VZCZCXRO9992
RR RUEHAG RUEHAST RUEHDF RUEHHM RUEHIK RUEHLN RUEHLZ RUEHMA RUEHPB
RUEHPOD RUEHROV RUEHSR RUEHTM
DE RUEHBS #0006/01 0051807
ZNR UUUUU ZZH
R 051807Z JAN 09
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUCNMEU/EU INTEREST COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHCH/AMEMBASSY CHISINAU
RUEHKV/AMEMBASSY KYIV
RUEHMO/AMEMBASSY MOSCOW
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEKJCS/DOD WASHDC

UNCLAS SECTION 01 OF 02 BRUSSELS 000006 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EPET EUN
SUBJECT: RUSSIA/UKRAINE - THE EU PERSPECTIVE 
 
Sensitive but Unclassified - not for Internet distribution. 
 
¶1. (SBU) Summary.  The EU is ramping up engagement on the 
Ukraine/Russia gas dispute.  Today, it dispatched a fact 
finding mission to Kyiv and convened an extraordinary meeting 
of the Permanent Representatives.  Later this week, the 
College of Commissioners and Foreign Ministers will convene 
in Prague and the PermReps will reconvene on Friday.  At this 
point, the EU does not seek to play a mediating role but 
rather to encourage the parties to continue negotiations. 
End Summary. 
 
¶2. (SBU) The Czech EU Presidency called an extraordinary 
meeting of the Council's COREPER I committee in Brussels 
January 5 to discuss the Russian/Ukrainian gas dispute.  A 
Commission spokesman said that that a joint mission of the 
Czech Presidency and the Commission was hastily set up and 
departed for Kiev the morning of January 5.  The Commission 
is represented by Commissioner Piebalgs's Chef de Cabinet, 
Andris Kesteris, and by the Director-General DG for Energy 
and Transport, Matthias Ruete.  The Czech Presidency is 
represented by Minister of industry and trade Martin Riman 
and the Special Ambassador for Energy Security, Vaclav 
Bartuska. 
 
¶3. (SBU) EU Energy Commissioner Piebalgs told Ambassador 
Silverberg on January 5 that he expects the EU will encourage 
Ukraine and Russia to sign a longer-term, more comprehensive 
transit agreement.  He noted that the current transit 
agreement is only three pages long.  In the past, Piebalgs 
said the EU has turned a blind eye to such shortcomings, but 
he now believes a comprehensive agreement is warranted and 
added that the Ukrainians are open to a longer-term 
agreement.  He said that he would know more over the next few 
days -- following the report of the fact-finding mission. 
Nevertheless, he does not expect a resolution in January. 
 
¶4. (SBU) Piebalgs believes the EU can handle a delay into 
February because demand is down this year, and most of the EU 
has adequate gas storage.  He is, however, concerned about 
supplies to Bulgaria and Romania.  Piebalgs excluded the 
possibility of the EU monitoring the flow of gas through 
Ukraine; they don't want to be in the position of pointing 
fingers at either party.  He said the EU objective is to keep 
both parties negotiating toward a longer-term arrangement. 
(Note:  A press release by the Czech Presidency said "The 
objective of our joint mission is to lead negotiations with 
Ukrainian government officials and representatives of gas 
companies." End Note.) 
 
¶5. (SBU) Contacts who were present at the COREPER confirmed 
Piebalgs comments.  Few details about the dispute are clear, 
and the EU seeks to obtain more information before deciding 
if/how to proceed.  One concern is the brevity of the transit 
agreement.  There was general support for the fact-finding 
mission, which is scheduled to visit Kyiv January 5 and 
Moscow January 6, although there is some concern that because 
of the Russian holiday, little will be accomplished there. 
(Note: There are indications that the mission may actually 
meet Gazprom officials in Berlin rather than Moscow.  End 
note.)  Except for Lithuania, none of member states want the 
EU to play a mediating role.  A contact from the Lithuanian 
PermRep said his government is concerned about the lack of 
reliable data; gas destined for Europe is disappearing and EU 
officials need to become more involved.  He added that 
Ukraine President Yushenko sent a request to all member 
states seeking their support in the dispute.  The COREPER I 
will reconvene on Friday, January 9 to discuss the findings 
of the mission. 
 
¶6. (SBU) Econ Officers also spoke separately with Gazprom's 
local agents on January 5.  From the Russian perspective, 
Gazprom is dependent on Ukraine both for transit and as a 
customer - Ukraine is Gazprom's second largest customer after 
Russia.  According to the agents, Gazprom's CEO Miller and 
Naftogaz's Chairman Dubyna had negotiated a draft contract 
but this fell apart on December 31.  Under the draft terms, 
the middleman - RUE - would be cutout and the price would be 
set in the range of $235-250/tcm.  Further, Gazprom would 
agree to advance 2009 transit fees to cover 2008 arrears. 
Gazprom is asking the EU and European leaders to pressure 
Ukraine to return to table under the auspices of Energy 
Charter obligations.  Gazprom, however, does not seek EU 
mediation at this point.  Gazprom's Deputy Chief Medvedev was 
 
BRUSSELS 00000006  002 OF 002 
 
 
visiting Paris and London on January 5, and planned to travel 
to Berlin January 6.  Gazprom is hoping for a meeting with 
the EU delegation in Berlin or with EU officials in Brussels 
later this week. 
 
Silverberg 
.