VZCZCXRO1063
RR RUEHCN RUEHGH
DE RUEHBJ #5388/01 2062305
ZNR UUUUU ZZH
R 252305Z JUL 06
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 2344
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
INFO RUEHKO/AMEMBASSY TOKYO 0754
RUEHUL/AMEMBASSY SEOUL 9416
RUEHNE/AMEMBASSY NEW DELHI 4134
RUEHSH/AMCONSUL SHENYANG 6611
RUEHGH/AMCONSUL SHANGHAI 5359
RUEHCN/AMCONSUL CHENGDU 6844
RUEHGZ/AMCONSUL GUANGZHOU 1134
RUEHIN/AIT TAIPEI 5841
RUEHHK/AMCONSUL HONG KONG 7878

UNCLAS SECTION 01 OF 05 BEIJING 015388 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR EAP/CM AND EB/ESC SIMONS 
DOE OIC FOR PUMPHREY, OEA FOR CUTLER 
 
E.O. 12958: N/A 
TAGS: ECON ENRG EINV EPET CH JA KS IN
SUBJECT: July 13 Preparatory Meeting for Energy Ministerial 
Roundtable 
 
 
¶1.  (SBU) Summary and Comment: On July 13, China's National 
Development and Reform Commission (NDRC) hosted a 
successful preparatory meeting to discuss a proposed five 
country Energy Ministerial Roundtable in Beijing later this 
fall.  Reflecting input from the Japanese and Korean 
delegations, the Chinese proposed the October 24-27 
timeframe as tentative dates for the ministerial, and asked 
delegations to provide feedback by the end of July on the 
suitability of those dates.  Bowing to suggestions from the 
U.S. and other delegations, the Chinese also agreed to 
broaden the scope of the meeting to include separate 
discussions of energy security and strategic oil stocks, 
diversification of energy supply and alternative sources, 
investment and the energy market, major challenges and 
priorities of international cooperation, and energy 
conservation and efficiency.  Participants also made some 
initial progress toward a potential Joint Statement, 
shifting the focus from the original Chinese emphasis on 
oil markets toward a broader effort to point to areas of 
common interest.  Demonstrating a flair for multilateral 
diplomacy, the Chinese delegation adopted a flexible, 
responsive approach to suggestions from the other 
delegations, which should bode well for the success of the 
eventual meeting.  End Summary and Comment. 
 
-- Five Party Energy Preparatory Meeting 
 
¶2. (U)  The Preparatory Meeting for a proposed five country 
Energy Ministerial Roundtable was held in Beijing on June 
13, 2006.  Bringing together representatives from the 
United States, China, South Korea, Japan and India, the 
Chinese sponsored meeting's purpose was to discuss the 
time/venue, agenda, and basic outline of a Joint Statement 
to be issued at the proposed Ministerial.  The U.S. was 
represented by Paul Simons, Deputy Assistant Secretary of 
State for Energy and Sanctions, Tom Cutler, Director of 
Asia and Europe for the Department of Energy, Embassy DOE 
rep, EconMin, and other emboffs. 
 
¶3. (U)  China's delegation consisted of senior NDRC 
officials including Vice Chairman Zhang Guobao, Zhao 
Xiaoping, Director General for Energy, Ma Xin, NDRC 
director General for Foreign Affairs, Xu Yongsheng, Deputy 
Director General for Energy, and Li Bin, Deputy Director 
General for Foreign Affairs. 
 
¶4. (U)  Prior to the meeting, the U.S. delegation held 
preparatory sessions with the delegations of Japan, Korea 
and India, and also met with U.S. private sector 
representatives for their input.  On the margins of the 
meeting, the U.S. delegation also met with IEA Deputy 
Director General Bill Ramsay, as well as senior officials 
from CNOOC, SINOPEC, the CNPC Research Center, and the NDRC 
Energy Research Institute. 
 
 
-- Preparatory Meeting: Chinese Opening Statement 
 
¶5.  (U)  NDRC Vice Chairman Zhang Guobao led off with 
opening remarks which focused on the value of this grouping 
of large consuming countries to speak with one voice on 
energy issues.  Speaking without notes, Zhang noted that 
the solution to this problem needed to take into account 
the policies of China and India, which ranked third in 
global energy consumption behind the U.S. and Japan and as 
"rising economies" were increasingly important players.  He 
said the solution would need to encompass a mixture of 
conservation, domestic supply incentives, as well as 
expansion of alternative fuels and renewables, and 
acknowledged that with a high energy consumption/GDP ratio, 
China had "a lot of work to do".  He noted the significance 
of the five countries gathered - all were major oil 
consumers and importers, and all were located in the Asia 
Pacific region.  Zhang pressed for an early ministerial, 
ideally in late August, and expressed confidence that such 
a meeting could help stabilize oil prices by "containing 
speculation" which he said some had quantified as 
 
BEIJING 00015388  002 OF 005 
 
 
accounting for $10-15/bbl of the current high oil market 
prices.  He noted that the meeting had been discussed with 
Secretary Bodman in Doha and that Secretaries Rice and 
 
SIPDIS 
Deputy Secretary Zoellick had also expressed "interest" in 
China's initiative.  Energy Director Zhao Xiaoping followed 
with remarks which highlighted the important signal such a 
meeting could send to the international community and the 
fact that Chinese consumption alone could not account for 
the current high price levels in international oil markets. 
 
- Preparatory Meeting: Japan, South Korea and 
India - Opening Remarks 
 
¶6.  (SBU)  Kazuhiko Hombu, Deputy Director General of the 
Ministry of Economy, Trade and Industry presented Japan's 
opening statements.    Welcoming the five party concept, he 
said that Japan was "positive" about the idea of bringing 
the five countries together.  That said, given the 
likelihood of Japanese parliamentary elections in September, 
he suggested that the proposed ministerial date of late 
August was a "little too early" and more time would be 
needed to prepare.  Hombu said that the Beijing venue was 
"OK" but also noted that Japan might field a vice minister 
for the meeting.  Hombu suggested adding the following 
topics to the agenda: impact of oil on the world economy, 
transparency and investment in energy markets, improvements 
of energy demand structure (conservation, clean coal, 
renewables), use of the Asia Pacific Partnership to promote 
clean and efficient energy, and cooperation on emergency 
response capabilities, including strengthening strategic 
stocks of oil, and developing closer relations between 
China and India and the IEA.  Hombu noted that both the 
agenda and the communiquQ would need to be referred to 
Tokyo for final approval. 
 
¶7. (SBU)  Seok Cho, the Director-General of Korea's 
Ministry of Commerce, Industry and Energy also welcomed the 
five party concept and China's preparatory work.  He 
commented that the proposed date of the meeting was too 
early, and noted that specific items with respect to the 
agenda and the joint statement would need to be reviewed in 
Seoul before final positions could be agreed. 
 
¶8. (SBU)  Prabh Das, Joint Secretary of the Indian Ministry 
of Petroleum and Gas, stated that the three key challenges 
of sustainable development, access to resources and price 
stability all should be addressed through the Ministerial 
meeting.  The high cost of oil, he said, was being absorbed 
by developing countries through huge subsidies that 
directed much needed funds away from social and education 
sectors.  Das echoed the Chinese argument that China and 
India were not the principal contributors to current high 
oil prices, noting fairly modest Indian oil demand despite 
an impressive eight percent GDP growth rate last year.  Das 
also pointed to pricing problems for oil in the Asian 
market which he suggested be addressed in the Ministerial. 
Finally, he noted that current high oil prices would spur 
more efficiency and conservation. 
 
¶9. (SBU)  Das suggested creating an "Axis of Sustainable 
and Affordable Energy".  He recommended that the following 
areas should be covered in the agenda: structural 
shortcomings, sustainable development and access to 
hydrocarbon resources, a framework for cooperation among 
consumers and producers for security and sustainability of 
energy, increased efficiency, conducting joint research, 
sharing technology, promoting sustainable growth, 
protecting the environment through the use of green fuels 
and promoting alternative sources of energy like biofuels. 
 
-- Preparatory Meeting: U.S. Delegation Opening Remarks 
 
¶10. (SBU)  Summing up the discussion, Department of State 
Deputy Assistant Secretary (DAS) for Economic Affairs Paul 
Simons welcomed the Chinese initiative and noted that it 
was consistent with broader U.S. efforts to bring China and 
India into a more prominent role in global energy 
 
BEIJING 00015388  003 OF 005 
 
 
discussions.  He noted that the five participating 
countries were increasingly important players on the global 
energy stage, with EIA forecasts suggesting that they would 
account for more than half of global oil consumption by the 
year 2025. 
 
¶11.  With respect to the agenda, U.S. representatives noted 
that it would be important to move beyond a narrow focus on 
short term oil markets to a broader approach which 
highlighted the commonality of approach of the five 
countries.  For example, all five participants shared 
interests in the development of a global liquified Natural 
Gas (LNG) market, accelerated uptake of clean coal 
technologies, nuclear energy and energy efficiency.  All 
five countries needed to focus on the use of alternative 
fuels to power their respective transport sectors.  The 
world's energy future would be determined to a large degree 
by how the five participating countries handled those 
issues.  Rather than seeking to influence oil prices 
through a narrowly crafted joint statement, a broader 
approach that focused on shared interests in resolving 
longer term energy security challenges might be a better 
approach.  Such a statement could reference the work of 
existing institutions and fora, including International 
Energy Forum (IEF), International Energy Agency (IEA), APEC, 
Asia Pacific Partnership, and others, while not advocating 
the creation of any new bureaucracy. 
 
¶12.  With respect to substantive issues, DAS Simons laid 
out the four suggestions highlighted in previous U.S. 
guidance on the five party ministerial - coordination of 
strategic petroleum reserve management; improving data 
transparency; cooperation on energy use in the 
transportation sector, including biofuels; and a focus on 
market principles for energy, possibly tracking the 
approach to be followed at the G8 summit. 
 
¶13. (SBU)  With respect to next steps, DAS Simons suggested 
creation of an email collective; rather than another face 
to face preparatory meeting, he suggested e-mail comments 
or conference calls to resolve remaining issues.  He echoed 
the comments of the Japanese and Korean delegations that 
all issues with respect to timing, agenda, and joint 
statement would need to be endorsed by capitals prior to 
final decisions. 
 
-- Proposed Ministerial Scheduling: Suggested dates of 
October 24-27 
 
¶14. (SBU) Discussion opened on the scheduling of specific 
dates for the Ministerial meeting.  The Chinese opened with 
a proposal for late August; Japan and Korea wanted no 
specific dates but wanted the meeting pushed back into 
October at the earliest; the U.S. suggested "some time in 
the fall".  The Chinese insisted on penciling in tentative 
dates to be taken back to capitals, with a suggestion of 15 
October.  The Korean delegate objected to this timeframe, 
noting that it conflicted with IEA Governing Board meetings. 
The Chinese responded with tentative dates of October 24-27, 
and asked delegations to consult in capitals and confirm by 
end-July if those dates were suitable. 
 
-- Proposed Ministerial Agenda/Three Days of Meetings, Site 
Visits 
 
¶15.  DG Li opened discussion on the agenda, proposing five 
topics to discuss: the energy situation, oil pricing, oil 
substitution, energy efficiency, and energy conservation. 
He proposed that each Minister make a 15-minute keynote 
speech on one topic immediately followed by a 15-minute 
discussion of the topic.  Afterwards, there would be a 
press conference and the issuance of a joint statement on 
the meetings.  The meeting would wrap up in the early 
afternoon. 
 
¶16.  Delegates from the other four countries raised a 
number of modifications to the proposed schedule; most 
 
BEIJING 00015388  004 OF 005 
 
 
supported the U.S. focus on a broader agenda allowing for 
more detailed discussion of key topics. 
 
¶17. (SBU) After extensive discussion with the participating 
delegates, the Chinese delegation produced a considerably 
revised second working draft of the agenda, which will be 
shown to the Ministers of each country for approval: 
 
Day 1 
 
-- Morning registration 
 
-- Afternoon bilateral meetings (according to each 
Minister's individual plans) 
 
-- Evening welcome dinner 
 
Day 2 
 
-- 8:30-9:00 NDRC Chairman Ma Kai meets with Ministers (TBD) 
 
-- 9:00-10:15  15-minute opening Ministerial addresses in 
the following order: China, India, Japan, Korea, the U.S. 
 
-- 10:15-10:30 Tea break 
 
-- 10:30-15:30 Structured thematic dialogue led by 
Ministers 
 
1- Energy security and strategic oil stocks (U.S.) 
2- Diversification of energy supply and alternative sources 
(South Korea) 
3- Investment and the energy market (Japan) 
4- Major challenges and priorities of international 
cooperation (India) 
5- Energy conservation and efficiency improvement (China) 
 
-- 12:30-13:30 Working lunch 
 
-- 13:30-15:30 Continue thematic dialogue 
 
-- 16:00-16:30 Joint Press Conference 
 
-- 17:00-17:30 State leaders meet with Ministers (TBD) 
 
-- 18:00-20:00 Farewell dinner 
 
Day 3 
 
-- Individual site visits. 
 
-- Proposed Ministerial: Working the Joint Statement Draft 
 
¶18. (SBU) With respect to the draft Joint Statement issued 
by the Chinese, most delegations agreed that it would be 
difficult to make progress on such a document until the 
agenda was finalized and ministers contributions could be 
appropriately incorporated.  The Chinese government 
distributed an initial draft which focused heavily on the 
current oil market situation.  Japan argued for a 
broadening of the document to reflect a commitment to 
market principles; evidence of international cooperation; 
and alternative fuels.  The U.S. delegation remarked that 
in order to be effective, the Joint Statement as well as 
the press conference themes would need to demonstrate a 
united front of the five countries, and that it would be 
particularly important to highlight the shared approaches 
adopted by the five countries to our key medium and long 
term challenges.  The U.S. suggested several edits to the 
draft communiquQ which removed some of the heavy focus on 
current oil market instability, highlighted the importance 
of intensified cooperation on strategic stocks, and 
introduced the concept of diversification of fuels in the 
transport sector.  A revised, bracketed Joint Statement, 
which incorporated most of the U.S. Delegation's and other 
delegations' suggestions, was provided to the respective 
delegations for further review and discussion. 
 
BEIJING 00015388  005 OF 005 
 
 
 
---- 
Comment 
---- 
 
¶19.  (SBU) Chinese officials adopted a highly flexible 
approach to this multilateral meeting, taking on board 
suggestions from other delegations on the issues of timing, 
agenda, and the joint statement, and clearly seeking to use 
the proposed ministerial to present a united front on 
energy to the broader world stage.  This flexible approach 
- if sustained -- bodes well for the ultimate success of 
the Ministerial gathering.  End Comment. 
 
¶20. (SBU) EB/ESC DAS Simons cleared this report. 
 
RANDT