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OO RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHMO #0036/01 0121210
ZNR UUUUU ZZH
O 121210Z JAN 09 ZDS RUCNFB #8241 0121543
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1456
INFO RUCNCIS/CIS COLLECTIVE IMMEDIATE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE IMMEDIATE
RUEHXD/MOSCOW POLITICAL COLLECTIVE IMMEDIATE
RHEHNSC/NSC WASHDC IMMEDIATE
RHMFIUU/DEPT OF ENERGY WASHINGTON DC IMMEDIATE
RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE

UNCLAS SECTION 01 OF 02 MOSCOW 000036 
 
C O R R E C T E D  C O P Y  (SENSITIVE ADDED) 
 
SENSITIVE 
 
SIPDIS 
 
DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND WRIGHT 
EUR/CARC, SCA (GALLAGHER, SUMAR) 
DOE FOR HEGBURG, EKIMOFF 
DOC FOR JBROUGHER 
 
E.O. 12958: N/A 
TAGS: EPET ENRG ECON PREL RS UK
SUBJECT: RUSSIA-EU GAS UPDATE -- UKRAINE TO "DETACH" 
DECLARATION, AGREEMENT TO BE SIGNED AGAIN, GAS TO BEGIN 
FLOWING "SHORTLY" 
 
REF: A. MOSCOW 28 
     ¶B. KYIV 40 
     ¶C. BRUSSELS 31 
     ¶D. 07 MOSCOW 3395 
 
MOSCOW 00000036  001.2 OF 002 
 
 
------- 
SUMMARY 
------- 
 
¶1. (SBU) The EC Delegation in Moscow and Gazprom told us 
independently on January 12 that they expect a new trilateral 
agreement (refs A, B, C), without the supplemental 
"declaration" attached by Ukraine, to be signed as early as 
the end of the day.  Once signed and once monitors are in 
place, Russia would immediately resume gas deliveries to the 
EU.  Customers could begin receiving gas as early as 
approximately 30 hours after Gazprom turns on the taps.  The 
agreement only applies to the Russia-EU gas situation; Russia 
and Ukraine will need to work out a separate bilateral deal 
on gas supplies for the Ukrainian domestic system.  End 
summary. 
 
--------------------------------------------- -- 
UKRAINIANS TO "DETACH" SUPPLEMENTAL DECLARATION 
--------------------------------------------- -- 
 
¶2. (SBU) European Commission Delegation Energy Officer Ismo 
Koskinen told us January 12 that following late night January 
11 discussions between EC head Barrosso and Ukrainian PM 
Tymoshenko, Ukraine had agreed to "detach" the supplemental 
declaration it had added to the trilateral agreement on the 
monitoring of gas deliveries from Russia to the EU (refs A, 
B, C).  Koskinen said the Ukrainian supplemental declaration 
was "unacceptable" to the Russians and a new agreement now 
needed to be signed by all three parties, with the document 
needing to be flown to all three capitals for original 
signatures.  Koskinen said that monitors were already largely 
in place at 18 points along the gas supply route as of the 
morning of January 12 and could begin their duties as soon as 
the document is signed, which he hoped would be by the end of 
the day on January 12.  According to Koskinen, Ukraine had 
not "withdrawn" its declaration, but had agreed to keep it 
separate from the signed agreement.  He suggested this nuance 
should be acceptable to the Russians as the Ukrainian 
declaration would be independent of the actual agreement. 
 
¶3. (SBU) Gazprom Director of Foreign Relations, Ivan Zolotov, 
told us January 12 that Russia had found Ukraine's attached 
declaration to the agreement "totally unacceptable."  He said 
that through the declaration Ukraine wanted to break with 
four decades of precedent and charge additional transit fees 
for so-called "technical gas" -- gas needed to maintain 
system pressure.  Calling the Ukrainians "totally unreliable 
partners," he claimed that Ukraine also sought in the 
declaration to "continue stealing" as much as 21 million 
cubic meters of gas per day (over 7 billion cubic meters per 
year), but he didn't clarify how.  According to Zolotov, 
Ukraine also included in its declaration a time limit of one 
month for the tri-lateral monitoring group, in contrast to 
the agreed text, which he said calls for monitors "as long as 
required."  Zolotov said he had only read in the press about 
Ukraine's agreement to exclude its declaration, but that 
Gazprom will only believe it when it sees Ukrainian 
signatures on the new document. 
 
--------------------------------- 
DELIVERIES TO RESUME VERY SHORTLY 
--------------------------------- 
 
¶4. (SBU) Koskinen said that once monitors are in place and 
the document signed, gas deliveries from Russia to the EU 
through Ukraine -- currently completely halted -- would 
resume immediately.  He noted the EU's understanding that it 
could take approximately 10-12 hours for enough pressure to 
build up on the Russian side and another 36 hours for gas to 
transit to Ukraine.  Thus, it could take up to 50 hours for 
gas to reach all EU customers, once Gazprom resumes supplies. 
 He said it could take less time if Russia takes steps to 
fill pipelines prior to the conclusion of the placement of 
monitors and signing of the agreement, or if Ukraine adds gas 
 
MOSCOW 00000036  002.2 OF 002 
 
 
from its storage facilities to help speed the build up of gas 
in the pipeline system.  According to Koskinen, the gas 
supply situation is currently "critical" in Moldova and 
Bulgaria, and could become critical in various other Eastern 
European countries as early as the week of January 19.  He 
said some countries are coping with the gas shortage by 
rationing gas and by relying on storage and supplies from 
alternative routes. 
 
¶5. (SBU) Zolotov said that once Russia sees Ukraine's 
signature on the agreed-upon document, "without any tricks," 
Gazprom would resume gas deliveries to the EU immediately. 
He said Gazprom CEO Alexei Miller is in Brussels and that 
Gazprom expects the document to be signed by all three 
parties "within hours."  Zolotov said Gazprom's technical 
experts had told him it would only take 6-8 hours for 
sufficient pressure to build up on the Russian side and that 
EU customers would begin receiving gas 24 to 36 hours after 
that.  According to Zolotov, Gazprom is eager to resume 
deliveries as quickly as possible as the company has been 
forced to shut down 11 gas wells and is losing $100 million 
per day in gas sales. 
 
--------------------------------------------- --- 
INDEPENDENT OF BILATERAL RUSSIA-UKRAINE GAS TRADE 
--------------------------------------------- --- 
 
¶6. (SBU) Both Zolotov and Koskinen said the tri-lateral 
Russia-EU-Ukraine agreement and monitoring group only applied 
to the Russia-EU gas trade and is completely independent of 
the on-going dispute and negotiations on the Russia-Ukraine 
gas trade.  Zolotov said the Russia-EU gas trade is the 
priority and that once the situation is resolved, Gazprom 
would continue discussions with Ukraine on bilateral gas 
trade issues (ref D). 
 
------- 
COMMENT 
------- 
 
¶7. (SBU) Russian officials are aware that this dispute has 
cost them dearly in terms of both credibility and image, but 
we are hesitant to declare the impasse at an end until the 
gas actually starts flowing again.  With $100 million per day 
losses, Gazprom itself would also seem highly motivated to 
prevent future problems with its best customers, but the 
company is clearly not making all the decisions in this 
standoff. 
BEYRLE