VZCZCXRO8250
RR RUEHAG RUEHAST RUEHDF RUEHHM RUEHIK RUEHLN RUEHLZ RUEHMA RUEHPB
RUEHPOD RUEHROV RUEHSR RUEHTM RUEHTRO
DE RUEHBS #0245/01 0511558
ZNR UUUUU ZZH
R 201558Z FEB 09
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUCNMEU/EU INTEREST COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA
RUEHAH/AMEMBASSY ASHGABAT
RUEHSI/AMEMBASSY TBILISI
RUEHKB/AMEMBASSY BAKU

UNCLAS SECTION 01 OF 02 BRUSSELS 000245 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EPET EUN
SUBJECT: DAS HENGEL TALKS ENERGY SECURITY WITH THE EU 
 
REF: BRUSSELS 186 
 
Sensitive but Unclassified - not for Internet distribution. 
 
¶1.  (SBU) Summary.  On February 5 DAS Doug Hengel gave a well 
received presentation on "Oil and Gas Pipelines: the US 
Perspective" to a conference on "Investing in Europe's Energy 
Future" organized by the French Institute of International 
Relations (Ifri) in Brussels.  Following the conference on 
February 6 Hengel met with EU officials to exchange views on 
opportunities to enhance European energy security.  A 
recurring theme in these meetings was the importance of 
building interconnections between member states and reforming 
the internal market.  EU officials also stressed the 
importance of opening the Southern Corridor as a way to 
diversify Europe's energy supplies.  End Summary. 
 
¶2.  (SBU) On February 5, DAS Doug Hengel gave a presentation 
on "Oil and Gas Pipelines: the US Perspective" to a 
conference on "Investing in Europe's Energy Future" organized 
by the French Institute of International Relations (Ifri) in 
Brussels.  DAS Hengel's remarks were well received by the 
participants who included representatives from the EU, Member 
States, NGOs, and press.  DAS Hengel outlined how the U.S. 
views European energy security and stressed the commonality 
of U.S. and EU desires to address EU energy security 
challenges, notably the need to build a common, 
interconnected, competitive internal market for natural gas 
and electricity and the need to look to diversify Europe's 
sources for natural gas by moving forward on the Southern 
Corridor as well as opportunities for LNG and the potential 
for developing non-conventional gas deposits in Europe.  DAS 
Hengel also stressed that Iran must remain off-the-table as a 
source of gas for the Southern Corridor. 
 
¶3.  Following the conference, DAS Hengel met on February 6 
with EU Commission and Council officials to discuss energy 
security.  In a meeting with Jean-Arnold Vinois, Head of Unit 
for Energy Policy & Security of Supply at DG-TREN, Vinois 
said that the principal energy security challenge the EU 
faces is integrating eastern Europe into the internal market. 
 Gazprom wants to maintain the monopoly position it enjoys in 
many eastern States so the EU needs to find the right 
incentives to build new infrastructure to interconnect the 
currently isolated national markets.  Following the 
Ukraine/Russia gas crisis the Commission is re-examining the 
2004 Security of Gas Supply directive with an eye to how it 
can be strengthened.  The Commissions goal is to have a new 
proposal before the Summer recess.  Energy Minister's was 
scheduled to discuss their ideas on the gas directive on 
February 19, the Council's Gas Coordination Group will 
discuss the topic in more detail on February 23.  The topic 
could then be raised at the Spring Council on March 19 as 
part of their response to the Commission's Second Strategic 
Energy Review. 
 
¶4.  (SBU) Dr. Klaus Gretschmann, the EU Council's 
Director-General for the Internal Market, Customs Union, 
Industrial Policy, Telecommunications, Information Society, 
Research, Energy, and Transport, discussed some of the 
options he sees for the EU in terms of diversity of supply. 
In Gretschmann's opinion establishing an interconnected 
single European market for natural gas and electricity is the 
key for achieving energy security.  Gretschmann opined that 
the EU would stick to its Nabucco strategy, but may seek to 
enlarge the role of LNG.  Gretschmann said that the 
Russia/Ukraine crisis had shown that the consumer could be 
blackmailed by transit countries just as easily as by 
producer countries.  Gretschmann stressed that the EU learned 
a lot about how the gas system works and doesn't work during 
the crisis.  He see's a need for the EU to tackle the problem 
of building interconnection.  Gretschmann also said he 
believes the EU may look at a public/private model for 
funding the Nabucco pipeline project.  He said that getting 
gas from Turkmenistan will be important, but the EU needs to 
solve the transit problem first.  And for transit, the big 
question remains in Turkey.  On the question of the money for 
infrastructure projects included in the European Recovery 
Project, Gretschmann saw this as a very political issue and 
said "All Hell broke loose" over which country and which 
project will get what. 
 
¶5.  DAS Hengel met with Faouzi Bensarsa, DG-RELEX Energy 
Counselor for an exchange focused on U.S.-EU cooperation on 
Ukraine's energy infrastructure (see reftel).  Bensarsa also 
 
BRUSSELS 00000245  002 OF 002 
 
 
discussed his outlook for the Southern Corridor.  He said the 
EU is fully committed to establishing a trans-Caspian 
corridor for gas.  There are not technical obstacles, but the 
issues of Caspian delimitation, political agreements, and 
security will have to be addressed to make trans-Caspian gas 
flow a reality.  Bensarsa opined that ultimately the public 
sector would have to provide risk coverage for any new 
Caspian projects.  In his mind, no private company would be 
able to take the risks by itself in the post Russia/Georgia 
conflict environment. 
 
¶6.  Steven Everts, Advisor to EU High Representative Javier 
Solana, told DAS Hengel that he expected the March Council to 
take real decisions on energy security and expected that they 
could wrap up the Third Energy Package.  He said that over 
the last two years the EU has built a consensus on what 
energy policy should be and the debate has been accelerated 
by the Russia/Ukraine gas crisis.  Everts expects the debate 
going forward will focus on the internal market, gas stocks, 
and building interconnections.  On the Southern Corridor, 
Everts acknowledged the importance of Turkmenistan as a 
potential gas supplier, but said a lot hinges on the reaching 
an agreement for gas transit between Azerbaijan and Turkey. 
DAS Hengel urged that senior level EU officials visit 
Turkmenistan to press for private sector companies to be 
allowed to develop Turkmen energy resources; otherwise these 
resources will not be available for export.  Everts was not 
optimistic about the possibility of the EU opening the Energy 
Chapter with Turkey.  Everts said that for Solana, energy is 
only part of a larger relationship with Turkey.  Solana views 
energy as part of a broader context and considers it to 
require a long term process of building relationships, 
especially with Azerbaijan. 
 
¶7.  (SBU) Comment.  Like the meetings DAS Bryza had with EU 
officials the prior week, DAS Hengel's discussions revealed a 
clear focus on the need to accelerate actions to enhance EU 
energy security in light of the Russia/Ukraine dispute.  The 
Russia/Ukraine "wake up call," however, does not seem to 
translate into a willingness to engage in a more robust 
manner with Turkey to push forward the transit agreement 
necessary to make the Southern Corridor a reality.  In their 
meetings with Hengel EU officials underlined the difficulties 
in opening the Energy Chapter with Turkey and seemed to be 
looking for the US to deliver an Azeri-Turkey deal."  End 
Comment. 
 
Murray 
.