This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 PARIS 005010 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/WE; OES; NP; EB/ESC, AND EB/CBA 
USDOC FOR 4212/MAC/EUR/OEURA 
DOE FOR ROBERT PRICE PI-32 AND KP LAU NE-80 
 
E.O. 12958: N/A 
TAGS: ENRG EPET EIND EINV PREL PGOV FR
SUBJECT: FRANCE: ENERGY SECTOR UPDATE 
 
Sensitive but unclassified - Contains company proprietary 
information. 
 
Ref: Paris 3654 
 
¶1. (U) This is the second in a series of occasional 
updates on the French energy sector.  Feedback is welcome 
to help us make this product as useful as possible for 
our Washington inter-agency audience. 
 
Contents: 
-- GDF share sale raises over four billion euros (para 2) 
-- Total concerned about its concession in Sudan (para 3) 
-- French nuclear powerhouse Areva bids to buy rival 
Westinghouse (para 4) 
-- France adopts new energy law (para 5) 
-- New French Industry Minister takes over energy 
portfolio (para 6) 
-- France celebrates ITER site selection (para 7) 
 
¶2. (U) GDF share sale raises over four billion euros: 
Sixty years after the nationalization of the French 
electricity and gas industries, the government has turned 
a historical page, selling shares in gas utility Gaz de 
France (GDF) for the first time (see Paris 4999).  The 
GOF will keep a 79% stake in the partially privatized 
company.  The government will use the 2.5 billion euros 
in expected proceeds to reduce public debt and to fund 
"innovative industries."  GDF also sold new shares and 
plans to use its two billion euros in new capital to 
expand and to prepare for increasing national and 
international competition.  The success of the offering 
has given impetus to the government's plan to move 
forward with other privatizations, including electricity 
utility Electricite de France (EDF) later this year. 
 
¶3. (SBU) Total concerned about its concession in Sudan: 
In June, Total company executives told us that they were 
very concerned about the "White Nile" challenge to their 
"Bloc B" concession in southern Sudan, which was 
attributed to Marathon Oil in joint venture with Total. 
White Nile is a UK-based company established recently and 
owned primarily by a celebrity British cricket player, 
who apparently cut a deal with the SPLM-SPLA rebel 
leaders, even though the Sudanese Government had already 
granted a concession for the area to Marathon/Total. 
Total is concerned that, as the peace process proceeds, 
the joint government/rebel commission deciding which oil 
concessions are valid will be pressured to validate some 
rebel-negotiated deals, such as this one.  They see a 
real potential vulnerability of loosing their investment, 
which has been effectively frozen for over 20 years. 
 
¶4. (SBU) French nuclear powerhouse Areva bids to buy 
rival Westinghouse:  Recent reports in French daily Le 
Figaro and BBC News say that French nuclear conglomerate 
Areva is bidding to buy U.S. competitor Westinghouse from 
its current owner, state-owned British firm BNFL.  Areva 
reportedly hopes that its purchase of Westinghouse could 
give greater access to the large American market, as the 
U.S. government supports the construction of new nuclear 
reactors to address growing U.S. energy demand.  Another 
factor in the decision to bid may have been 
Westinghouse's success and Areva's failure to win USG 
advocacy for potential nuclear reactor sales in China. 
However, Areva faces stiff competition in what is quickly 
becoming a bidding war for Westinghouse.  Earlier, 
Mitsubishi made a 1.8 billion dollar bid to purchase 
Westinghouse.  General Electric, the Shaw Group, and the 
Cerberus investment fund have also reportedly made 
offers.  According to BNFL, several bidders have made 
offers, which they will evaluate over the next six 
months. 
 
¶5. (U) France adopts new energy law:  After surviving a 
challenge in the French Constitutional Court, a new 
energy law was formally adopted on July 13.  The key 
provisions of the new law will: 
- promote energy diversity by increasing the percentage 
of renewable energy in electric production from 13 to 21% 
by 2010; increasing by 50% the quantity of heat produced 
by renewable energies (biomass, wood, solar, geothermal) 
and increasing from 1 to 5.75% by 2010 the proportion of 
biofuels in gasoline and diesel. 
- promote energy conservation by creating energy 
certificates which require large energy users to conserve 
energy either directly, indirectly, or by acquiring 
"white certificates," which can be traded through a 
national register. 
- keep "nuclear option" open by breaking ground on a 
demonstration nuclear reactor "of the most recent 
design", i.e. the European water pressurized reactor 
(EPR), by 2007 and completing construction by 2012. 
- strengthen research for new energy technologies (carbon 
sequestration, fuel cells, solar energy, etc.). 
¶6. (U) New French Industry Minister takes over energy 
portfolio:  Following the GOF reshuffle on June 2, 
Francois Loos, 51, stays on as Junior Minister ("Ministre 
Delegue") in the French Ministry Economy and Finance, but 
he switches portfolios from Foreign Trade to Industry. 
The Industry Ministry is responsible, inter alia, for all 
energy issues.  Loos was previously Junior Minister for 
Higher Learning and Research.  Loos' background is not 
that of a typical French politician.  A graduate of 
France's prestigious Polytechnic School, and an engineer, 
he also holds a degree in Mathematics.  Unlike many of 
his colleagues, he has a strong private sector 
background, which includes Secretary General of Research 
for French pharmaceutical giant Rhone-Poulenc, and CEO of 
Lohr SA Group, a manufacturer of industrial trucks and 
specialized vehicles. 
 
¶7. (SBU) France celebrates ITER site selection:  After 
three years of tension and negotiations, the six 
international partners have decided to build a 
International Thermonuclear Experimental Reactor (ITER) 
in Cadarache, France (see also Marseille 0063).  ITER is 
a definite positive 'deliverable' the French government 
can point to in an otherwise dismal year, e.g., the 
French 'Non!' to the EU Constitution and the IOC's 'Non' 
to France as the host country for the 2012 Olympic games, 
the country's continued flat economic performance.  In 
the south of France, ITER is undoubtedly being seen as a 
triumph that will assure jobs for years.  A specialist in 
technology and research matters, French Parliamentarian 
Claude Birraux thinks that ITER is a very important 
project, as well as a very long-term one, and said he is 
hopeful that it will prove a success on different levels. 
He thinks ITER could serve as a model for future 
international research collaboration on Generation IV and 
high-level nuclear waste, for example.  Such a model will 
be required to deal with the intellectual property 
considerations of advanced research in these areas. 
 
Stapleton