Identifier
Created
Classification
Origin
06THEHAGUE16
2006-01-05 07:13:00
CONFIDENTIAL
Embassy The Hague
Cable title:  

NETHERLANDS/RUSSIA-UKRAINE GAS: ALSO COUNSELING

Tags:  ENRG ECON UP RS NL 
pdf how-to read a cable
VZCZCXYZ0008
OO RUEHWEB

DE RUEHTC #0016 0050713
ZNY CCCCC ZZH
O 050713Z JAN 06
FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4472
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHKV/AMEMBASSY KIEV PRIORITY 0413
RUEHMO/AMEMBASSY MOSCOW PRIORITY 1636
C O N F I D E N T I A L THE HAGUE 000016 

SIPDIS

SIPDIS

STATE FOR EUR/UBI/REITER

E.O. 12958: DECL: 01/04/2016
TAGS: ENRG ECON UP RS NL
SUBJECT: NETHERLANDS/RUSSIA-UKRAINE GAS: ALSO COUNSELING
COMPROMISE

REF: A. 2005 STATE 229253

B. 2005 THE HAGUE 3075

Classified By: Econ Counselor Richard Huff for reasons 1.4 (b) and (d).
C O N F I D E N T I A L THE HAGUE 000016

SIPDIS

SIPDIS

STATE FOR EUR/UBI/REITER

E.O. 12958: DECL: 01/04/2016
TAGS: ENRG ECON UP RS NL
SUBJECT: NETHERLANDS/RUSSIA-UKRAINE GAS: ALSO COUNSELING
COMPROMISE

REF: A. 2005 STATE 229253

B. 2005 THE HAGUE 3075

Classified By: Econ Counselor Richard Huff for reasons 1.4 (b) and (d).

1) (C) Summary: The Dutch Economic Ministry's Deputy
Director General for Energy Pieter Bot told econoff his
embassies in Moscow and Kiev have been counseling reftel A's
same message of compromise and reform, respectively. While
Bot believed Ukraine's version of events over Russia's, he
worried that Gazprom's allegations of gas theft could have
merit. Russia's and Ukraine's secret gas contracts and
pricing formulas are at the heart of the dispute, but
Russia's actions were clearly politically motivated, he
added. While the Netherlands receives less than five percent
of its gas from Russia, Dutch investment in the Russian
energy sector is substantial. End Comment.


2. (C) On January 3 econoff made reftel demarche to Pieter
Bot, Deputy Director General for Energy and
Telecommunications, Ministry of Economic Affairs.


3. (C) Bot said that the GONL has been making ref A
demarche points in Moscow and Kiev, as well as in
consultations with fellow EU member states. In his view the
Ukraine and Russia are trying to use complicated and
ambiguous price formulas in their secret gas contracts to
their own advantage. Bot said that the contracts probably
allowed significant price hikes, but also said Russia had
created the crisis to influence Ukraine's parliamentary
elections. His embassy in Kiev has had frank talks with
Ukraine energy officials, and the GONL tends to believe
Ukraine's version of events over the Russia's. Consequently,
the GONL is taking a dim view of Russian actions.


4. (C) While Bot was encouraged that Russia had resumed gas
shipments to Ukraine, he was concerned that Russia's
accusations of gas theft could have merit and would poison
ongoing negotiations. The Dutch embassy in Kiev, he said,
had reported that a twelfth-hour compromise to allow Turkmen
gas to replace Gazprom's supplies to Ukraine had fallen
through, raising question about Ukraine's claims to have been
taking receipt of Turkmen gas on January 1. However, Gazprom
has also leveled accusations of theft in the past, he noted,
without elaborating. This time the allegations would have to
be addressed if the two sides are to settle the current
disagreement. He believed the secretariat of the European
Energy Charter might be the appropriate organization to
investigate the veracity of theft charges.


5. (C) Bot did not know what the EU energy experts would
decide at their January 4 meeting, but he thought greater
transparency in secret gas contracts between Gazprom and
Ukraine would be key to any solution. Bot suggested the IEA
or even the Stockholm Institute for Arbitration could play a
key mediating role.


6. (C) Comment: The Netherlands is not concerned about
their gas supply - it gets less than five percent of its
natural gas from Russia. Instead, GONL and private sector
energy officials seem to share a latent distrust of Russian
energy sector legal protections, with Yukos lawsuits playing
out in Amsterdam's courts and Shell Oil disputing Russian
revenue demands from the over-budget Sakhalin-II project.


7. (C) Comment, Cont. Nevertheless, Dutch companies are
forging ever closer links to Russian energy. Dutch LNG
company Gasunie is considering investing in the new
German-Russian Baltic pipeline and Shell is buying into
Gazprom's Siberian gas fields. Bound to - but leery of -
further investment in Russia's energy sector, the Dutch might
join efforts to pressure Russia for energy sector reforms in
the wake of this crisis.


8. (C) Comment, cont. At his meeting with the Deputy
Secretary in October, Foreign Minister Ben Bot invited

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Zoellick to a high-level trans-Atlantic energy security
conference scheduled for February 6-8 (reftel B). Bot hopes
the conference, which would target EU commission and member
state officials, think tanks, senior energy executives, as
well as Turkey's prime minister, NATO the IAE, would lead to
a sustained trans-Atlantic conversation on energy security.
Such a conference could be even more pertinent now in light
of developments in the Ukraine. End Comment.
BLAKEMAN