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DE RUEHLO #2384/01 2631021
ZNY CCCCC ZZH
O 191021Z SEP 08
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9807
RHEGGTN/USDOE GERMANTOWN MD IMMEDIATE
RUEHBS/USEU BRUSSELS IMMEDIATE
INFO RUEHMO/AMEMBASSY MOSCOW PRIORITY 2722
C O N F I D E N T I A L LONDON 002384
SIPDIS USDOE FOR JEFFREY KUPFER, KATHY FREDRIKSEN USEU FOR RICHARD FROST E.O. 12958: DECL: 09/20/2018 TAGS: ENRG TRGY
UK
SUBJECT: READOUT OF DEPUTY SECRETARY KUPFER MEETINGS WITH JOHN HUTTON AND JONATHAN PORTES ON ENERGY SECURITY AND LONDON
SUMMIT
Classified By: E/MIN Mark Tokola for reasons 1.4 b, d.
1. (C) Summary: During his visit to the UK on September 16th and 17th, Acting Deputy Secretary of Energy Kupfer met
separately with Secretary of State for Business, Enterprise and Regulatory Reform (BERR) John Hutton and the Prime
Minister,s Special Envoy for Energy Jonathan Portes to discuss energy security issues. Hutton pointed out that the
United States and the UK need to have a dialogue on energy security, which he said was a political issue, not a market
issue. Both Hutton and Portes discussed the upcoming Jeddah Summit follow-up meeting in December in London. HMG hopes to
discuss supply and demand, new capacity, market transparency and efficiency. Both Hutton and Portes urged the USG to
send high-level representation but acknowledged that the U.S. political calendar might make that difficult. End summary.
Energy Security Risks are Rising --------------------------------
2. (C) Hutton said that to our energy security are rising,8 and because they are a political issue, they need to be addressed at the government
to government level. He noted that the UK was becoming more exposed to energy security risks, and that consumers were in
no mood to pay more for energy. Hutton said that the United States and the UK need to discuss energy security more
often.
EU Response to Georgia -------------------------------
3. (C) Hutton stated that the is never going to speak with one voice on energy security,8 pointing out that each country has dealt with supply issues
independently. He pointed to the growing European dependence on Russian gas, and the fact that much of Gazprom,s board
was former Federal Security Service (FSB). These factors, Hutton said, contributed to the EU,s response to the Russian invasion of Georgia. Hutton went on to say that dealing with Russia would require a
multi-lateral effort on the part of states.8 He added that Nabucco is important project for us.8 Although the UK would like to have better relations with the Russians, and invited them to
attend the energy summit in December, Hutton said that an improvement in relations was
Unbundling: Scared to Say Yes, Scared to Say No --------------------------------------------- --
4. (C) Hutton sought to clarify the ongoing issues regarding unbundling legislation in the EU. He said that Eastern
European governments are fearful that their assets will be purchased by Gazprom if they are forced to unbundle. However,
they are also afraid to say no to the Russians if offers are made. As a result, Hutton stated that the Eastern Europeans
need the European Commission to provide cover for them to keep Gazprom from purchasing their transmission assets.
London Summit: Hutton and Portes Want High-Level --------------------------------------------- --- U.S. Participation
------------------
5. (C) Hutton said that the summit planned for December 19th has no agreed format or outcome yet. He noted that he would
like to see more oil and gas resources unlocked, and for them to be exploited more efficiently. Although he cautioned
that more price falls might remove the impetus for the summit, Hutton stated that the memory of high prices will
continue to spur action. Hutton also pointed out that neither Iranian President Ahmedinejad nor Venezuelan President
Chavez were invited, but that the energy ministers from both countries were invited to attend. Hutton did not want to
give any excuse for OPEC not to show up.
6. (SBU) Jonathan Portes elaborated on the format of the planned summit, saying that discussions may include supply and
demand issues, new capacity, market transparency, and efficiency improvement. He pointed out that the Japanese-hosted G8
3 meeting scheduled for November to discuss efficiency and demand management will send a signal to producing countries
that the major consuming countries are working on demand reduction and efficiency, not simply asking producers to do
more. Both Hutton and Portes said they would like to see more involvement from the international oil companies at the
London summit, although neither suggested in what capacity. Portes would like to convene a Sherpa Group of perhaps ten
countries to prepare for the summit, possibly meeting at the end of October. Although both Hutton and Portes
acknowledged that the U.S. political calendar could make the timing of the London summit difficult, they pushed for
high-level representation to underscore continued USG engagement.
7. (SBU) Portes said that the UK would like to see more cooperation between OPEC and the IEA on research and analysis.
He commented that current international institutions like the G8 are for effectively discussing energy issues. He said that there was scope for change in the future, although he was unsure
of what the correct forum would be.
8. (SBU) Comment: It is a good time to engage HMG on energy security since security of supply issues are a top priority.
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