VZCZCXRO8567
RR RUEHIK
DE RUEHKV #1761/01 2861333
ZNR UUUUU ZZH
R 131333Z OCT 09
FM AMEMBASSY KYIV
TO RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEHC/SECSTATE WASHDC 8572
INFO RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RHEHAAA/NSC WASHDC
RUEHRC/USDA FAS WASHDC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 02 KYIV 001761 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR S/EEE, EUR/UMB, EB/ESC/IEC 
DOE PLEASE PASS TO JELKIND, LEKIMOFF, CCALIENDO 
NSC PLEASE PASS TO KKVIEN 
 
E.O. 12958: N/A 
TAGS: ENRG ECON EFIN EREL PINR UA
SUBJECT: U.S.-UKRAINE ENERGY SECURITY WORKING GROUP 
 
REF: STATE 103668 
 
KYIV 00001761  001.2 OF 002 
 
 
Sensitive but unclassified. 
 
¶1. (SBU) Summary:  Ukraine welcomes the opportunity to 
discuss a broad range of energy-related issues with 
Ambassador Morningstar and DOE co-hosts at the upcoming 
Energy Security Working Group meeting, tentatively scheduled 
for October 28.  Minister of Foreign Affairs 
Ambassador-at-Large for Energy Security, Viacheslav 
Kniazhnytskyi, suggested detailed discussions on gas transit 
system modernization, nuclear fuel supply and waste, 
renewables, energy efficiency, mine safety and methane 
capture, which all could be discussed within the framework of 
the proposed agenda (reftel).  Ukraine would also be prepared 
to brief the U.S. delegation on Ukraine's cooperation with 
the European Union in the area of energy, including the 
recently completed negotiations for Ukraine to join the 
European Energy Community.  Kniazhnytskyi said that the 
Ministry of Fuel and Energy would co-chair the meetings with 
the Presidential Secretariat's Representative for 
International Energy, Bohdan Sokolovsky. End Summary. 
 
------------------------------------- 
Energy Security Working Group Meeting 
------------------------------------- 
 
¶2. (SBU) Ukraine's new Ministry of Foreign Affairs 
Ambassador-at-Large for Energy Security, Viacheslav 
Kniazhnytskyi, on October 9 said that the GOU welcomed the 
opportunity to deepen cooperation on energy-related matters 
with the United States at upcoming Energy Security Working 
Group meetings in Washington, D.C.  Kniazhnytskyi said he 
hoped to be able to confirm shortly that October 28 would be 
acceptable for the Ukrainian delegation.  He understood our 
desire to have an interagency delegation that would be able 
to speak with authority on the broadest range of energy 
issues.  He said that the Ministry of Fuels and Energy was 
planning to co-chair the meeting, possibly at the Deputy 
Minister level (Deputy Minister Sergiy Pavlusha).  Bohdan 
Sokolovsky from the Presidential Secretariat would also 
co-chair.  Kniazhnytskyi mentioned that it would be useful to 
have some of the regulators at the table as well. 
 
¶3. (SBU) Kniazhnytskyi thought that the proposed agenda 
(reftel) would be acceptable to the Ukrainian delegation, and 
he had a number of suggestions for discussion topics under 
the agenda items: 
 
-- Gas Transit System Modernization.  He envisioned a 
discussion about infrastructure to include the underground 
storage of gas.  Ukraine wants to emphasize plans for 
improved metering and auditing and will discuss general 
improvements in the legal and regulatory environment. 
Ukraine intends to use its recent agreement to join the 
European Energy Community to bring its system up to EU 
standards. 
 
-- Nuclear Power Fuel Supply.  Kniazhnytskyi said that 
diversification of nuclear fuel supply is a very high 
priority for Ukraine.  He was positive about the prospects 
for licensing (done by the Nuclear Regulatory Commission) of 
Westinghouse fuel assemblies, including the 42 that are to be 
loaded in the third unit of the South Ukraine Nuclear Power 
Plant.  He was aware of the concern of some regulators in 
Ukraine about using both Westinghouse fuel and Russian fuel 
in the same reactor, however.  He emphasized that there is no 
bias against American fuel. Note:  See para 4 for additional 
information on this issue.  End Note. 
 
-- Nuclear Waste.  Ukraine is participating with the EU and 
the IAEA on a roadmap for nuclear safety and would be willing 
to discuss findings of a yet-to-be released Ukraine-EU-IAEA 
report on nuclear waste issues. 
 
-- Nuclear Cooperation with the U.S.  Ukraine is eager for 
additional assistance/cooperation with the U.S., including to 
build a fuel fabrication plant in Ukraine.  Kniazhnytskyi 
asked that we keep in mind that Ukraine wants technology 
transfer along with this project. 
 
 
KYIV 00001761  002.2 OF 002 
 
 
-- Renewables, Energy Savings, Efficiencies.  Kniazhnytskyi 
said that Ukraine was working hard to improve energy 
efficiency and would be interested in a discussion of energy 
efficiency, possibly under the agenda item devoted to U.S. 
technical assistance. 
 
-- Mine Safety.  Ukraine would welcome further cooperation on 
mine safety, in particular methane capture. 
 
-- Tripartite Cooperation.  Kniazhnytskyi suggested the ESWG 
explore US-Ukraine-EU cooperation in the area of energy and 
possible benefits of tripartite cooperation. 
 
¶4. (SBU) Note/ Additional information on Nuclear Fuel Supply: 
Over the last couple of months the State Nuclear Regulatory 
Committee of Ukraine (SNRCU), the regulator for nuclear 
matters in Ukraine, has been asserting a number of technical 
issues must be resolved before SNRCU will license the initial 
core load of fuel developed under the Ukraine Nuclear Fuel 
Qualification Program (UNFQP).  This initial core loading is 
scheduled for January ) February of 2010 and would be the 
culmination of 10 years and $80 million dollars worth of DOE 
assistance to develop an alternative qualified nuclear fuel 
for Ukraine,s civilian nuclear power sector.  Qualifying 
this alternative fuel would remove Russia,s monopoly on 
nuclear power plant(NPP) fuel in Ukraine and also make the 
Westinghouse technology more attractive with regards to 
competing proposals between Westinghouse and Russia regarding 
Ukraine,s imminent selection of a technology for a Ukraine 
domestic nuclear fuel fabrication facility.  The SNRCU is 
raising concerns although the Ukraine Center for Nuclear Core 
Design from the Kharkiv Institute of Physics and Technology, 
which is the designated lead organization in Ukraine for 
criticality and safety documentation for this material, has 
submitted recommendations that this fuel meets all normally 
accepted criteria and should be licensed.  Many of the 
comments by SNRCU are non-standard, inaccurate and 
unsubstantiated.  The United States Department of Energy 
Attache in Kyiv is concerned that the delay in licensing this 
fuel for loading could be related to an attempt by factions 
in the GOU to assure Russia remains Ukraine,s only source of 
NPP fuel.  The delay could also enable Energoatom to opt out 
for non-performance of their contract obligations, due to 
commence in 2011, to purchase Westinghouse fuel for future 
core reloads at South Ukraine NPP.   End Note. 
 
------------------------------------- 
Joining the European Energy Community 
------------------------------------- 
 
¶5.  (SBU) Kniazhnytskyi said that Ukraine would also be 
prepared to brief the U.S. delegation on Ukraine's 
cooperation with the European Union in the area of energy, 
including Ukraine's commitment to join the European Energy 
Community.  Ukraine and the EC completed negotiations on 
October 7 for Ukraine to join the European Energy Community, 
signing a memorandum specifying the terms and conditions, 
including a timetable, for implementation of directives that 
would bring Ukraine into conformity with Energy Community 
obligations.  Ukraine gains access to Europe's energy market 
by becoming a member of the Community.  Although the 
memorandum awaits ratification by Ukraine's parliament (the 
Rada) as well as the Ministerial Council of the Energy 
Community, Ukraine is expected to start work immediately to 
be able to meet its targets.  The Memorandum regarding 
Ukraine's accession to the Energy Community Treaty can be 
found at www.energy-community.org/pls/portal /docs/426177.pdf 
 
 
¶6. (SBU) Kniazhnytskyi also said that he thought that the 
long-awaited new law on issues related to the gas sector 
would be finalized and sent to Prime Minister Tymoshenko for 
approval the week of October 12. After her approval, it would 
be submitted to the Rada.  Although this draft law had been 
revised many times and had been circulating from the 
government to the Rada for over eight years, Kniazhnytskyi 
thought the current, improved version had a significant 
chance of being brought into law. 
PETTIT