Identifier
Created
Classification
Origin
08BRUSSELS1697
2008-11-05 16:44:00
CONFIDENTIAL
USEU Brussels
Cable title:  

EU ENERGY COMMISSIONER TO SEEK &POLITICAL ACCORD8

Tags:  ECON EPET EU 
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VZCZCXRO3815
RR RUEHHM RUEHPB RUEHTM
DE RUEHBS #1697 3101644
ZNY CCCCC ZZH
R 051644Z NOV 08
FM USEU BRUSSELS
TO RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEHC/SECSTATE WASHDC
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEHAK/AMEMBASSY ANKARA
RUEHAH/AMEMBASSY ASHGABAT
RUEHKB/AMEMBASSY BAKU
C O N F I D E N T I A L BRUSSELS 001697 

SIPDIS

E.O. 12958: DECL: 11/04/2016
TAGS: ECON EPET EU
SUBJECT: EU ENERGY COMMISSIONER TO SEEK &POLITICAL ACCORD8
WITH TURKEY

Classified By: EEST Counselor Louis L. Bono, reasons 1.4 (b) and (d).

C O N F I D E N T I A L BRUSSELS 001697

SIPDIS

E.O. 12958: DECL: 11/04/2016
TAGS: ECON EPET EU
SUBJECT: EU ENERGY COMMISSIONER TO SEEK &POLITICAL ACCORD8
WITH TURKEY

Classified By: EEST Counselor Louis L. Bono, reasons 1.4 (b) and (d).


1. (C) Andris Kesteris, Chef de Cabinet to the Energy
Commissioner said Andris Piebalgs would be visiting Ankara
and Baku November 6 and 7 to promote the opening of the
Southern Corridor. Piebalgs does not seek to sign any deals
but rather to reach an informal political agreement with
Erdogan. Piebalgs expects the Turks will be flexible on
their 15% liftoff demand, but Kesteris could not say what
Piebalgs is prepared to offer beyond possible EIB concessions
and added that the opening of the energy chapter does not
appear to be forthcoming. Independently, we have heard that
Piebalgs may support a commercial agreement that would
provide Turkey with similar volumes, provided that any
discounted costs would be born by the commercial venture and
not Azerbaijan. Piebalgs was supposed to visit Tbilisi and
Ashgabat as well, but the prospect of anti-government riots
in Tbilisi this weekend caused his staff to cancel the trip.
As for Ashgabat, Turkmen officials advised that the President
Berdimuhamedov would be returning from the Republic of Korea
on Friday evening and would thus be unavailable to meet the
next day. Nevertheless Kesteris said the two maintain a good
relationship, stemming from their ability to communicate in
Russian and common experiences under Soviet rule.


2. (C) When asked about the Turkey-Greece-Italy
interconnector, Kesteris laughed: &Why do you want to know
about this project8 he asked. He opined that TGI is not the
answer to Europe,s security of supply situation due to its
limited capacity (about 10 bcm),most of which will end up in
Italy. In contrast, he pointed out that Nabucco has much
greater capacity (31 bcm) which is destined for Central
Europe. He sardonically added that TGI,s agreement to
provide the Turks with 15% lift-off rights has been a major
headache for the Commission, since the Turks are seeking the
same percentage from Nabucco. Kesteris was not aware that
Turkey,s supply contract with Algeria (4 bcm ) see Istanbul
553) is due to expire in 2011, along with its Russian
contract (6 bcm). He said this underscores Turkey,s
security of supply concerns.


3. (C) On Russia, Kesteris said it is &desperate now for the
European market.8 He is not concerned about Russia,s
ability to fulfill its export contracts. He said that when
Russia liberalizes its market in 2010, there will be less
domestic demand, leaving more available for export. He did
not comment on the prospect of or need for Russian
contributions to Nabucco. Rather, Kesteris he said Egypt is
considered a viable secondary supply source.


4. (C) In a separate meeting, Jeremy Ellis of RWE was less
optimistic about Egypt. He said Egypt has prohibited exports
until 2011, and thus it is not clear what, if any supplies
will be available, and how to transit the gas. Ellis said
the Nabucco shareholders are instead looking at Iraq, Iran,
and Turkmenistan as secondary source options, and is
interested in USG perspective on these options. He said that
they are close to securing commercial agreements with Turkey,
and would not be surprised if these were executed during the
January 2009 Nabucco Summit in Budapest. Ellis was not
enthused about Piebalgs, trip, and indicated that the
Commission has not been particularly helpful, in contrast to
member state governments. He added that German Foreign
Minister Steinmeier has agreed to carry the &Nabucco
mantle8 and that Turkmen President Berdimuhamedov would be
visiting Germany later this month.


5. (C) Subsequently, Brendan Devlin, assistant to EU Southern
Corridor Coordinator Jozias Van Aartsen, said Piebalgs plans
to pitch the Caspian Development Corporation (CDC) idea to
Turkey as a carrot to encourage flexibility on their 15%
liftoff demand. The CDC was conceived by the Commission as a
way to aggregate demand from Europe and Turkey for Turkmen
gas. Convincing Turkmenistan to ship large gas volumes west
would also alleviate Turkey,s security of supply concerns
and convince them to let enough gas flow through to Europe to
make the Southern Corridor a reality. Devlin said the
Commission has requested the World Bank to commence a
feasibility study on CDC and asked for our support.
.