VZCZCXRO1993
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHTC #1041/01 3570704
ZNR UUUUU ZZH
R 220704Z DEC 08
FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC 2361
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHMO/AMEMBASSY MOSCOW 1838
RUEHNY/AMEMBASSY OSLO 5030
RUEHAT/AMCONSUL AMSTERDAM 4067
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC

UNCLAS SECTION 01 OF 02 THE HAGUE 001041 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG EPET NL RS
SUBJECT: NETHERLANDS: ECONOMIC MINISTER VISITS RUSSIA, 
ADVANCES ENERGY RELATIONSHIP 
 
REF: A. THE HAGUE 589 
     ¶B. THE HAGUE 365 
     ¶C. 07 THE HAGUE 1999 
 
THE HAGUE 00001041  001.2 OF 002 
 
 
SENSITIVE BUT UNCLASSIFIED; PLEASE PROTECT ACCORDINGLY. 
 
¶1. (SBU) SUMMARY.  Dutch Economic Affairs Minister Maria van 
der Hoeven returned from her December 4-5 Moscow visit with a 
handful of energy announcements.  Her meeting with Gazprom's 
CEO touched on Nord Stream, a gas storage project in the 
Netherlands, and selling future output from Yamal gas field 
to a Dutch utility.  But scratching the surface reveals mixed 
evidence of concrete progress.  The Dutch government and 
corporate sector will continue to woo Russia as they position 
themselves to remain an important energy player in Europe as 
their own gas production declines.  END SUMMARY. 
 
------------------------------------------- 
Energy Dominates "Economic Framework" Talks 
------------------------------------------- 
 
¶2. (SBU) EconOff met December 15 with Bert Roukens and Erik 
Janssen, energy security experts at the Ministry of Economic 
Affairs (MEA) who accompanied Minister van der Hoeven on her 
December 4-5 visit to Russia.  (Note: MEA has lead 
responsibility for energy issues in the Dutch government. 
End note.)  The trip took place under the rubric of the 
Netherlands-Russia economic framework agreement and follows 
on Prime Minister Jan Peter Balkenende's November 2007 trip 
to Russia (ref C).  During that earlier visit, the two 
countries announced that Dutch state-owned gas infrastructure 
company Gasunie would acquire from Gazprom a 9 percent stake 
in the Nord Stream pipeline.  (Note: The Netherlands has 
identified Russia, Algeria, Saudi Arabia, and Kazakhstan as 
its priority bilateral relationships among fossil fuel 
producers.  End note.) 
 
¶3. (SBU)  Van der Hoeven's visit culminated in a plenary with 
Russian First Deputy Prime Minister (and Gazprom chairman) 
Viktor Zubkov.  Although the bilateral talks included working 
groups to promote trade in various sectors, energy issues 
took center stage.  Several Dutch energy companies 
participated, including Shell, GasTerra (privatized gas 
trading company), and Essent (largest Dutch gas and 
electricity utility).  Roukens described key outcomes on the 
energy front: discussion about Nord Stream, a letter of 
intent for Gazprom to join a consortium developing a gas 
storage site in the Netherlands, and a commitment in 
principle to supply future gas from the Yamal field to 
Essent. 
 
------------------------------------ 
Nord Stream: Optimistic Atmospherics 
------------------------------------ 
 
¶4. (SBU) In her meeting with Gazprom CEO Alexei Miller, van 
der Hoeven stressed that international treaties spelled out 
clear procedures for how the Nord Stream pipeline ought to be 
constructed and operated.  According to Roukens, van der 
Hoeven told Miller that the Netherlands expects Gazprom and 
its partners to live up to their environmental and governance 
obligations as Nord Stream moves forward.  Roukens said 
Gazprom was irritated by the European Commission's November 
2008 Second Strategic Energy Review (SER).  Specifically, the 
SER contained a table showing a scenario where if the EU 
meets its "20-20-20" energy and climate goals, it will not 
need extra gas imports from Russia.  He added, however, that 
in private Gazprom sounded bullish about Nord Stream despite 
recent statements to the contrary by Russian officials. 
Roukens said the mood was "positive" that development of the 
QRoukens said the mood was "positive" that development of the 
Shtokman field is progressing and will help fill the Nord 
Stream pipeline with new gas.  Gazprom claimed its upstream 
investment plans remained intact in the face of economic 
turmoil. 
 
--------------------------------------------- ------ 
Gazprom to Participate in Dutch Gas Storage Project 
--------------------------------------------- ------ 
 
¶5. (SBU) Gazprom and Abu Dhabi-owned energy company TAQA 
signed a letter of intent December 4 to develop a depleted 
natural gas reservoir in North Holland, Bergermeer, as a gas 
storage facility.  The project consortium includes TAQA's 
Dutch subsidiary, Dutch state-owned gas production concern 
Energie Beheer Nederland (EBN), Dutch private energy company 
 
THE HAGUE 00001041  002.2 OF 002 
 
 
Dyas, PetroCanada, and Gazprom.  The project aims to create a 
gas storage site with a capacity of 4.1 billion cubic meters 
(bcm), or 145 billion cubic feet (bcf), which equates to 
about 10 percent of annual Dutch natural gas consumption. 
The Bergermeer project's estimated cost is 700 million euros 
(USD 1 billion).  It is part of the Dutch government's 
efforts to position the Netherlands as a "gas roundabout" hub 
to supply gas from diverse sources to the rest of Europe. 
Roukens cautioned that the project is not yet ready to 
commence due to lack of agreement over who will supply and 
fund the injection of base gas into the reservoir.  The 
consortium hopes to start construction in mid-2009 and 
commercial operations in 2013. 
 
----------------------------------------- 
Dutch Utility Seeks Gas Supply from Yamal 
----------------------------------------- 
 
¶6. (SBU) Van der Hoeven and Miller also discussed the 
development of Yamal gas field.  Gazprom reportedly agreed to 
negotiate a deal with Dutch utility Essent to sell 5 bcm (177 
bcf) per year from Yamal.  Essent and other Dutch utilities 
have made no secret of their desire to secure long-term gas 
supplies from new sources as domestic gas production declines 
over the next 20 years.  According to Roukens, the 
Gazprom-Essent announcement was a symbolic gesture and had 
little substance behind it.  (Note: Rumors have circulated 
that Gazprom wants to buy Essent to establish a downstream 
position in the Netherlands.  Van der Hoeven has repeatedly 
stated her support for the EU's "third country" -- or 
"Gazprom" -- clause, which would prevent Gazprom from 
acquiring an unbundled Dutch energy company.  End note.) 
Roukens said other Dutch firms in the energy, engineering, 
and dredging sectors were also seeking Yamal-related 
contracts. 
 
--------------------------------------------- --------- 
Slow Progress on Dutch-Russian Energy Efficiency Links 
--------------------------------------------- --------- 
 
¶7. (SBU) The Netherlands is keen to move forward on 
implementing a bilateral agreement with Russia to promote 
energy efficiency.  Roukens said the Dutch government is 
pushing to set up a work program with the new Moscow-based, 
UNESCO-funded International Sustainable Energy Development 
Center (ISEDC). 
 
----------------------------- 
Netherlands to Observe Gaspec 
----------------------------- 
 
¶8. (SBU) The Netherlands received Russia's backing to become 
an observer of the fledgling Gas Exporting Countries Forum 
(or "Gaspec").  Roukens said the Dutch have not yet received 
an official invitation to attend an inaugural event in early 
2009, but would likely attend.  Roukens reiterated van der 
Hoeven's public stance that the Netherlands would withdraw 
immediately if the group assumed cartel-like behavior. 
 
------- 
Comment 
------- 
 
¶9. (SBU) Minister van der Hoeven's Russian trip underscores 
how badly the Netherlands wants to maintain its traditional 
role as a key European gas hub after its own gas is gone.  As 
a result, when it comes to energy security, the Dutch wish to 
have their cake and eat it too.  They realize the 
contradiction of wooing Russia as a bilateral energy partner 
while they concurrently champion the cause of a common EU 
energy security posture.  They also know it is risky -- Dutch 
officials still smart from Russia's about-face on Shell's 
investment in the Sakhalin project.  The Dutch have been 
Qinvestment in the Sakhalin project.  The Dutch have been 
extremely patient in developing their energy relations with 
Russia.  They can afford to be because they do not need the 
gas now, but they will in a few years when large Russian 
fields might be coming on stream.  END COMMENT. 
 
CULBERTSON