FRANCE: OFFICIALS SPELL OUT EU PRESIDENCY ENERGY OBJECTIVES

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SIPDIS

SENSITIVE
SIPDIS

E.O. 19528: N/A
TAGS: ECON ENRG PREL FR
SUBJECT: FRANCE: OFFICIALS SPELL OUT EU PRESIDENCY ENERGY OBJECTIVES
FOR U/S JEFFERY


1. (SBU) In a March 28 meeting with MFA Director for Economic
Affairs Christian Masset, U/S Reuben Jeffery underscored the need
for cooperation in addressing potential intermediate-term
bottlenecks on global energy markets. Masset sketched out French EU
presidency energy priorities designed in part to address such
issues. Of the three elements of EU energy policy -- increasing
security of supply, ensuring the availability of affordable energy,
promoting sustainability and combating climate change -- France
believed insufficient attention had been paid to supply. The French
would focus the Commission's two-year strategic review on the topic
in October/November.


2. (SBU) There were both internal market and external relations
challenges to an effective supply strategy. France would encourage
a review of internal market issues, including connectivity and
long-term energy investment requirements. Germany remained a
challenge, Masset noted, given its hostility to the nuclear option
and a perceived reluctance to engage in long-term strategic planning
for energy sector needs.


3. (SBU) The challenge extended to external relations, though Masset
believed the traditional German view that it was big enough to deal
on its own with third countries such as Russia was gradually
evolving. Negotiations of a follow-on agreement to the Partnership
and Cooperation Agreement, which included an energy dimension, would
likely begin in earnest during the French presidency. The goal for
the EU/Russia Summit in November would be to sketch out a "road map"
on energy relations, and focus on practical projects -- gas flaring,
carbon capture, etc. - that could appeal to common interests.
Beyond 2010 those interests would increasingly converge as Russian
domestic demand outstripped supply capabilities. France would insist
on the importance of hewing to the St. Petersburg principles as a
means of meeting such challenges.


4. (SBU) Engagement with Russia would go hand-in-hand with a more
robust "political presence" in Central Asia during the French
presidency. But Masset said France would have "a different style"
than the United States in the region, hinting at disagreement with
what he perceived as an excessively "vocal" U.S. policy in the
region. France intended to pursue a balanced "triangular" policy
among Russia, the EU and Central Asia. It would look to organize an
EU/Central Asia meeting in October/November, and Foreign Minister
Kouchner planned to travel twice to the region as well.

Climate Change
- - - - - - - -


5. (SBU) Masset said carbon capture and storage would be a priority
for the French presidency. The recent UK/France Summit had included
language calling for a CCS action plan for the French EU summit. The
EU had committed to projects by 2015, it now needed to talk in
concrete terms about how and where they would be built.


6. (SBU) In an aside on the Major Economies process, Masset said the
GOF was "a little worried" about the upcoming MEM Summit. It was
important that MEM and the G8 (and G8 plus five) be complementary.
France felt it was incumbent on the G8 to "show the way" on subjects
like climate change. That was not equivalent to saying the G8
should do everything itself. France believed China and other
developing countries eventually needed to make binding commitments,
but "our move makes them move."

IEA, Access Issues
- - - - - - - - - -


7. (SBU) On other international energy issues, Masset said the MFA
fully supported the U.S. position on a greater role for China and
India in the IEA. France's energy directorate (Ministry of
Sustainable Development) had "conservative views" on the subject and
prevented the French from being more supportive in the OECD. But,
Masset said, the MFA's views "ultimately will prevail."


8. (SBU) Masset touched on France's concern over global
underinvestment in the oil sector, resulting in part from the
increasingly limited access the majors have to the world's oil
fields. The issue would be addressed in an upcoming report from
former IEA Director General Claude Mandil, tapped by PM Fillon to
honcho energy security issues during France's EU presidency.


9. (SBU) During a meeting earlier in the day, Mandil briefed U/S
Jeffery on his energy security work in preparation for the French EU
presidency. He indicated he would be making recommendations in a
report due April 15 to provide Europe with more room for maneuver,
including for negotiations with Russia. In his view, this means
more energy efficiency, more internal market-opening and
interconnections of gas and electricity grids, more LNG terminals
and pipelines, and more nuclear energy.


10. (SBU) Regarding the Nabucco pipeline project, Mandil commented
that for such a large pipeline you need a large source of gas, that
the main long-term purpose of Nabucco is to bring Iranian gas to

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Europe. He opined that a decision to proceed with that pipeline
could not be made only with gas from Azerbaijan, that Russian gas
would also need to be included (while waiting for Iranian gas later)
and the sooner Europe accepts that the better to avoid Russia
pursuing other options that could undermine Nabucco.

Stapleton