VZCZCXRO3310
OO RUEHKW
DE RUEHWR #1314/01 1791359
ZNY CCCCC ZZH
O 281359Z JUN 06
FM AMEMBASSY WARSAW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1187
INFO RUEHKW/AMCONSUL KRAKOW PRIORITY 1175
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 WARSAW 001314 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR S/P, EUR, E, EUR/NCE, EUR/ERA, EB/ESC 
S/P FOR SKRASNER 
EUR FOR A/S DFRIED, DAS MPEKALA, DAS MBRYZA 
EUR/NCE FOR DKOSTELANCIK AND MSESSUMS 
EB/ESC FOR SGALLOGLY, RGARVERICK, JLEWANDOWSKI 
DOE FOR LEKIMOFF 
USDOC FOR 4232/ITA/MAC/EUR/JBURGESS, JKIMBALL, MWILSON 
 
E.O. 12958: DECL: 06/26/2016 
TAGS: ENRG EPET PL UR RS KZ LH LO EZ PGOV
SUBJECT: GOP REQUESTS US CONTACT SLOVAK GOVERNMENT ABOUT 
TRANSPETROL SALE 
 
REF: A. WARSAW 525 AND PREVIOUS 
 
     ¶B. BRATISLAVA 501 
 
Classified By: Econ Counselor Richard Rorvig for reasons 1.4 (b) and (d 
) 
 
 ¶1.  (C)  This cable contains an action request, para 
 
¶2.  (C)  Summary:  During a meeting with visiting S/P 
Director Stephen Krasner, officials at the Ministry of 
Economy requested U.S. assistance in contacting the 
government of Slovakia about Polish interest in acquiring 
from Yukos its 49 percent stake in Transpetrol.  Polish 
officials stressed that the Slovak government is hesitant to 
allow the transaction to proceed in light of Russian interest 
in purchasing the shares.  A signal from the USG that it 
supports the deal could assist the GOP in completing the 
transaction. 
 
--------------------------------------------- ------------- 
Pipeline Operator Pern negotiating to purchase Transpetrol 
--------------------------------------------- ------------- 
 
¶3.  (C)  Visiting S/P Director Dr. Stephen Krasner discussed 
energy security with Pawel Konzal, Advisor to Ministry of 
Economy Deputy Minister Piotr Naimski and Krzysztof Rogala of 
the Office for Diversification of Oil and Gas Supply in the 
Ministry.  Rogala explained that Pern, the Polish pipeline 
operator, is pursuing the purchase of Yukos' 49 percent share 
and controlling interest in Transpetrol (ref a and b).  The 
GOP believes that there is a window of opportunity during 
which the current Slovak government might approve the sale by 
Yukos to Pern.  The GOP is interested in purchasing 
Transpetrol because it is part of the Druzba pipeline which 
supplies PKN Orlen's refineries in the Czech Republic.  Pern 
plans to eventually connect the reversed Odessa-Brody 
pipeline to Druzba and transport Caspian oil to Europe.  The 
GOP does not want any pipeline infrastructure to fall into 
Russian hands. 
 
¶4.  (C)  Konzal and Rogala requested that Krasner convey the 
message to the government of Slovakia that Poland is 
interested in purchasing the Yukos share of Transneft, and 
that the USG is supportive of the sale.  Rogala emphasized 
that the government of Slovakia is worried about Russian 
pressure to approve the sale of the shares to Rusneft under 
its previous agreement, or another Russian entity.  If Yukos 
receives a clear message from the government of Slovakia that 
it will approve a sale to Pern, the negotiations between 
Yukos and Pern can be speeded up. 
 
¶4.  (C)  Rogala noted that Yukos offered its stake in 
Transpetrol to PKN Orlen during the Mazeikieu, Lithuania 
refinery sale.  However, the GOP did not pursue the deal 
using Orlen, in which it holds a 27% share, as it prefers 
that Pern, which is 100% state owned, become the final owner. 
 The GOP does not want any pipeline infrastructure on which 
it may depend to fall into Russian hands.  Pern currently 
owns all of the transit pipeline infrastructure in Poland. 
Rogala later explained to Econoff that the GOP plans to have 
Pern control all of the ports and pipeline infrastructure in 
which the GOP has an interest - including ports and pipelines 
in Poland, Lithuania, Latvia, and hopefully Slovakia. 
 
---------------- 
Mazeikieu Update 
---------------- 
 
¶5.  (C)  When asked by Mr. Krasner why the GOP allowed PKN 
Orlen to purchase the Mazeikieu refinery, Konzal stated that 
it was not a GOP decision, but rather a company decision, to 
purchase the plant.  Once the company made the decision to 
pursue the deal, the GOP decided to support it.  Rogala 
explained that the GOP is concerned that oil supplies to the 
refinery could be cut, but believes this will not happen in 
the short term.  Under the terms of the deal, PKN Orlen must 
invest approximately $1.5 billion in the plant.  The GOP 
believes that Russia will wait for that investment to be 
completed before cutting oil supplies.  In the meantime, 
Mazeikieu officials are negotiating oil supply deals with 
Tatneft, Ukoil, Lukoil and Rosneft, all of whom approached 
 
WARSAW 00001314  002 OF 002 
 
 
PKN Orlen after the deal was announced.  Rogala later 
explained to Econoff that PKN Orlen cannot negotiate or 
finalize the deals until after the European Commission 
approves the sale.  The GOP is pleased that so many companies 
are competing to supply the refinery, believing that it 
augurs well for continued supply.  Rogala noted that the 
heavy wind conditions on the Baltic could cause supply 
problems using the buoy, and that Orlen estimates that it 
will lose 60 days to wind problems per year if forced to rely 
solely on the buoy for supply. 
 
-------------------------- 
Comment and Action Request 
-------------------------- 
 
¶6.  (C)  After Krasner's departure, Konzal and Rogala called 
Econoff to urgently request that she follow up on their 
request that the USG support Pern's purchase of Yukos' shares 
of Transpetrol with the government of Slovakia.  Konzal 
explained that Deputy Minister Naimski, during Strategic 
Dialogue meetings in Washington, had requested that the USG 
inform the government of Slovakia that Poland wants 
permission for Pern to purchase Transpetrol.  Without such 
approval, the GOP fears that a deal will not be struck. 
According to Konzal and Rogala, the message was conveyed to 
an Advisor to Minister Dzurinda, but the message was not 
strong enough.  Post requests that Washington advise post on 
what the USG position on the Yukos sale of Transneft to Pern 
is so that it can advise the GOP.  If the USG does send a 
signal to the government of Slovakia that it supports the 
sale of Transpetrol to Pern, post appreciates knowing when 
the message is conveyed so that it can so inform the GOP. 
 
¶7.  (U)  S/P Director Krasner did not clear this cable. 
ASHE