VZCZCXRO7264
PP RUEHIK
DE RUEHVI #1447 3171207
ZNR UUUUU ZZH
P 131207Z NOV 09
FM AMEMBASSY VIENNA
TO RUEHC/SECSTATE WASHDC PRIORITY 3585
INFO RUEHMO/AMEMBASSY MOSCOW PRIORITY 2277
RHEHNSC/NSC WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS VIENNA 001447 
 
SIPDIS, SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ENRG EAIR ELTN ECON PREL AU RS
SUBJECT: Faymann In Moscow: Austria Reaffirms South Stream Interest; 
Russians Push Hard on Gas Issues 
 
REF: Moscow 02784 
 
Sensitive but Unclassified - Protect accordingly. 
 
¶1. (U) Austrian Chancellor Werner Faymann discussed energy and 
transportation issues with Russian President Medvedev and PM   Putin 
during a November 10-11 trip to Moscow.  According to press reports, 
the Medvedev meeting was a brief courtesy visit while the Putin 
meeting was a three-hour discussion that the Russian PM later 
described as "fact based" and "trustworthy." 
 
SOUTH STREAM 
- - - - - - - 
 
¶2. (SBU) Faymann and Putin confirmed that Austria will become a 
partner in the South Stream pipeline project, if the negotiations on 
the details are successful.  The pipeline (or, more likely, one 
branch of the line) would then terminate at the Austrian/OMV gas hub 
in Baumgarten.  Russia hopes that a final agreement can be concluded 
by the end of the year.  However, contacts in the Chancellery and 
Austrian energy company OMV told us in the lead-up to the visit that 
reaching an agreement by the end of 2009 will be difficult, as the 
Austrians and Russians are still quite far apart on legal and 
technical issues.  According to Chancellery contacts, the Russians 
have been pushing for months to make a South Stream agreement a 
centerpiece of the visit, and Austrian press reports affirm that 
Putin personally (accompanied by Gazprom CEO Alexei Miller) pushed 
Faymann very hard on South Stream. 
 
¶3. (U) Faymann told reporters that Austria "will take gas from 
wherever it comes, as we need long-term energy security."  He noted 
that gas consumption is expected to significantly increase in 
Austria in the coming years.  Faymann reportedly assured Putin that 
the planned Nabucco pipeline is not competing with South Stream -- 
Putin's reply reaction after the meeting was to say publicly that 
all pipelines circumventing Ukraine could help to "discipline" that 
country.  At Putin's request, Austria and Russia are planning to set 
up a bilateral energy working group. 
 
RUSSIA-UKRAINE GAS DISPUTE 
- - - - - - - - - - - - - - 
 
¶4. (U) Putin said bluntly after talks with Faymann that if Ukraine 
"cannot pay for our gas, we will not deliver it.  If Ukraine takes 
out our transit gas, we will reduce the amount of supply to Western 
Europe."  Faymann tried to allay public fears by saying he is 
confident in Ukraine's ability to pay its bills and in the EU's 
capacity to serve as mediator between Russia and Ukraine. 
 
AVIATION / RAIL 
- - - - - - - - 
 
¶5. On transportation, the leaders discussed air service rights for 
Austrian Airlines (AUA) in Russia following its recent takeover by 
Lufthansa, where Russia agreed to extend AUA rights through February 
` (but rights will then have to be re-negotiated (NOTE: Faymann 
tried to convince the Russians that AUA is still an "Austrian 
company" under the terms of the bilateral air service agreement, 
despite ownership by Lufthansa).  Leaders also confirmed plans to 
extend a Russian-gauge (which differs from EU standards) rail line 
through Slovakia to the Danube, which would facilitate  container 
shipments from China to central Europe. 
 
COMMENT 
- - - - 
 
¶6. (SBU) Faymann's trip to Moscow was his first major foreign policy 
expedition outside the EU, and natural gas was sure to top the 
agenda.  The GoA has long said it wants to participate in South 
Stream (but Nabucco is its "first priority");  until now, the GoA 
has taken a "go slow" approach on South Stream, letting sticky 
regulatory/tax issues (driven in part by EU regulations) slow the 
negotiations.  If press reports are accurate about closed-door 
meetings, the Russian side was insistent in pushing for Austria to 
sign a South Stream agreement this year, or the pipeline could 
terminate in Slovenia, not at the Baumgarten hub.  END COMMENT. 
 
EACHO