GERMANY TAKES RUSSIAN - BELARUS OIL DISPUTE IN

UNCLAS BERLIN 000045

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EUR/AGS TO'KEEFFE, EB/ESC/IEC FOR SGALLOGLY,
JLEWANDOWSKI, RGARVERICK, EUR/ERA FOR LCATIPON, DLIPPEATT

E.O. 12958: N/A
TAGS: ENRG ECON PREL PGOV PL RS BO UP GM
SUBJECT: GERMANY TAKES RUSSIAN - BELARUS OIL DISPUTE IN
STRIDE

REF: WARSAW 33

THIS CABLE IS SENSITIVE BUT UNCLASSIFIED, NOT FOR INTERNET
DISTRIBUTION


1. (U) German reaction to the cutoff of Russian oil via the
Druzhba Pipeline has been relatively muted. Economics
Minister Michael Glos stated there was no cause for alarm as
Germany has sufficient reserves to cover any shortages. That
said, Glos demanded that "the pipeline be reopened as soon as
possible." Chancellor Merkel stated the cutoff underscores
the need for Germany to diversify its energy supplies, focus
on renewables, and reexamine its decision to phase out
nuclear power. Merkel intends to raise the issues of
security of supply and transit with Russian President Putin
in a previously scheduled meeting set for January 21 in
Moscow, a point Chancellery Director General for Economics,
Jens Weidmann, reiterated in a meeting with EMIN January 9.
Merkel also publicly stated a new partnership agreement with
Russia is vital and should address energy security concerns.


2. (SBU) Weidmann told us no oil is coming to Germany
through the pipeline. He added that there are alternative
sources as well as 90 days of reserves which will keep the
cutoff from having an immediate impact on domestic supplies.
He does expect the disruption to impact discussions on
security of energy supplies, in Germany as well as throughout
the EU. Germans in the past, he said, have tended to regard
energy security as a problem for others; Russia's actions
showed Germany too is vulnerable.


3. (SBU) Ministry of Foreign Affairs State Minister Gernot
Erler agreed with Weidmann's assessment. He also told us he
believes the disagreement will be resolved soon. The Foreign
Ministry's Energy Officer Michael Frank was sanguine about
the technical impact of the shutoff. He said Germany's
reserves were more than sufficient to weather any disruption
of supply, and stated that oil is much more fungible than
natural gas. Frank said the main impact is likely to be on
the reputation of Russia as a reliable energy supplier.
Hartmut Schneider, Deputy Director General for Energy at the
Economics Ministry, echoed Frank's opinion. Schneider added
that the disruption will influence not only German-Russian
but also EU-Russian relations. Schneider said it was
apparent by Russia's behavior that it had little concern for
its European "friends." Schneider stated European
Commissioner Piebalgs would chair a meeting of the EU Oil
Suppliers Group later in the week, possibly Thursday or
Friday (January 11 or 12).


4. (U) The Druzhba Pipeline provides approximately 20% of
Germany's crude oil imports (22 million tons) to refineries
in eastern Germany at Schwedt and Leuna. Both refineries
have approximately one week of crude oil reserves. Berlin is
among the areas the two refineries supply with gasoline and
other refined products. The refinery at Schwedt is connected
via tanker to a pipeline in Rostock and as a result should
experience no disruption in operation. The German government
has strategic oil reserves to cover demand for 90 days, as
well as the largest natural gas reserves in Europe. German
energy companies also maintain their own reserves.


5. (SBU) In contrast to last year's controversy over natural
gas supplies via Ukraine, the German government has not
rushed to the defense of Belarus a country viewed by most
Germans as autocratic and less "European" than Ukraine.
However, the controversy is likely to strengthen Germany's
determination to diversify energy supplies, including through
a proposed LNG terminal at Wilhelmshaven and the Baltic Sea
Pipeline, currently under construction. In addition, it will
affect discussions on an EU energy strategy, to be released
under the German presidency in March. The European
Commission is also scheduled to release an extensive series
of energy initiatives on January 10.
TIMKEN JR