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PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
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DE RUEHBM #0655/01 2711135
ZNR UUUUU ZZH
P 281135Z SEP 09
FM AMEMBASSY BUCHAREST
TO RUEHC/SECSTATE WASHDC PRIORITY 9924
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RHMCSUU/DEPT OF ENERGY WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 BUCHAREST 000655 
 
SENSITIVE 
 
DEPT FOR SE MORNINGSTAR AND EUR/CE ASCHIEBE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG ECON PGOV PREL OREP RO
SUBJECT:  ROMANIA: ENERGY SCENESETTER FOR SE MORNINGSTAR 
 
Sensitive but Unclassified; not for Internet distribution. 
 
¶1. (SBU) Post warmly welcomes the visit of Special Envoy for 
Eurasian Energy Richard Morningstar.  Your visit comes at just the 
right time to send an important signal to our Romanian allies that 
the United States remains fully engaged in Eastern Europe, 
especially when it comes to energy security.  The Black Sea Energy 
and Economic Forum, where you will deliver the opening night 
address, will bring together a broad spectrum of ministers and 
business leaders to discuss energy security and cooperation.  As 
event organizer, the Atlantic Council envisions this Forum as the 
first of what will become a regular series of conferences around the 
Black Sea on transnational energy issues.  As co-host, the Romanian 
Government hopes the Forum will burnish Romania's credentials as a 
serious player in regional energy issues and enhance Romanian 
aspirations to be the primary European gateway to the Black Sea and 
beyond to the Caspian region and Central Asia. 
 
¶2.  (SBU) You will be the first high-level State visitor from 
Washington to meet with President Traian Basescu since DAS Matt 
Bryza in January.  Basescu is a big-picture strategic thinker and 
very well informed on energy issues from a national (and EU) 
security perspective.  He has personally driven Romania's own 
"energy diplomacy" by pursuing closer bilateral relations with 
Turkey, Georgia, and Kazakhstan, and has made overtures to 
Turkmenistan.  Basescu has been particularly successful in forging 
close ties with President Aliyev of Azerbaijan, who just concluded 
his most recent visit to Bucharest on September 28.  Despite 
Romania's rough-and-tumble domestic politics, there is broad 
consensus on geostrategic issues like energy security, and 
differences are more of nuance than substance.  Likely to run for 
re-election this November, President Basescu has faced some media 
criticism for putting too much faith in Romania's relationship with 
the United States.  However, in recent statements he has strongly 
reaffirmed our bilateral partnership as the cornerstone of Romanian 
foreign policy.  Despite budgetary constraints due to the current 
recession, Romania remains a staunch NATO ally and contributor to 
missions in Afghanistan and the Western Balkans. 
 
¶3.  (SBU) Views on energy security tend to be closely aligned with 
our own.  Romania is a member and steadfast supporter of the Nabucco 
consortium and seeks to use its ties with Central Asia to encourage 
gas exports via Nabucco, complementing U.S. efforts.  The draft bill 
for Romania's ratification of the Nabucco Inter-governmental 
Agreement should be submitted to Parliament shortly.  Looking 
further ahead, Romania also sees promise in the White Stream 
project.  Romania is interested in reviving the stalled Pan-European 
Oil Pipeline (PEOP) and in exploring other avenues of transit for 
crude and refined oil products through Romania to the rest of the 
EU.  KazMunayGaz (KMG), owner of Rompetrol (Romania's second largest 
oil refiner and distributor), wants to leverage its refining 
capacity here to export Kazakh oil to the European market. 
 
¶4.  (SBU) While domestic natural gas production still meets 60 
percent of Romanian consumption, the 40 percent that is imported 
comes entirely from Russia via Ukraine.  In the wake of last 
winter's gas cutoff, Romania is eager to diversify its gas sources. 
Beyond new pipelines like Nabucco, Romania sees promise in liquified 
natural gas (LNG) imports through a proposed terminal at the port of 
Constanta.  The U.S. Trade and Development Agency (USTDA) is 
financing a one-year feasibility study for which state-owned Romgaz 
and U.S. contractor Granherne concluded a contract on September 15. 
A key issue will be sea routes for LNG to Constanta.  Although 
Romania enjoys good relations with Turkey -- due in part to 
Romania's vocal support for Turkish accession to the EU -- LNG 
transit through the Bosporus remains a contentious topic, and the 
Romanians have frequently signaled their interest in U.S. engagement 
with Turkey on this question.  Romania hopes that LNG transit across 
the Black Sea may be possible in the future, although USTDA recently 
declined to pursue a feasibility study for a gas liquefaction plant 
in Georgia.  Romania is also pursuing better gas connectivity with 
its neighbors; a pipeline linking its national grid with Hungary 
will be completed soon, and talks are underway for a similar hookup 
with Bulgaria. 
 
¶5.  (SBU) Romania maintains a cautious but pragmatic energy 
relationship with Russia.  Officials have been in talks with Gazprom 
over development of a two billion cubic meter underground gas 
storage facility.  As part of a broader engagement with Russia, 
Romania would like to see forward progress on the EU Energy Charter 
Treaty.  Romania and Russia are also finding ways to cooperate on 
commercial projects outside of the energy sphere.  Even though 
Romanians are reluctant to cede too much control over national 
energy infrastructure to any third party, they recognize their need 
for the investment money and technical expertise required to upgrade 
domestic infrastructure and exploit unconventional energy sources. 
If the Russians can supply these, Romania is willing to talk. 
 
 
BUCHAREST 00000655  002 OF 002 
 
 
¶6.  (SBU) Despite membership in the EU, Romania is still a 
developing country and is sympathetic to other developing countries' 
concerns on global issues such as climate change.  This is usually 
expressed quietly, however, as an effort to influence policy 
decisions within the EU.  Publicly Romania follows the EU lead. 
Romania's large hydroelectric base and growing nuclear power 
capacity, coupled with less reliance on coal-fired plants, put the 
country much closer to meeting EU emissions targets than most other 
states in Eastern Europe.  Romania sees great promise in renewable 
energies, especially wind power.  However, in spite of efforts to 
build substantial wind farms in the Dobrogea region along the Black 
Sea coast, transmission grid capacity limits and problems obtaining 
financing have slowed progress. 
 
GITENSTEIN