DUESSELDORF, Germany, Feb 26 (Reuters) - Austrian steelmaker Voestalpine can compensate for a loss of business from the scrapping of Russia’s $40 billion South Stream underwater gas pipeline by taking on other work, its chief executive said on Thursday.
The company had been due to supply 120,000 tonnes of steel for the second of four South Stream pipelines in a deal worth an estimated 100 million euros ($113 million).
But Russia scrapped the project in December, citing EU objections, amid plunging energy prices, stalling European demand and a political standoff between the European Union and Moscow over the crisis in Ukraine.
“You can assume that we can compensate for South Stream through other projects,” CEO Wolfgang Eder told Reuters on the fringes of a steel conference organised by newspaper Handelsblatt. “South Stream is not relevant for our profits.”
Voestalpine said it was supplying 117,000 tonnes of steel to Petrobras for the Rota 3 deep-ocean oil pipeline in Brazil and would in April begin delivering clad steel for Kazakhstan’s Kashagan offshore oil field in the Caspian Sea.
Eder said Voestalpine had not supplied any steel for South Stream since December after an initial delivery of 20,000 tonnes and was still waiting to see what Russia’s next move would be.
Russia has named Turkey as preferred partner for an alternative pipeline and Voestalpine could yet supply steel for such a route.
“The contract is not canceled,” Eder said. “We can’t keep capacities ready for ever but we have some flexibility for the next few months.”
Eder added that Voestalpine was sticking to its target to make earnings before interest and tax (EBIT) of 850 million euros this year and EBITDA (EBIT before depreciation and amortisation) of between 1.5 billion and 2 billion by 2020.
$1 = 0.8812 euros Reporting by Georgina Prodhan; Editing by Thomas Atkins and David Holmes