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INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 5140
RUEHAH/AMEMBASSY ASHGABAT 0140
RUEHKB/AMEMBASSY BAKU 0208
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RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEHBS/USEU BRUSSELS
C O N F I D E N T I A L SECTION 01 OF 02 ATHENS 000598
SIPDIS
E.O. 12958: DECL: 04/28/2018
TAGS: PREL ENRG EPET GR
SUBJECT: P.M. KARAMANLIS TRIP TO RUSSIA: ENERGY
Classified By: Ambassador Daniel Speckhard for Reasons 1.4 (b,d)
1. (C) According to Raphael Moisis, Chairman of the Greek
Energy Council, P.M. Karamanlis and Russian President Putin
signed "an important but general" inter-governmental
agreement during Karamanlis' April 28-29 visit to Moscow.
The IGA, he said, includes provisions that:
a. an international holding company (Societe Anonyme) will
be established for the portion of South Stream that passes
through Greek territory, jointly and equally owned by Gazprom
and the Greek Pipeline Transmission Operator (DESFA);
b. the holding company will "request" a third-party access
exemption from the EU as well as obtain all relevant national
permits;
c. refer to specific EU energy regulations, while not
referring to the EU by name. (Moisis said Russia absolutely
refused to refer to the EU in the agreement, but that Greece
said it was required as an EU member state to at least
include the operative provisions of EU law);
d. give Greece the right to an unspecified amount of offtake
from the pipeline. (Moisis said the GoG is hoping to have its
new marginal domestic supply needs met by TGI and thus did
not want to specify an amount of offtake in the South Stream
agreement, which could end up leaving Greece with more gas
than it needs);
e. the amount of gas transiting Greece through South Stream
will total approximately 10 bcm;
f. specify that South Stream will enter Greece from Bulgaria
but do not specify where it will exit (Moisis said there was
the possibility that it would flow from Greece through
Albania on its way to Italy).
2. (C) Moisis said that, as the Greek portion of South
Stream would be operated by a private company (the
Gazprom/DESFA JV), it would normally be classified as a
private and not public pipeline. Under Greek law, however,
any pipeline that links up with the Greek public pipeline
network (which South Stream will) must be part of the public
pipeline network, managed by DESFA. (Note: The on-shore
portion of TGI that runs through Greece is, in contrast, a
public pipeline to be owned and operated by DESFA.) Russia
rejects putting South Stream under DESFA, Moisis said, so
this remains a difficult, outstanding issue.
- - - - -
TGI Is, and Qdad of South Stream
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3. (C) Moisis stre`ek press
attention tQclipsed real action on TGQportant to emphasize to t(p on th
Interconnectorstill
in the formative stages, TGI is happening now." He said
that, during Minister Folias' March 17 trip to Baku, the
Azerbaijanis had expressed their willingness to supply an
additional 1 bcm of Shah Deniz I gas once transit issues with
Turkey were worked out. During his April 20 - 23 visit to
Rome for the International Energy Forum, Folias had met with
Turkish Energy Minister Guler. Speaking on behalf of both
the Greek National Gas Company (DEPA), and Italian Edison,
Folias told Guler it was important for Turkey to resolve the
transit dispute with Azerbaijan so that gas supply contracts
could be signed. He invited Guler and Italy's then Minister
of Energy Bursani to come to Athens for four-way talks on
TGI, which Guler quickly accepted, but Bursani could not as a
result of the Italian Government's fall. Moisis says Folias
remains committed to this meeting taking place.
4. (C) Significantly, Folias raised the Azerbaijani offer to
Greece of an additional bcm of SD I gas. Guler told Folias
that Turkey did not want to get in the way of this
development and was willing to waive the 15% netback
provision (for this 1 bcm only). Guler, according to Moisis,
urged Folias to send a DEPA representative to Ankara
immediately to finalize an agreement on the additional 1 bcm.
5. (C) In an aside, Moisis said that Guler surprised Folias
during their Rome bilat by pulling him aside and asking
whether Folias truly believed Azerbaijan had enough gas for
TGI. Moisis said this just further sowed doubts in Greek
minds about Azerbaijani supplies. Economic Counselor
reminded Moisis that he had sent him in late 2007 information
that British Petroleum had provided the USG convincing
evidence of significant new finds showing Azerbaijani gas
could more than fill TGI.
6. (C) Moisis ended the meeting by saying he viewed TGI and
South Stream as two separate projects, with separate
suppliers and separate customers. TGI was ahead. Provided
it stayed ahead, South Stream would be unable to derail it.
Economic Counselor noted that the USG was intensely engaged
on helping resolve the transit dispute between Turkey and
Azerbaijan. He urged Moisis, however, to recommend to his
counterparts that the GoG greatly increase its public support
for TGI so that potential investors and suppliers kept the
faith with this important project.
- - - - - - - - - - - - -
Comment: Where's the EU?
- - - - - - - - - - - - -
7. (C) This meeting once again raises the question: "Where's
the EU?" According to Moisis, ENI and Gazprom
representatives have either just met, or were just about to
meet, EU Energy Commisioner Piebalgs to probe for the EU's
real opinion on South Stream. In our view, it is amazing
that there should be any question. Southstream is aimed at
the heart of the EU's energy security strategy. It is being
implemented through agreements signed by EU member states
that (if Moisis is to be believed) wink at EU requirements
while not citing the EU by name. It is based on the belief
that the EU will grant it TPA exemptions. While we believe
that TGI (which we in Athens know pretty well) is far enough
along that agreements such as that signed in Moscow cannot
derail it (assuming a resolution of the Turkey-Azerbajani
transit dispute), we cannot say the same for Nabucco (about
which we are admittedly less informed). We believe the USG's
new energy envoy, Amb. Gray, is perfectly positioned to raise
with his former EU interlocutors such as Piebalgs our hope
that EU institutions will rigorously require EU member states
to consider and justify how their rhetorical (and sometimes
more) support for South Stream meshes with the EU's
overarching security need for Nabucco. We also believe that
our engagement with the GoG on TGI would be immeasurably
enhanced by Piebalgs and other EU officials coming to Athens
and making clear and unequivocal statements of support for
TGI.
SPECKHARD