VZCZCXRO1459
RR RUEHIK
DE RUEHC #7194/01 2890411
ZNR UUUUU ZZH
R 151842Z OCT 09
FM SECSTATE WASHDC
TO EUROPEAN POLITICAL COLLECTIVE
RUEHAS/AMEMBASSY ALGIERS 3730-3733
RUEHGB/AMEMBASSY BAGHDAD 8981-8984
RUEHBJ/AMEMBASSY BEIJING 0853-0856
RUEHDO/AMEMBASSY DOHA 1414-1417
RUEHOS/AMCONSUL LAGOS 8193-8196
INFO RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC

UNCLAS SECTION 01 OF 04 STATE 107194 
 
SENSITIVE 
 
SIPDIS 
 
C O R R E C T E D  C O P Y (ADDING SENSITIVE CAPTION) 
 
E.O. 12958: N/A 
TAGS: ENRG EPET PPD
SUBJECT: EURASIAN ENERGY POLICY: PRESS GUIDANCE 
 
STATE 00107194  001.4 OF 004 
 
 
¶1.  (SBU)  The purpose of this cable is to provide Embassies 
with talking points and general press guidance that they can 
draw on as needed regarding our Eurasian Energy policy.  We 
continue to believe that diversity ) of energy suppliers, 
transportation routes and energy sources ) is the key to 
energy security.  This belief guides our work to encourage 
new oil and gas production in Russia, Kazakhstan, 
Turkmenistan and Azerbaijan.  We continue to work with 
producers in Central Asia and the Caucasus to find new routes 
to market including new routes for oil and natural gas to be 
delivered to Europe and markets beyond.  We call this route 
the &Southern Corridor8 which includes the Nabucco and 
Turkey-Greece Italy Interconnector (TGI) pipelines for 
natural gas. We are also working with some of the countries 
of the region to increase energy efficiency and to develop 
new clean, energy alternatives. 
 
¶2. (SBU)  There are two major areas in which our policy 
differs from the previous Administration.  The first is our 
emphasis on engagement; we recognize that we cannot achieve 
our energy goals alone.  We need the help and support of our 
allies and we must open a dialogue on energy security issues, 
even when we don,t agree.  This new approach is most 
apparent in our relationship with Russia, where the 
Administration has set a new, positive tone, but it also 
applies to Europe and others.  The second area of difference 
relates to the scope of our Eurasian energy policy.  New 
resources and new pipelines alone are not enough to increase 
European or global energy security.  We must also support 
efforts to increase market competition, to build new LNG 
facilities, gas and power interconnections, and gas storage 
capacity, to explore opportunities to develop unconventional 
gas, and to create a single, integrated European market for 
energy. 
 
¶3. (SBU)  Below are provided cleared responses for Posts, 
use as needed regarding what we believe might be the 
&difficult8 questions on Eurasian energy.  You can find 
this guidance at http://eeb.e.state.sbu.  We will work to 
keep it updated.  We welcome your comments and requests for 
additional guidance as needed. 
 
¶4.  (U) Begin guidance in the format of questions and answers. 
 
--Why is the U.S. focused on European energy security? 
Isn,t this a problem for Europe to solve? 
 
A: Taking goods and services together, the EU and the U.S. 
account for the largest bilateral trade relationship in the 
world.  The significant amount of bilateral trade and 
investment illustrates the high degree of interdependence of 
the two economies.  We have an interest in maintaining this 
level of commercial and economic activity with Europe and 
therefore have an interest in an economically strong Europe. 
In addition, Europe is our partner on any number of global 
issues. 
 
Of course, Europe is composed of many different states and 
energy security is a more pressing issue for some than for 
others.  And, it is true that we can,t be more European than 
the Europeans. 
 
However, we do see that Europe is taking steps to enhance its 
energy security.  Since the January 2009 gas cut-off to 
Europe, the European Commission has increased funding for 
electricity and gas interconnections, gas storage facilities 
and alternative energy. 
 
--What is the U.S. policy on Russian gas for Nabucco? 
 
A: According to the commercial structure of the Nabucco 
consortium, third parties have the right to bid on purchasing 
up to 50% of the total capacity of the pipeline.  Third 
parties are not entitled to ownership or managerial stakes in 
the consortium.  Whether or not Russian gas will be included 
in Nabucco is a decision for the consortium members, as well 
 
STATE 00107194  002.4 OF 004 
 
 
as for Russia, which to date has not stated whether or not it 
would consider participating. 
 
If Russian gas is included in the Nabucco project, doesn,t 
that undermine the objective, which is to encourage the 
diversification of suppliers to Europe (i.e., not Russia) and 
means of transport for Caspian gas (i.e., not Russian 
pipelines). 
 
The Nabucco pipeline would be an integral part of a Southern 
Corridor to transport Caspian (and potentially Iraqi) gas to 
Europe. It would represent a diversification of sources for 
the European Union and a diversification of export routes for 
Caspian and Middle Eastern producers.  Some Russian gas 
shipped through the pipeline would not fundamentally alter 
that design, since it still would carry primarily Caspian 
and/or Iraqi gas. 
 
--Will there be another Russian-Ukraine gas cut off/dispute 
this winter? 
 
A: We have been working closely with Ukraine, Russia and the 
EU, as well as the international financial institutions, to 
develop strategies to avoid another crisis.  We encourage 
Russia, Ukraine, and Europe to work together on gas transit 
issues and make every effort possible to avoid another 
crisis.  We support efforts by the EU and international 
financial institutions to help Ukraine reform its energy 
sector and modernize its gas transit infrastructure. 
 
We will continue our discussions on this issue with our 
partners in the EU and at international financial 
institutions, as well within the context of our Strategic 
Partnership Commission with Ukraine. 
 
--What will the US and Russia discuss about energy issues? 
 
A: The U.S. and Russia cooperate on a number of energy 
issues, and are looking for more ways to deepen this 
cooperation.  As President Obama said at the U.S.-Russia 
Summit in Moscow in July, &the United States and Russia have 
more in common than they have differences.8  The White House 
has announced a new bi-national Presidential Commission that 
will cover a host of important bilateral issues.  In 
particular, the bi-national commission will broadly cover 
three energy topics: energy efficiency; clean energy 
technologies; and energy security. 
 
We are working to have an open dialogue with Russia and 
identify areas of mutual interest and benefit.  On some 
issues, we may disagree, but that doesn,t mean we shouldn,t 
have a discussion.  In any event, we will continue to 
strongly support Europe,s initiative to diversify its energy 
sources and routes. 
 
Russia is and will continue to be a major player in energy 
markets.  It is in all of our interests for Russia to 
increase production of oil and gas resources.  That is not 
inconsistent with seeking diversification or competition. 
We will continue to strongly support Europe,s initiative to 
diversify its energy sources and routes. 
 
Another potential area for cooperation is on energy 
efficiency and savings. Increasing energy development and 
production cannot achieve energy security alone; we must 
think about conservation too.   Increasing energy efficiency 
helps producers and consumers, allows for a better allocation 
of scarce resources, and is also integral to our overall 
climate goals. 
 
--Does the U.S. support the Russian-backed projects Nord 
Stream and South Stream? 
 
A: The U.S. neither supports nor opposes either of these 
pipelines.  In general, U.S. policy is to support transparent 
and commercially-viable pipeline projects that meet 
environmental safety standards. 
 
On Nord Stream, we understand that some European countries 
view the project as beneficial to their energy security while 
others have raised environmental and other concerns about the 
project.  These concerns should be addressed before the 
pipeline is built. 
 
 
STATE 00107194  003.4 OF 004 
 
 
South Stream is still in the conceptual phase.  There are 
some major questions about its technical and commercial 
viability. 
 
--Where will the gas come from for Nabucco? 
 
A: There are a several possibilities for gas supply and 
clearly this should be the focus of the work of the Nabucco 
consortium in this next phase of project development. 
Exploration of Azerbaijan,s Shah Deniz field is continuing 
and we have heard from the companies developing the field 
that the resource base looks promising, with potential 
production of up to 15-16 BCM.  In addition, there are 
several other offshore fields that could provide additional 
production over the longer term. 
 
Nonetheless, as a practical matter, Azerbaijani gas is 
necessary but not sufficient to launch Nabucco.  There are 
other potential suppliers that could supply gas for the 
project.  Turkmen President Berdimuhamedov recently stated 
his desire for Turkmenistan to participate in Nabucco.   We 
are encouraging the Turkmen government to work cooperatively 
with international oil companies, which have the capital and 
expertise to help raise the level of gas production for 
export.  We are hopeful that Azerbaijan,s President Aliyev 
and Turkmen President Berdimuhamedov will be able to come to 
an agreement on shipping Turkmen gas to the West. 
 
Iraq is another potential supplier.  At the July 13 signing 
ceremony for the Nabucco IGA, Prime Minister Maliki said Iraq 
would like to supply up to 15 BCM to Nabucco.  However, here 
are many practical questions about how and when Iraqi gas 
would be available for Nabucco.  It,s not clear how much gas 
Iraq needs for domestic consumption and in what timeframe. 
If the gas came from northern Iraq, it would require an 
agreement between the Kurdish government and the central 
government in order to be exported.  If the gas came from the 
south, in the form of associated gas, significant new 
investment in exploration and production and transportation 
infrastructure would be needed.  Western Iraq could also 
provide gas for Nabucco, but this would also require 
extensive investment and development. 
 
The Nabucco consortium is now talking about the project 
beginning operation in 2014, five years from now. That is 
something to keep in mind when people talk about Iraqi gas 
not being available until 2016 or about the long time it will 
take to get Turkmen gas going westward. 
 
--Is Nabucco anti-Russian? 
 
A: Nabucco is not anti-Russian.  Nabucco is designed to 
provide access to diverse energy sources and competition for 
the Central and Southeastern European nations. It simply 
mitigates risk and that is good policy.  Diversification 
makes good economic sense.  More broadly, our Eurasia Energy 
Policy is not anti-Russian and we do not view our respective 
policies on energy in this region as a &zero-sum game.8 
 
--What is the U.S. policy on Iranian gas for Nabucco? 
 
Our position on Iran has not changed.  We oppose Iranian gas 
in the Southern Corridor at this time.  Although the 
Administration is committed to engagement with Iran, 
outstanding issues, such as the nuclear issue, must be 
resolved before we can think about Iran as a participant in 
any Southern Corridor projects. 
 
--Does the U.S. prefer Nabucco over the Turkey-Greece-Italy 
pipeline (TGI) or the Trans-Adriatic pipeline (TAP)? 
 
A: We don,t favor one pipeline over another.  What is 
important is to build a Southern Corridor that will connect 
the resources of the Caspian with growing markets in Turkey 
and Europe.  Nabucco is a strategically important project. 
It is a larger pipeline that would supply more gas to Europe 
once that gas is available.  The July 13 signing ceremony of 
the Intergovernmental Agreement (IGA) gave it new impetus. 
However, there are still many issues that need to be resolved 
before the project becomes reality.  The Turkey-Greece-Italy 
pipeline project is somewhat smaller but would supply gas to 
certain areas in Europe. In fact, Bulgaria and Greece 
announced a deal to build an interconnector so that Bulgaria 
could benefit from TGI.  This is also a very important 
 
STATE 00107194  004.4 OF 004 
 
 
project. 
 
We understand TAP plans to include Iranian gas and as a 
matter of policy and law, we do not support the development 
and export of Iranian gas at this time. 
 
--Do we support the Caspian Development Corporation (CDC)? 
 
A: The Caspian Development Corporation (CDC) is a concept 
developed jointly by Turkey and the EC.  The idea is to 
bundle the purchasing power of private sector gas companies, 
so that Turkmenistan can negotiate with the one company 
(consortium leader) for a large gas sales-purchase agreement, 
rather than negotiate with several companies for smaller 
deals.   In essence, CDC is designed to make it easier for 
Turkmenistan to ship gas west.  The World Bank is currently 
managing a feasibility study of the concept and may have some 
suggestions on the structure and operation of CDC by the end 
of the year. 
 
We applaud EC efforts to promote Europe,s energy security 
through the diversification of energy supplies and support 
efforts that will encourage Turkmenistan and other Caspian 
countries to develop their gas reserves and send them to 
Europe through a Southern Corridor.   For that reason, we 
support the feasibility study that is now underway. We also 
want to ensure that free market forces and the private sector 
are encouraged as the primary means through which gas is 
produced and transported. We also want to make sure CDC 
doesn,t disadvantage U.S. companies who want to do business 
in Turkmenistan. 
 
--Does the United States support development of Trans-Caspian 
pipelines? 
 
A: The United States believes that diversification of routes 
and market enhances the economic and energy security of both 
producer and consumer countries.  We support the development 
of commercially viable pipelines and we believe that a 
Trans-Caspian pipeline would offer new options for exporters 
and better access to world markets for Caspian producers. 
 
The development of Trans-Caspian pipelines has been under 
discussion for years.  However, delimitation issues and 
competition from existing pipelines have kept the idea on the 
drawing board.  Currently oil and gas exports from Kazakhstan 
and Turkmenistan primarily transit Russia.  Kazakhstan 
exports some oil to Azerbaijan, China and Iran.  Turkmenistan 
exports some natural gas to Iran and probably will being 
shipping gas to China in late 2009 or early 2010.  Kazakhstan 
is developing a new tanker-based oil transport network to 
increase export across the Caspian to Azerbaijan and beyond. 
Our Trade and Development Agency (TDA) is funding a study of 
Azerbaijani-Kazakhstan Trans-Caspian oil and gas transport 
pipelines. 
 
--Does the U.S. support the export of Turkmen gas to China? 
 
A: The export of Turkmen gas to China is a logical, 
market-driven development.  It serves to diversify 
Turkmenistan,s customer base for its natural gas resources 
and serves Chinese energy needs.  Turkmenistan also is 
looking to sell gas to European markets though a Southern 
Corridor, which we continue to encourage. 
 
China is becoming an increasingly important player in Central 
Asia.  China and Kazakhstan have completed an oil pipeline 
which now transports over 200,000 bpd of crude from eastern 
Kazakhstan to western China.  The PRC is building a pipeline 
to bring up to 40 billion cubic meters per year of natural 
gas from Turkmenistan and possibly Uzbekistan and Kazakhstan 
to western China.  That pipeline, which should become 
operational in 2010, will greatly alter natural gas markets 
in Central Asia by allowing Central Asian suppliers to 
diversify their export routes. 
CLINTON