UKRAINE: MINISTRY OF FUEL AND ENERGY ON ENERGY

UNCLAS SECTION 01 OF 02 KYIV 001828 SENSITIVE SIPDIS DEPT FOR S/EEE, EUR/UMB, EB/ESC/IEC DOE PLEASE PASS TO JELKIND, LEKIMOFF, CCALIENDO E.O. 12958: N/A TAGS: ENRG ECON EFIN EREL PREL PGOV UP SUBJECT: UKRAINE: MINISTRY OF FUEL AND ENERGY ON ENERGY SECURITY WORKING GROUP REF: A. STATE 103668 ¶B. KYIV 1761 KYIV 00001828 001.2 OF 002 ¶1. (U) This is an action request. Please see para 7. ¶2. (SBU) Summary: Deputy Minister of Fuel and Energy Sergiy Pavlusha confirmed that Ukraine was planning to send an interagency delegation, including representatives from state-owned energy companies Naftohaz and Energoatom, to the scheduled October 28 Energy Security Working Group meeting. Pavlusha noted that the Cabinet of Ministers needed to give final approval for the delegation to travel but expected its approval shortly. The Ministry also proposed more detailed agenda items and asked if any joint documents would be agreed on at the meeting. End summary. ¶3. (SBU) In an October 20 meeting to discuss Ukraine's participation in the inaugural U.S.-Ukraine Energy Security Working Group (ESWG) meeting on October 28, Deputy Minister of Fuel and Energy Sergiy Pavlusha stated that Ukraine was preparing to send a delegation comprised of representatives from the Ministries of Fuel and Energy, Economy, and Foreign Affairs, along with representatives from the Presidential Secretariat, the National Security and Defense Council, and if funding allowed, from the National Agency for the Effective Use of Energy Resources (NAER) to the meeting. President Yushchenko's Energy Security Envoy, Bogdan Sokolovsky, would be included in the delegation but would not co-chair it, according to Pavlusha. Pavlusha also said that Ukraine would like to include representatives from state-owned Naftohaz and Energoatom, provided the USG had no objection to their participation. The Ministry of Fuel and Energy had submitted to the Cabinet of Ministers the proposed delegation and was waiting for approval, which Pavlusha expected to receive without problems. ¶4. (SBU) Pavlusha proposed detailed agenda items for the meeting and noted that they fit within the broad categories suggested by the USG (Ref A). Ukraine has proposed the ESWG discuss joint efforts to: --diversify Ukraine's energy supply (sources and routes); --modernize Ukraine's gas transit system; --develop the Eurasian Oil Transit Corridor (the Odesa-Brody Pipeline),including prospects of American oil companies working in the Caspian region to assist in the Corridor's development; --reduce Ukraine's dependence on foreign nuclear fuel, including prospects for the construction of a nuclear fuel fabrication facility in Ukraine with Westinghouse technology; --implement the second stage of the Nuclear Fuel Qualification Project; --improve safety at Ukraine's nuclear power plants; --increase renewable energy and energy efficiency in Ukraine; and --expand trilateral energy security dialogue between Ukraine, the U.S., and the EU. Pavlusha also noted that the Ministry is working to develop a set of priorities that could benefit from any future U.S. technical assistance. Recalling his many years at the Ministry, Pavlusha said that many of the most successful past energy sector reforms had been achieved with U.S. assistance. ¶5. (SBU) Pavlusha asked that we provide a detailed agenda and the list of the USG delegation. He also wanted to know if the terms of reference or mandate of the ESWG would be discussed at the inaugural meeting and if any joint documents, either conclusions of the meeting or a public statement, would be agreed on at the meeting. ¶6. (SBU) Pavlusha also briefly discussed Ukraine's accession to the European Energy Community. He noted that the EU had given Ukraine a strict timeline for fulfilling sector reform commitments and characterized the recently signed EU-Ukraine Memorandum of Understanding (Ref B) as an "advance of trust" that Ukraine would undertake the required reforms. Pavlusha also commented that Ukraine needs external support to complete internal reforms. ¶7. (SBU) Action request: Please provide guidance on Ukraine's request to include representatives from Naftohaz and Energoatom in the delegation, and its inquiries concerning joint documents, the working group's terms of reference, and KYIV 00001828 002.2 OF 002 the membership of the U.S. delegation. PETTIT