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RR RUEHAG RUEHBC RUEHDA RUEHDE RUEHDF RUEHHM RUEHIHL RUEHIK RUEHKUK
RUEHLN RUEHLZ RUEHMA RUEHPB RUEHPOD RUEHROV
DE RUEHBS #0590/01 1091559
ZNR UUUUU ZZH
R 181559Z APR 08 ZDK (MULTI SVCS)
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCNRAQ/IRAQ COLLECTIVE
RUEHAK/AMEMBASSY ANKARA
RUEHAH/AMEMBASSY ASHGABAT
RUEHGB/AMEMBASSY BAGHDAD
RUEHDM/AMEMBASSY DAMASCUS
RUEHIT/AMCONSUL ISTANBUL

UNCLAS SECTION 01 OF 02 BRUSSELS 000590 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR, EEB, AND NEA/I 
 
E.O. 12958: N/A 
TAGS: ECON ENRG EPET ETRD EU IZ SY TU
SUBJECT: IRAQ PLEDGES 5 BCM/Y OF GAS TO EUROPE 
 
BRUSSELS 00000590  001.2 OF 002 
 
 
¶1.  (SBU) Summary.  In meetings in Brussels this week Iraq's 
Oil Minister pledged to supply Europe with 5 billion cubic 
meters per year (bcm/y) of gas.  The gas would come from 
development of Iraq's western Akkas field and would be 
supplied to Europe by building pipeline interconnections 
between Iraq, Syria, and Turkey.  The announcement comes as 
the EU is looking for ways to meet a projected shortfall in 
future gas supplies.  In addition to the pledge, Iraq and the 
EU are very close to signing a broad Energy Cooperation MOU 
that is viewed as the first step towards a more comprehensive 
cooperation agreement.  End Summary 
 
¶2.  (SBU) Roland Kobia, Member of EU Energy Commissioner 
Andris Piebalgs Cabinet, told EST officers that Iraq's oil 
minister Hussain al-Shahristani pledged to supply Europe with 
5 bcm/y during an April 16 breakfast meeting with Piebalgs. 
This pledge was re-discussed later in the day by EU President 
Jose Manuel Barroso and Iraqi Prime Minister Nouri al-Maliki. 
 Kobia characterized it as "A political gesture of good 
will."  Al-Shahristani's pledge was picked up in a number of 
press reports and likened to the pledge made last week by 
Turkmenistan to supply the EU with 10 bcm of gas annually. 
 
¶3.  (SBU) Sigurd Schmidt, a Commission official from DG-Tren, 
told EST Officer that the Iraq and Turkmenistan pledges are 
part of a wider effort to diversify the EU's gas supply and 
find supporting volumes for the proposed Nabucco pipeline. 
Schmidt said the EU is concerned about a future production 
gap as Europe's demand for gas grows.  The Commission is 
expecting a decline in European gas production and is worried 
about underinvestment in Russia leading to declining gas 
production there.  As such, bringing in new supplies through 
projects such as Nabucco is becoming more and more important. 
 For this reason the EU is pursuing potential gas supplies 
from Central Asia and the Middle East. 
 
The Pledge 
---------- 
¶4.  (SBU) Schmidt indicated the gas to meet al-Shahristani's 
pledge would come from the Akkas field in Iraq's western 
Anbar province, near the border with Syria.  Schmidt sees the 
only viable export route for Akkas gas via Syria to Turkey. 
This route would require very little in terms of new 
pipelines -- a 40 km connector to Syria from Akkas and a 17 
km Syria to Turkey connector.  According to Schmidt, the 
Syrian system has sufficient capacity and would not need to 
be expanded to handle the flow.  Schmidt estimates it would 
take about four years to bring Akkas exports up to the 
pledged amount of 5 bcm/y.  Schmidt indicated that EU 
understanding is that Akkas development can proceed without 
need for passage of the Iraqi hydrocarbon law. 
 
¶5.  (SBU) Kobia commented he believes the Iraqi pledge is 
realistic. Al-Shahristani is pleased with the tender for 
Akkas development, which saw 30-40 companies pre-qualified, 
and al-Shahristani told EU officials he is very happy with 
the "computer pick" of the best offer.  An intergovernmental 
agreement would be needed between Iraq, Syria, and Turkey to 
provide an export route into Europe, but Kobia does not see 
this as a sticking point.  Kobia indicated the pipeline 
connection between Syria and Turkey should be completed next 
year. According to Kobia, the Iraqis have also considered 
other less attractive options for exporting gas from Akkas: 
shipping gas south via the Arab Gas Pipeline to Alexandria, 
Egypt where it could be converted to LNG for export to 
Europe; or building a pipeline from Akkas to northern Iraq 
where it could be directly exported to Turkey (bypassing 
Syria).  Like Schmidt, however, Kobia views the 
Iraq-Syria-Turkey route as the most viable option. 
 
Next Step: An EU-Iraq Energy MOU 
-------------------------------- 
¶6.  (SBU) Kobia indicated that the EU and Iraq are very close 
to signing an Energy Cooperation MOU.  The EU has almost 
completed its internal review and Kobia feels the MOU could 
be signed in a matter of weeks.  Kobia said that Al-Mailiki 
and al-Shahristani had asked to sign the agreement this week, 
but the EU had to explain that they were not quite ready. 
The MOU will not be legally binding, but is intended to 
strengthen the energy dialog.  Schmidt indicated the MOU will 
cover three main topics: 
 
 
BRUSSELS 00000590  002.3 OF 002 
 
 
-- Enhanced cooperation on developing an energy policy for 
Iraq. 
 
-- Enhanced cooperation on energy security and supply. 
Topics discussed under this heading, include: using 
associated gas that is now being flared; hydrocarbon supply 
options; LNG possibilities in the south; Arab Gas Pipeline 
options; and more technical and educational exchanges. 
 
-- Renewable Energy and Energy Efficiency.  The Iraqis are 
very interested in solar and wind power -- especially because 
these options would provide distributed power and help with 
blackouts. Kobia indicated that Iraq views its oil and gas as 
sources of export revenue so they are looking for other 
solutions to meet internal electricity demand.  Schmidt said 
that the main topic for energy efficiency was looking at ways 
to improve efficiency at Iraq's oil refineries. 
 
¶7.  (SBU) Kobia characterized the MOU as the first step 
towards a broader cooperation agreement.  Kobia and Schmidt 
both indicated that there have been very good EU-Iraq 
discussions on the energy chapter for the cooperation 
agreement.  Schmidt also indicated that the EU, in 
cooperation with the Energy Charter Secretariat, plans to 
arrange a seminar in Damascus on June 19 for representatives 
from Lebanon, Syria, Jordan, Egypt, Turkey, and Iraq to work 
towards building a consensus on hydrocarbon transit.  The 
seminar will be a working level event.  Damascus was chosen 
as the venue because of its central importance for the Arab 
Gas Pipeline. 
 
¶8.  (SBU) Comment:  This is the second pledge in a week that 
the EU has received on gas from a potential export supply 
country.  It demonstrates that the EU's energy diplomacy is 
at least producing pledges.  The same sticking point seems to 
remain, however:  how will the EU get this gas?  Kobia said 
that the key for Europe is getting Turkey to accept a transit 
regime for gas that is "fair and transparent".  He urged the 
U.S. to collaborate with the EU to make this happen.  He also 
said that Turkey needs to separate its discussions on energy 
with the EU from its accession negotiations or negotiations 
on gas will go nowhere.  However, the EU is still relatively 
weak as an institution on promoting its energy interests and 
it is as yet uncertain what its new pledges will amount to. 
In the broader context, greater cooperation on energy is an 
encouraging sign of increased EU engagement with Iraq. End 
Comment. 
.