas to our customers."

OMV is one of five European companies -- along with France's Engie, Anglo-Dutch Shell and Germany's Uniper and Wintershall -- that in April agreed to finance up to 10% of the estimated Eur9.5 billion ($11 billion) project each.

First installments of the financing were paid to Nord Stream 2 earlier in the summer with OMV saying it paid in June a first Eur200 million ($234 million) tranche out of its financing commitment.

Florey said Thursday OMV also paid Eur65 million in Nord Stream 2 funding in the third quarter.

All five companies have slammed the threat of US sanctions, saying Nord Stream 2 was an important project for guaranteeing future gas supply security for Europe.

--Stuart Elliott, stuart.elliott@spglobal.com
--Edited by Jonathan Loades-Carter, jonathan.carter@spglobal.com