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TO RUEHC/SECSTATE WASHDC IMMEDIATE 1715
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 5140
RUEHAH/AMEMBASSY ASHGABAT 0140
RUEHKB/AMEMBASSY BAKU 0208
RUEHMO/AMEMBASSY MOSCOW 1007
RUEHTH/AMCONSUL THESSALONIKI 1868
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEHBS/USEU BRUSSELS

C O N F I D E N T I A L SECTION 01 OF 02 ATHENS 000598 
 
SIPDIS 
 
E.O. 12958: DECL: 04/28/2018 
TAGS: PREL ENRG EPET GR
SUBJECT: P.M. KARAMANLIS TRIP TO RUSSIA: ENERGY 
 
Classified By: Ambassador Daniel Speckhard for Reasons 1.4 (b,d) 
 
¶1. (C) According to Raphael Moisis, Chairman of the Greek 
Energy Council, P.M. Karamanlis and Russian President Putin 
signed "an important but general" inter-governmental 
agreement during Karamanlis' April 28-29 visit to Moscow. 
The IGA, he said, includes provisions that: 
a.  an international holding company (Societe Anonyme) will 
be established for the portion of South Stream that passes 
through Greek territory, jointly and equally owned by Gazprom 
and the Greek Pipeline Transmission Operator (DESFA); 
b.  the holding company will "request" a third-party access 
exemption from the EU as well as obtain all relevant national 
permits; 
c. refer to specific EU energy regulations, while not 
referring to the EU by name. (Moisis said Russia absolutely 
refused to refer to the EU in the agreement, but that Greece 
said it was required as an EU member state to at least 
include the operative provisions of EU law); 
d. give Greece the right to an unspecified amount of offtake 
from the pipeline. (Moisis said the GoG is hoping to have its 
new marginal domestic supply needs met by TGI and thus did 
not want to specify an amount of offtake in the South Stream 
agreement, which could end up leaving Greece with more gas 
than it needs); 
e. the amount of gas transiting Greece through South Stream 
will total approximately 10 bcm; 
f. specify that South Stream will enter Greece from Bulgaria 
but do not specify where it will exit (Moisis said there was 
the possibility that it would flow from Greece through 
Albania on its way to Italy). 
 
¶2.  (C) Moisis said that, as the Greek portion of South 
Stream would be operated by a private company (the 
Gazprom/DESFA JV), it would normally be classified as a 
private and not public pipeline.  Under Greek law, however, 
any pipeline that links up with the Greek public pipeline 
network (which South Stream will) must be part of the public 
pipeline network, managed by DESFA.  (Note: The on-shore 
portion of TGI that runs through Greece is, in contrast, a 
public pipeline to be owned and operated by DESFA.)  Russia 
rejects putting South Stream under DESFA, Moisis said, so 
this remains a difficult, outstanding issue. 
 - - - - - 
TGI Is, and Qdad of South Stream 
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¶3. (C) Moisis stre`ek press 
attention tQclipsed real action on TGQportant to emphasize to t(p on th 
Interconnectorstill 
in the formative stages, TGI is happening now."  He said 
that, during Minister Folias' March 17 trip to Baku, the 
Azerbaijanis had expressed their willingness to supply an 
additional 1 bcm of Shah Deniz I gas once transit issues with 
Turkey were worked out.  During his April 20 - 23 visit to 
Rome for the International Energy Forum, Folias had met with 
Turkish Energy Minister Guler.  Speaking on behalf of both 
the Greek National Gas Company (DEPA), and Italian Edison, 
Folias told Guler it was important for Turkey to resolve the 
transit dispute with Azerbaijan so that gas supply contracts 
could be signed.  He invited Guler and Italy's then Minister 
of Energy Bursani to come to Athens for four-way talks on 
TGI, which Guler quickly accepted, but Bursani could not as a 
result of the Italian Government's fall.  Moisis says Folias 
remains committed to this meeting taking place. 
 
¶4.  (C) Significantly, Folias raised the Azerbaijani offer to 
Greece of an additional bcm of SD I gas. Guler told Folias 
that Turkey did not want to get in the way of this 
development and was willing to waive the 15% netback 
provision (for this 1 bcm only).  Guler, according to Moisis, 
urged Folias to send a DEPA representative to Ankara 
immediately to finalize an agreement on the additional 1 bcm. 
 
 
¶5.  (C) In an aside, Moisis said that Guler surprised Folias 
during their Rome bilat by pulling him aside and asking 
whether Folias truly believed Azerbaijan had enough gas for 
TGI.  Moisis said this just further sowed doubts in Greek 
minds about Azerbaijani supplies.  Economic Counselor 
reminded Moisis that he had sent him in late 2007 information 
that British Petroleum had provided the USG convincing 
evidence of significant new finds showing Azerbaijani gas 
could more than fill TGI. 
 
¶6.  (C) Moisis ended the meeting by saying he viewed TGI and 
South Stream as two separate projects, with separate 
suppliers and separate customers.  TGI was ahead.  Provided 
it stayed ahead, South Stream would be unable to derail it. 
Economic Counselor noted that the USG was intensely engaged 
on helping resolve the transit dispute between Turkey and 
Azerbaijan.  He urged Moisis, however, to recommend to his 
counterparts that the GoG greatly increase its public support 
for TGI so that potential investors and suppliers kept the 
faith with this important project. 
 
- - - - - - - - - - - - - 
Comment: Where's the EU? 
- - - - - - - - - - - - - 
 
¶7.  (C) This meeting once again raises the question: "Where's 
the EU?"  According to Moisis, ENI and Gazprom 
representatives have either just met, or were just about to 
meet, EU Energy Commisioner Piebalgs to probe for the EU's 
real opinion on South Stream.  In our view, it is amazing 
that there should be any question.  Southstream is aimed at 
the heart of the EU's energy security strategy.  It is being 
implemented through agreements signed by EU member states 
that (if Moisis is to be believed) wink at EU requirements 
while not citing the EU by name.  It is based on the belief 
that the EU will grant it TPA exemptions.  While we believe 
that TGI (which we in Athens know pretty well) is far enough 
along that agreements such as that signed in Moscow cannot 
derail it (assuming a resolution of the Turkey-Azerbajani 
transit dispute), we cannot say the same for Nabucco (about 
which we are admittedly less informed).  We believe the USG's 
new energy envoy, Amb. Gray, is perfectly positioned to raise 
with his former EU interlocutors such as Piebalgs our hope 
that EU institutions will rigorously require EU member states 
to consider and justify how their rhetorical (and sometimes 
more) support for South Stream meshes with the EU's 
overarching security need for Nabucco.  We also believe that 
our engagement with the GoG on TGI would be immeasurably 
enhanced by Piebalgs and other EU officials coming to Athens 
and making clear and unequivocal statements of support for 
TGI. 
SPECKHARD