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50th Anniversary of the Gas Supply Contract

On 1 June 1968, a historic contract from today’s view was signed in Vienna, establishing Austria’s role as a key country in Europe’s natural gas network. An anecdotal look at an exceptional Russian-Austrian partnership and decisive moments of its history.

The setting is Argentinierstraße in Vienna. In the Soviet trade office, everything is ready for the big moment. Around the rectangular table – equipped with microphones, ashtrays, and one Soviet and one Austrian pennant – five men have taken their seats and pulled out their fountain pens. There are documents in front of each of them. In the background, men lean over the table and indicate the places where they need to sign. The moment has arrived. The CEO of OMV (at the time, still ÖMV), Ludwig Bauer, and his Deputy Friedrich Feichtinger, Voest CEO Herbert Koller, the Soviet Deputy Minister of Foreign Trade Nikolai Osipov and Igor Fedorov, the Deputy President of V/O Sojusnefteexport (today’s Gazprom Export) sign the contracts that, in addition to the delivery of pipeline tubes and a credit agreement, provide for the supply of natural gas from the Soviet Union to Austria over a period of 23 years. These contracts will go down in the history books of both countries and that of Europe’s energy supply. The date is 1 June 1968.

Then, as now, natural gas plays a key role in the portfolio of OMV. For Austria, it has always been an affordable energy source, and European demand for natural gas will continue to increase over the next decades. The 50-year collaboration with Russia is a win-win situation.

Trust in times of unrest

While a festive atmosphere filled the room in Argentinierstraße, the world outside was in unrest. That Soviets and Austrians could sit down at a table during the Cold War and agree on a common economic future was anything but a matter of course. Rudolf Gruber, CEO of the electricity supplier Newag in 1968 und today the only living Austrian witness who was actively involved in the signing of the contracts, explains why the pioneering achievement succeeded: “The special thing about the years before and after the State Treaty of 1955 was that over time, a strong relationship of trust grew from the ongoing cooperation between the Soviet and Austrian representatives, as well as the authorities and political institutions.”

Austria broke the ice
 

The conclusion of the contracts came at the right time. Austria, which had been substituting natural gas for coal gas since the 1960s, was faced with a significant increase in demand for the natural resource, which the country could no longer meet without imports. For the USSR, the door to Western Europe opened in 1968. Austria had broken the ice, and contracts followed with Italy, the Federal Republic of Germany, and France. Pipelines were built, and the natural gas energy industry began to flourish. Over the years, follow-up contracts were signed, and the quantities of natural gas delivered from the USSR to the European distribution hub in Baumgarten in Lower Austria grew exponentially. In 1968, the amount was only 140 million cubic meters, whereas by 1991 it had already risen to more than five billion.

1991 was also the year when OMV opened its office in Moscow. In 1993, Andrea Reiss became head of the office and from then on has served as OMV’s contact person for its Russian business partners. She is responsible for maintaining good relations and over the decades has organized and witnessed many contract negotiations and signings.

Sausages near the opera house

There is no shortage of anecdotes on the topic. One episode in Vienna left a lasting impression. The representatives had reached the end of two years of negotiations that for a long time seemed doomed to failure. “When we finally got the contracts ready to sign at two o’clock in the morning, nobody thought about going to bed after all the hard work.” Everyone went together to the sausage stand near the opera house. “The vendor who actually was getting ready to close for the night realized the importance of his sausages for our country and stayed open late just for us.” The contracts were signed on the same morning, at 10 am, recalls Andrea Reiss.

 

That long-lasting negotiations sometimes test the relationship remembers Andrea Reiss all too well. “However, we always managed to remain professional and separate business from the personal.” She finds that humor and warm hospitality are two of the qualities that connect and bring together Russians and Austrians: “This has led to trust, respect, understanding, and mutual appreciation which are necessary for the success of longstanding relationships.”


The flow goes on

The 45 billion cubic meters of natural gas that flowed from the Siberian Yamal fields to Baumgarten in 2017 is clear proof that the 50-year partnership between Gazprom and OMV is alive and well. In 2018, the 200 billionth cubic meter of Russian natural gas will be delivered to Austria. A set of long-term supply contracts provide for the transport of natural gas through Austria to Europe in the coming decades too. However, before that, it is only fitting to celebrate this “golden anniversary” with a gala event in the dignified setting of the Hofburg Palace in Vienna. It is rumored that the sausage stand near the opera has also been informed – for guests who want to party a little longer.

Discover more about major milestones  of the 50 years of cooperation between OMV and Grazprom:

 

 

 

 

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