LITHUANIA RECEIVES LETTERS OF SUPPORT ON ENERGY

C O N F I D E N T I A L SECTION 01 OF 02 VILNIUS 000982 SIPDIS SIPDIS E.O. 12958: DECL: 10/30/2016 TAGS: PREL ENRG EUN LH RS SUBJECT: LITHUANIA RECEIVES LETTERS OF SUPPORT ON ENERGY FROM EUROPEAN COMMISSION REF: VILNIUS 969 Classified By: Pol/Econ Chief Rebecca Dunham for reasons 1.4 (b) and (d ) ¶1. (C) During his October 24 meeting with the Ambassador (reftel),MFA Political Director Zygimantas Pavilionis mentioned two recent letters addressing energy issues: an October 19 letter from EC President Barroso to President Adamkus and a September 25 letter from EC Energy Commissioner Piebalgs to Russian Industry and Energy Minister Viktor Khristenko. At the Ambassador's request, Pavilionis provided us copies of the letters. The full text of both letters -- which Pavilionis passed to us in confidence -- follows below. ¶2. (C) The Lithuanians were pleased with both letters, which associate the Commission with Lithuania's energy concerns, particularly the supply cut-off of piped crude from Russia to Lithuania's Mazeikiu Nafta oil refinery. ¶3. (C) The full text of the letters is below. (Begin Barroso letter): ADVANCED - COPY H.E. Mr. Valdas Adamkus President of the Republic Lithuania Jose Manuel Barroso President of the European Commission Brussels, 19.10.2006 Barroso (2006) A/5182-LT Barroso (2006) D/1468 Your Excellency, Thank you very much for forwarding me a copy of the letter you jointly signed with the President of the Republic of Poland to the President of the Republic of Finland on the security of energy supplies and, in particular, the issue of the Mazeikiu Nafta oil refinery in Lithuania. As you are aware, energy security is one of the key issues currently being debated in the EU. The Commission published a Green Paper on this subject earlier in the year, which was then followed by a joint Commission/High Representative Paper on the external aspects in June. It has also featured as a key point of discussion in each formal and informal Heads of State and Government Summit this year. I am pleased that we will have a further opportunity to discuss this issue again later this week in Lahti. With respect to particular issue of the Mazeikiu Nafta oil refinery in Lithuania, Member of the Commissioner Piebalgs has raised the issue bi-laterally in a letter to the Russian Industry and Energy Minister in the framework of our Energy Dialogue with Russia. It is, clearly, important to try to �A;ensure that this issue is dealt with at an appropriate level and to encourage more transparency by the Russian side as to the real technical issues they face concerning the leak on this pipeline. A lack of transparency only leads to fears that the cut-off is not just a purely technical issue but one which is politically motivated. This then adversely affects the public perception of the willingness of Russia to play by the international accepted &rules of the game8. I therefore believe it is important that we use all opportunities to impress upon our Russian counterparts in a calm, coherent matter, that their lack of transparency does tQ no favours. The principles of transparency and predictability are ones we should recall in our meeting in Lahti tomorrow with President Putin. I will continue to follow this matter closely. Solidarity is an important principle for the EU --in energy as in others matters. Yours faithfully, Jose Manuel Barroso (NOT SIGNED) (End Barroso letter) (Begin Piebalgs letter) MR VIKTOR KHRISTENKO Minister of Industry and Energy Kitaygorodsky pr. 7 109074 Moscou Andris Piebalgs Member of the European Commission Brussels, 25 SEP 2006 D92006) 932 Dear Minister, (HANDWRITTEN: Dear Viktor,) VILNIUS 00000982 002 OF 002 I am writing in relation to recent announcements and press reports regarding the investments of a number of EU oil and gas companies in Russia. As I am sure that we are both aware, in order to ensure that companies are willing to invest in multi-billion Euro energy projects, a secure and predicable investment climate is necessary. Without this, investment in new energy projects will be highly problematic, providing uncertainties for the world,s future energy supply. This is one of the important issues that the EU-Russia Energy Dialogue enables us to consider to our mutual advantage. Specifically in relation to the developments such as Sakhalin-2, I fully support the view that every country has the legitimate right and indeed obligation to ensure that any oil or gas extraction on its territory is undertaken to the highest possible standards. However, in the event that any such issues are identified, I am sure that you will agree that they should be clearly and unequivocally set out by the appropriate Russian authorities and that investors must be given an appropriate time to resolve them according to defined and clear criteria which are set out in advance. The successful EU-Russia Energy Partnership is based on the mutual respect of transparency, predictability, and non-discrimination. The investments of EU companies in Russia need to be examined in this light. Indeed this principle must apply as much to the ability of Russian companies to invest and sell gas and oil freely at both upstream and downstream levels in the EU as much as the ability of EU companies to invest in Russia. I have no doubt that in the light of these shared values the Russian authorities will be able to rapidly resolve any technical issues with investors in a satisfactory manner. If necessary, I am available to discuss this further in the context of the EU-Russia Energy Dialogue and to play an active part in finding a rapid solution to such issues. I would also like to raise another issue related to crude oil deliveries to Mazeiku Nafta refinery in Lithuania via the Druzhba pipeline which were halted at the end of July 2006 following an incident on pipeline located in Russian Federation territory. I was informed that Mazeiku Nafta has offered assistance to repair the pipeline; however, there was no further follow up to this proposal. I would highly appreciate if you could provide me your assessment of this issue. In case this would be necessary, we could propose a joint evaluation by EU and Russian experts to assess the range of the accident in the Druzhba pipeline. Taking into account the high quantity of oil supplies the EU receives from Russia, I strongly believe there is a mutual interest to get more clarity in this particular case. Yours sincerely, ¶A. Piebalgs (SIGNED) (End Pielbalgs letter) CLOUD