Deadly blast at Austrian pipeline hub slashes gas flow to Italy

Smoke rises from Austria's largest natural gas import and distribution station after a gas explosion in Baumgarten, Austria December 12, 2017 REUTERS/Heinz-Peter Bader

By Alexandra Schwarz-Goerlich, Francois Murphy and Stephen Jewkes

VIENNA/MILAN (Reuters) - An explosion and fire that ripped through Austria's main gas pipeline hub on Tuesday killed one person and injured 21 others, prompting Italy to declare a state of emergency as flows from the strategic site were cut off for most of the day.

The Baumgarten site in eastern Austria, near Slovakia, is a major regional transfer node, taking natural gas from as far away as Russia and pumping it towards neighbours including Germany and Italy, Baumgarten's biggest recipient.

News of the blast sent gas prices in Europe soaring on fears it would restrict supply as winter sets in. But by Tuesday evening the site's operator, Gas Connect Austria, said it would be brought back online before midnight (1100 GMT), confirming a statement by Italian grid operator Snam <SRG.MI>.

"Flows on the Trans Austria Gas (TAG) pipeline towards Italy, the West Austria Gas pipeline to Germany and the Hungaria-Austria Gas pipeline will be restored over the next few hours," Gas Connect Austria said around 8 p.m., naming the main arteries that supply neighbouring countries from Baumgarten.

"With the restart of operation on the international pipeline systems, it will be possible to resume transit through Austria, thereby restoring security of supply for the affected countries," it added.

Asked what rate flows would resume at, a spokesman for Gas Connect Austria said they would be built up progressively and further information would be provided on Wednesday morning.

Footage on social and other media on Tuesday morning, when the explosion occurred, showed a column of fire in the distance rising from a flat landscape. A wide area around the site was cordoned off and 250 firefighters were called to the scene.

The emergency services said one person was killed and 21 injured, one seriously. Among the slightly wounded were "employees of contractors from six other countries" apart from Austria, the operator said, without elaborating.

The blaze was reduced to smaller fires and then extinguished by Tuesday afternoon, allowing experts to assess the damage. Police and Gas Connect Austria said they believed a technical fault was to blame.

Gas Connect Austria had said its deliveries to Austria's southern and southeastern borders were affected by the blast until further notice. Those pipelines supply Hungary, Slovenia and Croatia but also Baumgarten's biggest recipient, Italy.

That dependence on its gas led Italy to declare a state of emergency on Tuesday as its industry minister said the country had a "serious" energy supply problem.

A state of emergency would give Rome the right to use a series of extraordinary measures such as allowing coal and oil power plants to fire at full blast.

The Italian wholesale day-ahead price surged 215 percent to 75 euros per megawatt-hour, its highest recorded level.


Gas Connect Austria said the part of the site affected by the fire was only 100 metres (330 feet) by 100 metres at a site that covers 17 hectares (42 acres). That part is not used for international pipelines, a spokesman said.

"On the basis of the available information, the three lines of the TAG, the pipeline that brings Russian gas to Italy, have not been affected," Snam Chief Executive Marco Alvera said.

The blaze has exacerbated concerns in Europe about tight gas supply after several nuclear reactor and gas infrastructure outages and the shutdown of the Forties North Sea pipeline, during a period of high demand due to freezing temperatures.

Analysts believe, however, that there is enough storage to cope with supply for the time being.

"But if supply does not resume soon and the cold weather continues, prices will remain strong through the winter," Wood Mackenzie analyst Massimo Di-Odoardo said. "We might well see some competition between Europe and Asia to attract LNG (liquid natural gas, delivered by ship) this winter."

Slovakia's main gas transit route to Austria was suspended after the fire, Slovak pipeline operator Eustream said. Russia's Gazprom Export said it was working on redirecting gas flows and trying to secure uninterrupted supplies to clients.

In Britain, Europe's biggest gas market, the price of gas for immediate delivery reached its highest level since 2013.

A UK National Grid spokesman said there was sufficient gas supply to meet demand amid multiple outages, underlining the breadth of concern about supply after the Baumgarten blast.

(Additional reporting by Oleg Vukmanovic and Nina Chestney in London, Katya Golubkova in Moscow, Tatiana Jancarikova in Moscow and Massimiliano Di Giorgio in Rome; Writing by Francois Murphy; Editing by Edmund Blair and Adrian Croft)

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