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. Last Updated: 07/27/2016

Austria Gets Invited to Join South Stream

VIENNA -- Russia has invited Austria to join a planned pipeline below the Black Sea in a move to allay concerns that it is undermining a rival Austrian-led project, Austria's economy minister, Martin Bartenstein, said Thursday.

The invitation, made in a letter to Bartenstein by Industry and Energy Minister Viktor Khristenko, came shortly after Gazprom signed a deal to launch the gas pipeline with Italy's ENI, Bartenstein said.

"It's an invitation to Austria and to an Austrian energy company to participate in the South Stream pipeline project," Bartenstein said.

Bartenstein said he saw the move as a sign Russia was dropping its resistance to the rival Nabucco pipeline, due to bring Caspian gas to Europe without passing through Russia, and led by Austrian state-controlled energy group OMV.

"I think it's a good sign that Russia, on a government level, backs Austria joining the South Stream project," Bartenstein said.

The Industry and Energy Ministry and Gazprom both declined to comment on Khristenko's letter to Bartenstein.

"The Russian view of Nabucco used to be a clearly negative one. The Russian side used to always make this clear -- both the government and in particular Gazprom," he said. "I don't share concerns now that South Stream is meant to divert from Nabucco."

"For the European Union as a whole and for Austria in particular it is certainly welcome news if Nabucco and South Stream are seen as projects that are complementing each other."

The 3,300 kilometer, 4.6 billion euro ($6.2 billion) Nabucco pipeline, also backed by energy groups in Turkey, Romania, Bulgaria and Hungary, is a key plank in European Union plans to diversify gas supplies away from Russia.

The EU gets about one-quarter of its gas from Russia, which it needs to warm many northern European homes and fire an increasing number of power plants, and sees Nabucco as a crucial Russia bypass.

Nabucco initially incensed Gazprom, as the state monopoly has made a fetish of owning its export routes since a disruption to supplies during a pricing dispute with Ukraine at the start of 2006, which sparked outrage across Europe.

Gazprom's arm-twisting was suspected by analysts to be at work when Nabucco partner MOL of Hungary appeared to soften its support for the project earlier this year, saying it would keep its options open.

But when Gazprom deputy chief executive Alexander Medvedev presented the 900-kilometer South Stream project in June, he said it was not meant as an alternative to Nabucco, and also said the 50-50 joint venture with ENI was open to other parties.

After dipping beneath the Black Sea, South Stream would come ashore in Bulgaria and then branch to Austria and Slovenia in one spur and southern Italy in another.

OMV chief executive Wolfgang Ruttenstorfer said OMV would look closely at the proposal to join South Stream. "In principle we are, of course, interested in taking part in all projects that affect us," he said. "We are also glad that Gazprom thereby views Nabucco much more positively," he said.