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DE RUEHVB #0681 2730836
ZNR UUUUU ZZH
O 290836Z SEP 08
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8647
INFO RUEHLJ/AMEMBASSY LJUBLJANA 6423
RUEHRO/AMEMBASSY ROME 1041
RUEHUP/AMEMBASSY BUDAPEST 1101
RUEHBW/AMEMBASSY BELGRADE 0017
RUEHMO/AMEMBASSY MOSCOW 0967
RUEHSK/AMEMBASSY MINSK 0037
RUEHKV/AMEMBASSY KYIV 0004
RUEHSL/AMEMBASSY BRATISLAVA 0234
RUEHSF/AMEMBASSY SOFIA 0994
RUEHBM/AMEMBASSY BUCHAREST 0781

UNCLAS ZAGREB 000681 
 
SIPDIS 
SENSITIVE 
 
Department for EEB/ESC/IEP 
 
E.O. 12958:  N/A 
TAGS: ENRG PGOV HR RS
SUBJECT:  RUSSIAN MINISTER VISITS CROATIA TO DISCUSS SOUTH STREAM 
PIPELINE AND DRUZBA ADRIA PROJECT 
 
¶1. (U) Russian Emergency Situations Minister Dmitri Shoigu visited 
Zagreb on September 22 for a brief one-hour meeting with Deputy 
Prime Minister Damir Polancec.  The goal of the visit was reportedly 
to discuss preparations for an upcoming meeting of the 
Croatia-Russia Intergovernmental Technical Commission for Trade, 
Economic, Scientific, and Technical Cooperation, which has been 
dormant for four years.  The major topic of discussion was Croatian 
access to Russian energy sources.  Shoigu reportedly told the 
Croatians that Russia was willing to revisit the Druzba Adria oil 
pipeline project, but was not willing to negotiate any changes to 
its terms.  Previously, Croatia had proposed the pipeline be 
extended to Slovenia and Italy via Istria, rather than terminating 
on the island of Krk.  The Croatians have environmental concerns 
about the Krk terminus due to the potential for increased tanker 
traffic along the Croatian coast. 
 
¶2. (U) Shoigu also reiterated a Russian offer to connect Croatia to 
the planned South Stream gas pipeline to Italy.  However, 
unidentified press sources claim Russia will link this offer to a 
successful final agreement on the Druzba Adria project.  A senior 
strategic advisor at the INA national oil company confirmed to us 
that an eventual Croatian connection to South Stream was highly 
likely (should the pipeline be built), although the time-frame for 
the project is still 7 - 8 years out. 
 
¶3. (SBU) Comment:  According to the INA representative, Croatian 
demand for natural gas will grow to 6.5 bcm by 2015 and Croatia can 
supply only 3 bcm from domestic sources.  For this reason, access to 
Russian energy supplies through either South Stream or Druzba Adria 
will continue to be of strong interest to the Croatians.  A proposed 
LNG terminal on Krk could help significantly diversify supply, with 
or without connection to Russian sources.  The terminal would 
reportedly reach a capacity of 6.5 bcm per annum by 2016.  However, 
progress on that project continues to be slowed by Croatian 
foot-dragging on selecting a site, and continuing debates over 
whether Croatian participants, who will hold about 25 percent of the 
consortium, will have a veto on decisions related to the project. 
Even if the LNG project moves forward in earnest soon, however, 
Croatia will still have a major task ahead of it in locating and 
securing stable gas supplies for the terminal. END COMMENT. 
 
BRADTKE