POLAND'S ENERGY CZAR ON GAS DEAL WITH IRAN

C O N F I D E N T I A L SECTION 01 OF 02 WARSAW 000845

SIPDIS

E.O. 12958: DECL: 07/16/2018
TAGS: ECON ENRG EPET PGOV PREL IR PL
SUBJECT: POLAND'S ENERGY CZAR ON GAS DEAL WITH IRAN

REF: WARSAW 806

WARSAW 00000845 001.2 OF 002


Classified By: Econ Counselor Richard Rorvig for reasons:
1.4(b,d)


1. (C) Summary: According to the Polish Prime Minister's
top energy advisor, if PGNiG were to abandon its discussions
with Iran regarding the Lavan gas field, PGNiG would expect
U.S. help -- and deals with U.S. companies -- to obtain
natural gas elsewhere in the Middle East. In addition, the
Poles would like U.S. diplomatic assistance to keep Norway's
Statoil from pulling out of the consortium that is supposed
to build a natural gas pipeline from Norway to the European
mainland. The Poles seem to believe that dependence on
Russian gas is a greater threat to them than Iran's nuclear
ambitions. Consequently, they likely would expect to be
compensated if they walk away from a deal they believe would
enhance their own security. End summary.


2. (C) Reftel reported that Polish state-owned gas company
PGNiG is considering seriously a substantial investment in
Iran's Lavan gas field. On July 16, EconOff discussed U.S.
concerns regarding investment in Iran with Wojciech
Zajaczkowski, Prime Minister Tusk's chief advisor on energy
issues. (Note: Zajaczkowski has been nominated to be Poland's
Ambassador to Romania, and is expected to leave his current
position sometime around the end of August. End note).

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The Polish View: At Least Iranian Gas Isn't Russian
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3. (C) Zajaczkowski stated Poland has few options for new
sources of natural gas: gas from Russia, gas under Russian
control from Central Asia, or the Middle East. In the Middle
East, Iran is potentially the biggest player. While Poland
"will respect all U.N. rules," he stated the opportunities
offered by Iran are "interesting," and that PGNiG intends to
use all possible opportunities to conduct exploration, in
case political conditions in Iran change. Zajaczkowski added
that when conditions in Iran do change, he expects U.S.
companies will be among the first to invest there, and that
some U.S. companies are maintaining contacts in Iran through
intermediaries.

4, (C) EconOff noted that Total and other western companies
have announced they are withdrawing from Iran, that the Iran
Sanctions Act requires imposition of sanctions against
companies that invest more than US$20 million in Iran's oil
and gas sector, and that in recent testimony Under Secretary
Burns stated the USG would conduct a serious review of
Statoil's actions in Iran. In addition, Poland, an EU
member, is undermining a proposal crafted by the EU with the
P5, by suggesting that Iran can attract western investors
regardless of its nuclear behavior. This suggests lack of
Polish concern with a serious security threat faced by
Poland's most important economic partners and military
allies, whom Poland sometimes accuses of failing to take its
energy security concerns seriously enough.

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What Poland Wants: Help With Statoil and in the Middle East
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5. (C) Zajaczkowski stated that while the political
benefits to the United States if PGNiG were to withdraw from
a possible Iran project are "obvious," the benefits to Poland
are less apparent, and in economic terms withdrawing would be
a loss to Poland. As compensation for this loss,
Zajaczkowski stated Poland would like at least two things
from the United States:

-- First, Poland would want USG help to obtain
"non-controversial supplies." Zajaczkowski stated, "If we
were to leave Iran, we would have to see precisely what we
could have with American support in another area, such as
Qatar or Saudi Arabia, controlled by the United States." He
envisioned transactions with U.S. companies present in such
countries, based on market principles. He also stated that,
given the "particular culture in the Middle East," political
understanding "on the highest levels" is needed.

-- Second, Zajaczkowski stated that Statoil wants to
withdraw from Skanled, the consortium to build the "Baltic
pipeline" that is supposed to bring Norwegian gas into Europe
via Denmark. Without Statoil the project does not make any
sense, Zajaczkowski said. He believed Statoil's behavior is
being influenced by its interest in developing the Stockman
gas field in Russia's Barents Sea.

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It was unclear whether, in making these points, Zajaczkowski
was describing a fully-developed interagency view of the
Polish government, or merely presenting his own opinion.
However, his views were consistent with those of PGNiG's
president, described in reftel.

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Comment
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6. (C) Post will continue to raise U.S. views on this matter
with the Poles. Zajaczkowski stated he had received a copy
of a letter the Ambassador sent Poland's Treasury Minister in
May seeking an official explanation of PGNiG's activities in
Iran. The Poles do not seem to perceive a real threat to
themselves from Iran -- or at least not a threat of anywhere
near the same magnitude as continuing energy dependence on
Russia. If PGNiG were to abandon its interest in the Lavan
gas field, the Poles likely would view it as a costly favor
to the United States, rather than a necessary step to defend
Europe's and their own larger interests.
ASHE