Identifier
Created
Classification
Origin
08BRUSSELS284
2008-02-21 06:30:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
USEU Brussels
Cable title:
US/EU ENERGY SECURITY DISCUSSIONS
how-toVZCZCXRO3294 RR RUEHAG RUEHDF RUEHHM RUEHIK RUEHLN RUEHLZ RUEHMA RUEHPB RUEHPOD RUEHROV DE RUEHBS #0284/01 0520630 ZNR UUUUU ZZH R 210630Z FEB 08 FM USEU BRUSSELS TO RUEHC/SECSTATE WASHDC INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE RUCNMEU/EU INTEREST COLLECTIVE RUCNMEM/EU MEMBER STATES COLLECTIVE RUEHMO/AMEMBASSY MOSCOW
UNCLAS SECTION 01 OF 04 BRUSSELS 000284
SIPDIS
SENSITIVE
SIPDIS
EPT FOR OES
DEPT FOR EUR/ERA
DEPT FOR EEB/ESC
E.O. 12958: N/A
TAGS: ECON ENRG EPET ETRD EU
SUBJECT: US/EU ENERGY SECURITY DISCUSSIONS
UNCLAS SECTION 01 OF 04 BRUSSELS 000284
SIPDIS
SENSITIVE
SIPDIS
EPT FOR OES
DEPT FOR EUR/ERA
DEPT FOR EEB/ESC
E.O. 12958: N/A
TAGS: ECON ENRG EPET ETRD EU
SUBJECT: US/EU ENERGY SECURITY DISCUSSIONS
1. (U) Summary. Under Secretary for Economic, Energy, and
Agricultural Affairs Reuben Jeffery and Special Envoy Gray
learned during February 12 meetings with EU Competition
Commissioner Neelie Kroes, Energy Commissioner Andris
Piebalgs, CFSP High Representative Javier Solana, and
industry reps that:
-- EU Competition authorities are not sufficient to guarantee
full competition in the gas and electricity transmission
without the unbundling measures proposed in the Third Energy
Package;
-- The purpose of the energy package is to enhance energy
security -- including from major suppliers like Russia -- by
increasing investment in grid interconnections and to add
liquidity to the markets for gas and electricity;
-- The Commission would like to work more systematically with
the US to pursue common interest on energy issues.
End Summary.
--------------
Energy Security
--------------
2. (U) On 12 February Under Secretary for Economic, Energy,
and Agricultural Affairs Reuben Jeffery, Special Envoy Gray,
and Econ Officers met with EU Commission officials to discuss
energy security issues. In separate meetings with
Competition Commissioner Neelie Kroes, Energy Commissioner
Andris Piebalgs, and High Representative Javier Solana the
officials highlighted the importance they place on energy
security in the overall EU policy agenda.
3. (U) The EU views energy security from both internal and
external perspectives. Externally, Commissioner Piebalgs
said the EU is looking to increase gas supplies from Norway,
Algeria, Azerbaijan, the Arab Pipeline, and Iraq
(specifically the Akkas field in Anbar Province). Piebalgs
views LNG as another medium term solution for energy security
but cautioned that Europe faces stiff competition, especially
from China. LNG also has increased costs and technical
difficulties compared to pipeline gas and the market for LNG
is not as liquid as it could be. High Representative Solana
indicated he also believes increasing LNG supplies from all
sources will play an important role in enhancing EU energy
security.
4. (U) Piebalgs believes the Treaty of Lisbon should enable
the EU to transform its energy and external energy policy.
Currently the only tools the EU can use to enforce energy
policy are those related to the internal market or the
environment. Piebalgs believes the role of the Energy
Commissioner will be strengthened by the treaty.
5. (U) Internally the EU wants to increase competition and
investment in its energy infrastructure. The goal is to
establish a single liquid, competitive market for oil and gas
to replace the current fragmented markets now found in the
individual member states. The Commission's preferred tool to
accomplish this is the Third Energy Package, proposed in
September 2007. Commissioner Kroes stressed that the
competition tools at her disposal are not sufficient to
create the type of liberalized energy market Europe needs.
She said she needs the backing of the Council and Parliament
to impose real energy market liberalization, hence the Third
Energy Package.
--------------
The Third Energy Package
--------------
6. (U) Kroes believes that if the unbundling is successful
the EU can get more investment and upgrade its
infrastructure. Right now there are too few connections
between member state grids. Kroes stated "There is no
incentive for investment without unbundling." She believes
the EU needs a fair and level playing field. Kroes views
security of supply as a major issue within a common market.
Kroes said she was dedicated to fighting for market
liberalization in gas and electricity.
7. (U) On the question of unbundling, Piebalgs indicated
that currently energy is a member state competence which
BRUSSELS 00000284 002 OF 004
results in 27 separate markets. The task is to deliver one
market for electricity and gas. To do this the EU needs
interconnection between the grids and a liquid market.
Piebalgs feels the Third Energy Package is crucial.
Unbundling is important, but Piebalgs does not view it as the
most important part of the package. The most important part
for Piebalgs is making sure that regulators in all 27 member
states all have the same power and resources. Second, in
Piebalgs view the EU needs to have cross-border regulatory
balance. The EU Agency for Regulators has to make sure that
there are no regulatory barriers to cross-border flows.
Piebalgs ranks unbundling third in importance. He believes
the EU needs structural unbundling with the networks
separated from the suppliers.
8. (SBU) Piebalgs believes the EU can work with the recent
counter-proposal to the Third Energy Package from France &
Germany, which argues that application of existing
competition policy tools should be sufficient and that
unbundling, legal or de facto, is not needed. Kroes,
however, is not satisfied with the counter proposal and
believes the EU needs real unbundling. Piebalgs indicated
the Commission will see how the other member states react and
said the Commission could put additional requirements into
the package. Piebalgs said the Commission needs the package,
but not at any price. He expects a breakthrough by June;
otherwise he feels the task will be left to his successor.
Right now, however, he feels it is definitely too early to
say.
9. (U) Addressing the question of third country investment
in the EU energy sector, Commissioner Kroes said she believed
investment from inside the EU and from the outside should be
treated the same way. Kroes said she's delighted with US
money, Norwegian funds, and Middle East investment, but that
it has to be transparent when governments are the investors
-- one of the reasons there is concern in the EU about the
role of sovereign wealth funds. High Representative Solana
also believes sovereign wealth funds will become very
important and believes this will not be an easy or
uncomplicated issue. He sees the IMF and international
cooperation playing an important role on this issue.
--------------
EU-Russia Interdependence
--------------
10. (U) Solana, Piebalgs, and Kroes all emphasized the
important role that Russia plays in the EU's energy security.
As Commissioner Kroes put it, "The EU is dependent on
Russia, but Russia is also dependent on the EU. The EU needs
Gazprom, but Gazprom needs the EU." High Representative
Solana pointed out that Russia is the EU's most important
supplier and Russia never failed as a supplier during the
Cold War. Piebalgs also highlighted Russia's role as a
dependable supplier. Nonetheless, Kroes indicated that the
EU doesn't want to have all its eggs in one Russian basket.
That's why the EU is interested in increasing supplies from
Algeria and is pushing projects like Nabucco.
11. (SBU) The question for the EU is how reliable will
Russian supplies be in the future. Solana expressed concern
that the Russians have been "investing more on leverage than
on pipelines, especially pipelines in Russia." According to
Piebalgs, the current difficulty is over how the Russian gas
sector is being managed. Piebalgs called the current
situation an "unimaginable political mess" from a management
point of view. At a meeting to discuss the Nabucco pipeline
(see below),Howard Chase from BP indicated that BP believes
Russia has systematically underinvested in its gas industry
and cautioned that the cost for new Russian gas supplies will
be at least twice as high as existing supplies.
12. (U) One hope for Russian gas production is if Russia can
better manage its domestic market. Increasing prices and
improving inefficiencies could allow Russia to free up more
gas for exports. Solana finds Russia's attempts to tackle its
domestic demand encouraging. Piebalgs was less optimistic
but believes things are not as discouraging on the internal
market as they are for investment.
13. (U) On the export front, Piebalgs pointed out that
Russia is pushing a number of big projects such as Nord
Stream and South Stream. Piebalgs sees South Stream as
providing no new gas supplies for the EU, but at the same
BRUSSELS 00000284 003 OF 004
time doing no harm to EU interests. Piebalgs is pleased with
the level of transparency for the Nord Stream project and
categorized the Russians as working together with their
European partners.
--------------
Nabucco
--------------
14. (U) Piebalgs and Kroes both highlighted the important
role they see for the Nabucco pipeline project in enhancing
European energy security and emphasized the key role Turkey
will play in deciding whether the project is successful. On
the positive side, Nabucco recently added German RWE as its
sixth partner and the Commission granted the necessary
third-party-access exemption for the Austrian part of the
pipeline.
15. (U) For Piebalgs the difficulty with Nabucco lies in
sourcing. Nabucco is depending on Shah Deniz gas and Egyptian
and Iraqi gas down the line. Piebalgs pointed out that the
original idea behind Nabucco was Iranian gas but when this
became politically unacceptable they started looking to Shah
Deniz gas from Azerbaijan. Piebalgs does not exclude the
possibility of getting gas from Turkmenistan, but categorized
Turkmenistan as a "very particular country." He believes
Trans-Caspian gas is not out of the question. The situation
in Kazakhstan is more unclear.
16. (SBU) In a separate lunch meeting with officials from
British Petroleum (BP) and Austrian OMV, Howard Chase, BP
Director European Government Affairs, indicated production
from the BP-operated Shah Deniz phase I is increasing and
already at 9 bcm/year. This gas is already contracted to
markets in Azerbaijan, Georgia, and Turkey. BP expects an
additional 12-13 bcm/year from Shah Deniz Phase II.
Azerbaijan and Georgia will want some of this gas, but it
should leave 8 bcm/year to feed into Nabucco starting in 2013
onward, which will be enough to allow the project to go
forward.
17. (SBU) Gottfried Steiner, Head of International Affairs
for OMV, highlighted that Nabucco is a project that will have
a portfolio of different supply sources. He acknowledged,
however, that Nabucco needs the gas from Shah Deniz to make
the first stage of the pipeline project viable. He expects a
run on booking capacity once Nabucco is committed. He
stressed that Nabucco is not anti-Russian and indicated that
South Stream could be combined with Nabucco. Steiner said the
motivation for South Stream is to avoid transit problems in
Ukraine. Russia originally considered extending Blue Stream
but found an unclear regulatory environment and legal regime
in Turkey.
18. (U) Commissioners Kroes and Piebalgs both see Turkey as
the critical part of the equation to make Nabucco work.
Piebalgs believes it is essential that Turkey sort out the
transit terms with Azerbaijan. According to Piebalgs, EU
Nabucco coordinator Jozias Van Aartsen is very close to the
Azerbaijanis and is working to close the negotiating gap.
The good news is that Azerbaijan has absolutely no intention
to ship gas via Russia. Commissioner Kroes also said the EU
is watching Turkey closely. Until now Turkey has been
cooperative, but that is not enough, Turkey needs to make its
position clear. Whether the gas comes from Russia or Iran,
it will have to come through Turkey.
19. (SBU) The BP and OMV representatives also emphasized
that Turkey is key for Nabucco. Gottfried Steiner from OMV
indicated that Azerbaijan's state company (SOCAR) has
concerns over the transport regime in Turkey. Right now,
there is no clear transport regime and no clear tariff.
According to Steiner, Turkey has still not decided whether it
wants to be a second Gazprom, buying gas on one end and then
selling it on for a profit, or a gas transit state earning
fees. Steiner pointed out that Turkey knows it is in a
strategic position and they want to maximize their benefits
out of it. However, they have not yet decided on exactly
what these benefits should be. Howard Chase from BP agreed
that Turkey suffers from a lack of "strategic clarity."
Chase believes Turkey is the critical part of the whole
equation. He is confident something can be worked out with
Turkey. The Baku-Tblisi-Ceyhan (BTC) project worked proving,
according to Chase, that Turkey can make pipelines work if it
wants to.
BRUSSELS 00000284 004 OF 004
--------------
The Role for Nuclear Power
--------------
20. (U) Both Solana and Piebalgs raised nuclear power as an
important contributor to the EU energy mix going forward.
Solana believes nuclear is not playing a large enough role in
the EU picture, with the exception of France. He believes
nuclear use has to increase EU wide. He also believes it may
be time to take a fresh look at the non-proliferation treaty
with the aim of enabling greater peaceful use of nuclear
power worldwide. Piebalgs likewise believes now is the time
to invest in nuclear energy. Solana also indicated that he
does not believe Germany will go through with decommissioning
its nuclear power plants because substitution will be too
difficult in the context of the EU energy and climate change
targets.
21. (SBU) Solana highlighted that the EU is not alone in
looking for new nuclear power plants. China and India are
now competitive markets for nuclear power and over the past
two years there has also been a large move toward nuclear
power from the countries in the Mediterranean all the way
across to Saudi Arabia. Piebalgs also raised the issue of
Russian dominance in the nuclear power field. He indicated
that the majority of new power plant tenders in the east seem
to be going to Russia. Piebalgs finds this trend worrying,
but has not determined if Russian dominance poses a real
threat to EU energy security.
--------------
US/EU Energy Relations
--------------
22. (U) Commissioners Kroes and Piebalgs and High
Representative Solana all indicated that they find US
engagment on energy security issues to be very positve.
Piebalgs in particular encouraged the US to continue its
current policies to build a free market in energy. Piebalgs
believes the EU and US should have closer coordination on
security of supply and that they should strengthen the role
the IEA has to play. Piebalgs also agreed that the US and EU
should work to have more coherent policy discussions and on a
more systematic basis.
23. (SBU) Comment. U/S Jeffery's visit here helped set the
stage for what should be a very productive March 3 US-EU
Strategic Energy Policy Review. The Europeans in general
share our aims of diversifying sources of supply and
supporting the building of networks to bring gas from Central
Asia and the Caspian region to Europe. They also appear
amenable to collaborating with us as we work on some of the
detailed steps needed to reach this goal: helping Turkey
achieve clarity, enhancing investment climates, and working
on legal issues with the governments concerned. We will want
to develop a clear list of things on which we seek European
input by March 3, so we can follow up with them subsequently.
End Comment.
24. (U) U/S Ruben Jeffery cleared this cable with the
exception of the USEU comment in para 23.
Murray
.
SIPDIS
SENSITIVE
SIPDIS
EPT FOR OES
DEPT FOR EUR/ERA
DEPT FOR EEB/ESC
E.O. 12958: N/A
TAGS: ECON ENRG EPET ETRD EU
SUBJECT: US/EU ENERGY SECURITY DISCUSSIONS
1. (U) Summary. Under Secretary for Economic, Energy, and
Agricultural Affairs Reuben Jeffery and Special Envoy Gray
learned during February 12 meetings with EU Competition
Commissioner Neelie Kroes, Energy Commissioner Andris
Piebalgs, CFSP High Representative Javier Solana, and
industry reps that:
-- EU Competition authorities are not sufficient to guarantee
full competition in the gas and electricity transmission
without the unbundling measures proposed in the Third Energy
Package;
-- The purpose of the energy package is to enhance energy
security -- including from major suppliers like Russia -- by
increasing investment in grid interconnections and to add
liquidity to the markets for gas and electricity;
-- The Commission would like to work more systematically with
the US to pursue common interest on energy issues.
End Summary.
--------------
Energy Security
--------------
2. (U) On 12 February Under Secretary for Economic, Energy,
and Agricultural Affairs Reuben Jeffery, Special Envoy Gray,
and Econ Officers met with EU Commission officials to discuss
energy security issues. In separate meetings with
Competition Commissioner Neelie Kroes, Energy Commissioner
Andris Piebalgs, and High Representative Javier Solana the
officials highlighted the importance they place on energy
security in the overall EU policy agenda.
3. (U) The EU views energy security from both internal and
external perspectives. Externally, Commissioner Piebalgs
said the EU is looking to increase gas supplies from Norway,
Algeria, Azerbaijan, the Arab Pipeline, and Iraq
(specifically the Akkas field in Anbar Province). Piebalgs
views LNG as another medium term solution for energy security
but cautioned that Europe faces stiff competition, especially
from China. LNG also has increased costs and technical
difficulties compared to pipeline gas and the market for LNG
is not as liquid as it could be. High Representative Solana
indicated he also believes increasing LNG supplies from all
sources will play an important role in enhancing EU energy
security.
4. (U) Piebalgs believes the Treaty of Lisbon should enable
the EU to transform its energy and external energy policy.
Currently the only tools the EU can use to enforce energy
policy are those related to the internal market or the
environment. Piebalgs believes the role of the Energy
Commissioner will be strengthened by the treaty.
5. (U) Internally the EU wants to increase competition and
investment in its energy infrastructure. The goal is to
establish a single liquid, competitive market for oil and gas
to replace the current fragmented markets now found in the
individual member states. The Commission's preferred tool to
accomplish this is the Third Energy Package, proposed in
September 2007. Commissioner Kroes stressed that the
competition tools at her disposal are not sufficient to
create the type of liberalized energy market Europe needs.
She said she needs the backing of the Council and Parliament
to impose real energy market liberalization, hence the Third
Energy Package.
--------------
The Third Energy Package
--------------
6. (U) Kroes believes that if the unbundling is successful
the EU can get more investment and upgrade its
infrastructure. Right now there are too few connections
between member state grids. Kroes stated "There is no
incentive for investment without unbundling." She believes
the EU needs a fair and level playing field. Kroes views
security of supply as a major issue within a common market.
Kroes said she was dedicated to fighting for market
liberalization in gas and electricity.
7. (U) On the question of unbundling, Piebalgs indicated
that currently energy is a member state competence which
BRUSSELS 00000284 002 OF 004
results in 27 separate markets. The task is to deliver one
market for electricity and gas. To do this the EU needs
interconnection between the grids and a liquid market.
Piebalgs feels the Third Energy Package is crucial.
Unbundling is important, but Piebalgs does not view it as the
most important part of the package. The most important part
for Piebalgs is making sure that regulators in all 27 member
states all have the same power and resources. Second, in
Piebalgs view the EU needs to have cross-border regulatory
balance. The EU Agency for Regulators has to make sure that
there are no regulatory barriers to cross-border flows.
Piebalgs ranks unbundling third in importance. He believes
the EU needs structural unbundling with the networks
separated from the suppliers.
8. (SBU) Piebalgs believes the EU can work with the recent
counter-proposal to the Third Energy Package from France &
Germany, which argues that application of existing
competition policy tools should be sufficient and that
unbundling, legal or de facto, is not needed. Kroes,
however, is not satisfied with the counter proposal and
believes the EU needs real unbundling. Piebalgs indicated
the Commission will see how the other member states react and
said the Commission could put additional requirements into
the package. Piebalgs said the Commission needs the package,
but not at any price. He expects a breakthrough by June;
otherwise he feels the task will be left to his successor.
Right now, however, he feels it is definitely too early to
say.
9. (U) Addressing the question of third country investment
in the EU energy sector, Commissioner Kroes said she believed
investment from inside the EU and from the outside should be
treated the same way. Kroes said she's delighted with US
money, Norwegian funds, and Middle East investment, but that
it has to be transparent when governments are the investors
-- one of the reasons there is concern in the EU about the
role of sovereign wealth funds. High Representative Solana
also believes sovereign wealth funds will become very
important and believes this will not be an easy or
uncomplicated issue. He sees the IMF and international
cooperation playing an important role on this issue.
--------------
EU-Russia Interdependence
--------------
10. (U) Solana, Piebalgs, and Kroes all emphasized the
important role that Russia plays in the EU's energy security.
As Commissioner Kroes put it, "The EU is dependent on
Russia, but Russia is also dependent on the EU. The EU needs
Gazprom, but Gazprom needs the EU." High Representative
Solana pointed out that Russia is the EU's most important
supplier and Russia never failed as a supplier during the
Cold War. Piebalgs also highlighted Russia's role as a
dependable supplier. Nonetheless, Kroes indicated that the
EU doesn't want to have all its eggs in one Russian basket.
That's why the EU is interested in increasing supplies from
Algeria and is pushing projects like Nabucco.
11. (SBU) The question for the EU is how reliable will
Russian supplies be in the future. Solana expressed concern
that the Russians have been "investing more on leverage than
on pipelines, especially pipelines in Russia." According to
Piebalgs, the current difficulty is over how the Russian gas
sector is being managed. Piebalgs called the current
situation an "unimaginable political mess" from a management
point of view. At a meeting to discuss the Nabucco pipeline
(see below),Howard Chase from BP indicated that BP believes
Russia has systematically underinvested in its gas industry
and cautioned that the cost for new Russian gas supplies will
be at least twice as high as existing supplies.
12. (U) One hope for Russian gas production is if Russia can
better manage its domestic market. Increasing prices and
improving inefficiencies could allow Russia to free up more
gas for exports. Solana finds Russia's attempts to tackle its
domestic demand encouraging. Piebalgs was less optimistic
but believes things are not as discouraging on the internal
market as they are for investment.
13. (U) On the export front, Piebalgs pointed out that
Russia is pushing a number of big projects such as Nord
Stream and South Stream. Piebalgs sees South Stream as
providing no new gas supplies for the EU, but at the same
BRUSSELS 00000284 003 OF 004
time doing no harm to EU interests. Piebalgs is pleased with
the level of transparency for the Nord Stream project and
categorized the Russians as working together with their
European partners.
--------------
Nabucco
--------------
14. (U) Piebalgs and Kroes both highlighted the important
role they see for the Nabucco pipeline project in enhancing
European energy security and emphasized the key role Turkey
will play in deciding whether the project is successful. On
the positive side, Nabucco recently added German RWE as its
sixth partner and the Commission granted the necessary
third-party-access exemption for the Austrian part of the
pipeline.
15. (U) For Piebalgs the difficulty with Nabucco lies in
sourcing. Nabucco is depending on Shah Deniz gas and Egyptian
and Iraqi gas down the line. Piebalgs pointed out that the
original idea behind Nabucco was Iranian gas but when this
became politically unacceptable they started looking to Shah
Deniz gas from Azerbaijan. Piebalgs does not exclude the
possibility of getting gas from Turkmenistan, but categorized
Turkmenistan as a "very particular country." He believes
Trans-Caspian gas is not out of the question. The situation
in Kazakhstan is more unclear.
16. (SBU) In a separate lunch meeting with officials from
British Petroleum (BP) and Austrian OMV, Howard Chase, BP
Director European Government Affairs, indicated production
from the BP-operated Shah Deniz phase I is increasing and
already at 9 bcm/year. This gas is already contracted to
markets in Azerbaijan, Georgia, and Turkey. BP expects an
additional 12-13 bcm/year from Shah Deniz Phase II.
Azerbaijan and Georgia will want some of this gas, but it
should leave 8 bcm/year to feed into Nabucco starting in 2013
onward, which will be enough to allow the project to go
forward.
17. (SBU) Gottfried Steiner, Head of International Affairs
for OMV, highlighted that Nabucco is a project that will have
a portfolio of different supply sources. He acknowledged,
however, that Nabucco needs the gas from Shah Deniz to make
the first stage of the pipeline project viable. He expects a
run on booking capacity once Nabucco is committed. He
stressed that Nabucco is not anti-Russian and indicated that
South Stream could be combined with Nabucco. Steiner said the
motivation for South Stream is to avoid transit problems in
Ukraine. Russia originally considered extending Blue Stream
but found an unclear regulatory environment and legal regime
in Turkey.
18. (U) Commissioners Kroes and Piebalgs both see Turkey as
the critical part of the equation to make Nabucco work.
Piebalgs believes it is essential that Turkey sort out the
transit terms with Azerbaijan. According to Piebalgs, EU
Nabucco coordinator Jozias Van Aartsen is very close to the
Azerbaijanis and is working to close the negotiating gap.
The good news is that Azerbaijan has absolutely no intention
to ship gas via Russia. Commissioner Kroes also said the EU
is watching Turkey closely. Until now Turkey has been
cooperative, but that is not enough, Turkey needs to make its
position clear. Whether the gas comes from Russia or Iran,
it will have to come through Turkey.
19. (SBU) The BP and OMV representatives also emphasized
that Turkey is key for Nabucco. Gottfried Steiner from OMV
indicated that Azerbaijan's state company (SOCAR) has
concerns over the transport regime in Turkey. Right now,
there is no clear transport regime and no clear tariff.
According to Steiner, Turkey has still not decided whether it
wants to be a second Gazprom, buying gas on one end and then
selling it on for a profit, or a gas transit state earning
fees. Steiner pointed out that Turkey knows it is in a
strategic position and they want to maximize their benefits
out of it. However, they have not yet decided on exactly
what these benefits should be. Howard Chase from BP agreed
that Turkey suffers from a lack of "strategic clarity."
Chase believes Turkey is the critical part of the whole
equation. He is confident something can be worked out with
Turkey. The Baku-Tblisi-Ceyhan (BTC) project worked proving,
according to Chase, that Turkey can make pipelines work if it
wants to.
BRUSSELS 00000284 004 OF 004
--------------
The Role for Nuclear Power
--------------
20. (U) Both Solana and Piebalgs raised nuclear power as an
important contributor to the EU energy mix going forward.
Solana believes nuclear is not playing a large enough role in
the EU picture, with the exception of France. He believes
nuclear use has to increase EU wide. He also believes it may
be time to take a fresh look at the non-proliferation treaty
with the aim of enabling greater peaceful use of nuclear
power worldwide. Piebalgs likewise believes now is the time
to invest in nuclear energy. Solana also indicated that he
does not believe Germany will go through with decommissioning
its nuclear power plants because substitution will be too
difficult in the context of the EU energy and climate change
targets.
21. (SBU) Solana highlighted that the EU is not alone in
looking for new nuclear power plants. China and India are
now competitive markets for nuclear power and over the past
two years there has also been a large move toward nuclear
power from the countries in the Mediterranean all the way
across to Saudi Arabia. Piebalgs also raised the issue of
Russian dominance in the nuclear power field. He indicated
that the majority of new power plant tenders in the east seem
to be going to Russia. Piebalgs finds this trend worrying,
but has not determined if Russian dominance poses a real
threat to EU energy security.
--------------
US/EU Energy Relations
--------------
22. (U) Commissioners Kroes and Piebalgs and High
Representative Solana all indicated that they find US
engagment on energy security issues to be very positve.
Piebalgs in particular encouraged the US to continue its
current policies to build a free market in energy. Piebalgs
believes the EU and US should have closer coordination on
security of supply and that they should strengthen the role
the IEA has to play. Piebalgs also agreed that the US and EU
should work to have more coherent policy discussions and on a
more systematic basis.
23. (SBU) Comment. U/S Jeffery's visit here helped set the
stage for what should be a very productive March 3 US-EU
Strategic Energy Policy Review. The Europeans in general
share our aims of diversifying sources of supply and
supporting the building of networks to bring gas from Central
Asia and the Caspian region to Europe. They also appear
amenable to collaborating with us as we work on some of the
detailed steps needed to reach this goal: helping Turkey
achieve clarity, enhancing investment climates, and working
on legal issues with the governments concerned. We will want
to develop a clear list of things on which we seek European
input by March 3, so we can follow up with them subsequently.
End Comment.
24. (U) U/S Ruben Jeffery cleared this cable with the
exception of the USEU comment in para 23.
Murray
.