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). -------------- -------------- The Polish View: At Least Iranian Gas Isn't Russian -------------- -------------- ¶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. -------------- -------------- What Poland Wants: Help With Statoil and in the Middle East -------------- -------------- ¶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. WARSAW 00000845 002.2 OF 002 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. -------------- Comment -------------- ¶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