VZCZCXRO7555
RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHTL #0121/01 0881525
ZNR UUUUU ZZH
R 281525Z MAR 08
FM AMEMBASSY TALLINN
TO RUEHC/SECSTATE WASHDC 0573
INFO RUEHMO/AMEMBASSY MOSCOW 2589
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC

UNCLAS SECTION 01 OF 02 TALLINN 000121 
 
SIPDIS 
 
DEPT FOR EUR/ERA, EUR/NB AND DAS BRYZA 
DOC FOR ITA LEAH MARKOWITZ 
DOE FOR TYLER TILLER 
MOSCOW FOR ALI JALILI 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ENRG EINV PREL ECON EUR EN
SUBJECT: NORDSTREAM ROAD SHOW COMES TO TALLINN 
 
Ref: Tallinn 28 
 
¶1. (SBU) Summary:  In a 3-hour presentation hosted by the 
German embassy in Tallinn, presenters from WinGas, BASF and 
the UN Economic Commission for Europe both promoted and 
defended the NordStream gas pipeline project.  They used a 
variety of arguments to claim that NordStream will be a 
cheaper, safer, cleaner and more reliable source of gas for 
Europe than the alternatives.  They dismissed renewable 
energy sources as a viable alternative to fossil fuels, and 
equally dismissed any on-shore alternatives to NordStream. 
Participants were skeptical, but the event was at the very 
least an effort by NordStream consortium partners to repair 
some of the PR 'disaster' they experienced here after last 
fall's rejection of the project by the Government of 
Estonia (GOE).  End Summary. 
 
¶2.  (U) At a March 19th seminar titled "Some Key Global 
Energy Issues and their Relevance for Europe" the German 
Embassy in Tallinn hosted speakers from several companies 
involved in the NordStream gas pipeline project.  In a 
format they have taken to the other Baltic countries 
several times in the past six months, speakers presented 
scientific literature, economic projections, and forecasts 
of future EU energy demands in support of the project's 
safety, viability, and long-term inevitability. 
 
RUSSIA: A MORE RELIABLE SUPPLIER THAN...IRAN? 
 
¶3.  (U) In addition to one Swiss Nordstream official, the 
consortium was represented at the dinner by Dr. Ernst 
Schwanhold, (former Economic Minister in the German state 
of Westphalia) now of BASF Corporation which is a 20 
percent owner of NordStream, and Dr. Gerhard KQnig of 
WinGas (a 50/50 joint venture with Wintershall and 
Gazprom).  (Note: WinGas plans eventually to be a 
downstream customer of NordStream.  End Note.)  The third 
speaker, a regular on the NordStream Road Show, was Dr. 
Sead Vilogorac of the UN Economic Commission for Europe 
(UNECE) in Geneva.  No one came from Gazprom. 
 
The team came prepared to address the gamut of concerns 
about the NordStream pipeline.  Their lines of argument 
basically went like so: 
 
-- NordStream is not just a Russo-German project, it's a 
European project; 
-- Building off-shore is cheaper, safer, and cleaner than 
building on-shore; 
-- An off-shore pipeline allows higher pressure (180-200 
bar) without building compressor stations every 100km, as 
needed for on-shore pipelines; 
-- Building compressor stations would add cost, and emit 
more CO2 in the construction process; 
-- Gas is cleaner than coal, oil, etc. for energy 
production; 
-- Projected future EU demand for gas is so great that 
Europe will need all the NordStreams it can get, and soon; 
-- Renewables are nice to talk about, but won't work, are 
too costly, are basically a pie-in-the-sky proposition; 
and: 
 
¶4. (U) In a new twist on the complaint that the undersea 
route will cut out countries such as the Balts and Poland 
from access to the pipeline or transit fees, the NordStream 
team argued that an off-shore route will be "free from 
individual national interests" and thereby safer.  Just for 
good measure, their final argument was repeated more than 
once: Where else will Europe get its gas from? Iran? 
Algeria? Iraq?  In the words of Dr. Vilogorac of UNECE, 
"Only OPEC and Russia are reliable suppliers." 
 
"WHAT'S IN IT FOR US?" 
 
¶5. (SBU) The audience was interested and lively; 
questioners emphasized the particular concerns of countries 
in the region.  The Polish embassy asked about Yamal II as 
an alternative to NordStream; the answer: twinning Yamal I 
on-shore would be more expensive than building NordStream 
off-shore (see above).  The Estonian MFA's energy director 
asked about the environment impact of possible spills or 
other accidents during construction.  The speakers had no 
answer other than to speculate that the same legal 
framework would apply as with any other pipeline in the 
 
TALLINN 00000121  002 OF 002 
 
 
North Sea or the Mediterranean.  (Note: The MFA contact 
later told us he heard no new information from this 
"propaganda" session, and was unconvinced that WinGas and 
BASF truly understand the scope of what the NordStream 
project will entail.  End Note.)  To the Lithuanian 
embassy's concern about possible supply interruptions, 
WinGas and BASF simply said that they have found Gazprom to 
be a very responsible partner.  (Note: WinGas is 50 percent 
owned by Gazprom.  End Note)  Finally, the British embassy 
asked simply: "What's in this for Estonia?"  With a 
straight face, Dr. Schwanhold of BASF replied that 
"European solidarity" was the main payoff for Estonia, 
adding that someday there might also be the possibility of 
a reverse pipeline to carry gas from the terminus at 
Griefswald back into the Baltics.  The sole NordStream 
official in the group added that there was not one project 
on the Trans European Network (TEN) list that equally 
benefits all member states, but nevertheless all should 
support them for the good of the Union. 
 
¶6. (SBU) Comment: For all the skepticism among the 
audience, the forum was productive, and was exactly the 
kind of open debate that had not happened in the run-up to 
Estonia's decision to decline permission for an 
environmental impact study in Estonia's economic zone. 
WinGas and BASF representatives freely admitted that 
NordStream badly fumbled the PR aspects of the project last 
year, and felt that with better optics and communication, 
could have lessened opposition to the project in Estonia. 
The companies' arguments - while note entirely convincing - 
were at least a step towards more dialogue on the issue. 
 
¶7. (SBU) Comment, cont'd: It was curious that BASF and 
WinGas did not seek more attention for the event, but 
instead cloaked it under the guise of an embassy-sponsored 
discussion of "energy security, energy efficiency and 
climate protection."  This may be an indication of their 
lingering wariness of public opposition to NordStream 
leftover from last fall.  The German Embassy's Commercial 
Counselor confirmed that this event went quite well from 
the German point of view. The questions in Tallinn mirrored 
the questions that had been asked on stops in Riga and 
Vilnius.  It remains to be seen if NordStream consortium 
partners, or even Gazprom itself, will continue to make 
similar, or more ambitious, attempts to address the many 
persistent concerns in the region with this project.  End 
Comment. 
 
DECKER