Gazprom, OMV Sign Pact on South Stream Gas Pipe

VIENNA--Russian state gas giant OAO Gazprom and Austrian oil and gas company OMV AG signed an agreement Tuesday on the construction of the last 50 kilometers of the planned South Stream gas pipeline.

The signing comes the same day as Russian President Vladimir Putin is visiting Austria.

The South Stream pipeline is intended to bring Black Sea gas via Bulgaria to Europe, ending at the Baumgarten gas hub in Austria. The pipeline would by-pass Ukraine.

As the crisis in Ukraine continues, there has been growing European Union resistance to South Stream in recent months. Earlier this month, Bulgaria, seen as a supporter of the pipeline, stopped construction on the pipeline amid EU competition concerns.

Although the European Commission said last March that all high level political talks regarding South Stream would be put on ice, Gazprom's Chief Executive Officer Alexei Miller said, via a translator, that he was in "constructive dialogue" with the EU Commission. He added that he had at least weekly, sometimes daily phone contact with EU Energy Commissioner Guenther Oettinger.

"Big projects always have a question or another than need to be solved," Mr. Miller said, in response to a question about the construction stop in Bulgaria.

The pipeline is completely "on schedule," Mr. Miller, said with the first gas deliveries planned for the beginning of 2017 and for the gas deliveries to reach their maximum by the end of 2017.

OMV's CEO Gerhard Roiss said there is no alternative for Europe than to import gas from Russia.

"It must be clear to us that Europe needs Russian gas," Mr. Roiss said.

Gazprom said in a statement that the two sides expect to obtain all required permissions for the South Stream construction by the end of 2015. The pipeline is designed to carry 30 billion to 32 billion cubic meters of gas a year from the Austrian border with Hungary to Baumgarten, 50 kilometers away.

-Andrey Ostroukh in Moscow contributed to this article

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