VZCZCXRO0418
RR RUEHIK
DE RUEHBS #1647/01 3421240
ZNR UUUUU ZZH
R 081240Z DEC 09
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA
RUEHAK/AMEMBASSY ANKARA
RUEHAH/AMEMBASSY ASHGABAT
RUEHGB/AMEMBASSY BAGHDAD
RUEHKB/AMEMBASSY BAKU
RUEHBR/AMEMBASSY BRASILIA
RUEHCV/AMEMBASSY CARACAS
RUEHKV/AMEMBASSY KYIV
RUEHMO/AMEMBASSY MOSCOW
RUEHNT/AMEMBASSY TASHKENT

UNCLAS SECTION 01 OF 02 BRUSSELS 001647 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG EPET PREL ECON TU IZ NI UP RU ZJ ZK XR
SUBJECT: US-EU OFFICIALS CONVENE ENERGY COUNCIL'S SECURITY 
WORKING GROUP 
 
BRUSSELS 00001647  001.2 OF 002 
 
 
¶1. (U) Summary: U.S. Special Envoy for Eurasian Energy 
Richard Morningstar and RELEX North America Director Alan 
Seatter co-chaired the first meeting of the U.S.-EU Energy 
Council,s security and markets working group in Brussels on 
November 18, 2009.  The meeting established when and how the 
working group will meet and set forth the immediate 
priorities to be addressed.  The group also held informal 
discussions on Ukraine, the Southern Corridor, Iraq, and 
Nigeria.  End summary. 
 
UKRAINE 
 
¶2. (SBU) Faouzi Bensarsa, RELEX Energy Counselor, said there 
was good news and bad news to report on Ukraine.  (Note: 
Although Seatter was designated the EU's "co-chair," the 
substantive discussion was led by Bensarsa.  End note.)  The 
Commission has established a technical coordination unit for 
rehabilitation of Ukraine's transit infrastructure, and 
Ukraine officials have been more transparent in this process. 
 Ukraine has also taken strides towards Energy Community 
membership and could be eligible for &political accession8 
by the end of the year.  Full membership would be dependent 
on a series of reforms, including a new gas law and the 
restructuring of Naftohaz.  As for the bad news, Bensarsa 
said there has been little progress on &core reforms.8  He 
said Ukrainian officials continue to deny access to 
information and domestic institutional barriers inhibit the 
development of an integrated energy policy. 
 
¶3. (SBU) Ambassador Morningstar said Ukraine needs to improve 
its energy efficiency and investment climate.  The lack of 
FDI is a fundamental problem.  Bensarsa said the Commission 
plans to coordinate with major donors next year on developing 
an energy efficiency action plan.  The Commission is also 
working with the IFIs on a package in 2010, but stressed 
Ukraine must comply with the conditionalities set forth by 
the IFIs in July 2009.  Both sides agreed that pressure must 
be brought to bear on Ukraine to reform its energy sector 
after the elections.  In the meantime, Bensarsa asked the 
U.S. officials to support liberal access by Ukraine to its 
IMF SDR during December. 
 
SOUTHERN CORRIDOR 
 
¶4. (SBU) Ambassador Morningstar said securing a bilateral 
agreement between Turkey and Azerbaijan on gas price and 
transit is one of the most important issues for the U.S. and 
EU.  He also recommended serious consideration be given to 
Southern Corridor alternatives such as Black Sea CNG and LNG 
and the White Stream pipeline project through Ukraine in 
order to put pressure on Turkey.  He said the U.S. was 
prepared to conduct a feasibility studies on these projects 
if needed.  Bensarsa said the EU had already commissioned two 
feasibility studies, one on White Stream and the other on 
Black Sea alternative.  He said a pipeline through Turkey is 
the preferred option, but CNG is being considered. 
Ambassador Morningstar suggested the Commission look into 
Excelerate's vessel-based gasification technology.  He also 
mentioned that Uzbekistan is interested in supplying gas to 
Nabucco, and this could advance prospects for a Trans-Caspian 
pipeline.  He said the Uzbeks are considering a $10 billion 
project to supply gas to China, but could be swayed to ship 
its gas west if it could link to Nabucco for a lower price. 
 
IRAQ, NIGERIA 
 
¶5. (U) Bensarsa said there is a heightened interest in Iraqi 
gas now that the Nabucco IGA has been signed.  He said the 
Commission would support a commercial deal with the Kurds and 
that such deals should go forward even without GoI consent. 
Ambassador Morningstar agreed that getting Iraqi gas to EU 
markets is a mutual objective and stressed the need for a 
coordinated approach.  On Nigeria, the Commission recently 
launched a 700 million euro development package.  A major 
objective of the package is to promote peace and security in 
the Niger Delta.  Commission officials expressed concern 
about pending investment legislation.  They said there are 
three different petroleum bills in circulation and are trying 
 
BRUSSELS 00001647  002.2 OF 002 
 
 
to determine which one is receiving the most serious 
consideration.  European oil companies are concerned about 
the inconsistent signals. 
 
NEXT STEPS 
 
¶6. (U) Seatter agreed to draft a work plan outlining the 
working group's objectives for 2010.  Ambassador Morningstar 
said the most pressing concern is Ukraine, followed by 
Russia, and the Southern Corridor.  He also suggested Iraq 
and Nigeria be taken up.  Bensarsa concurred and asked that 
international governance, a &natural gas OPEC8 and 
Venezuela and Brazil also be included.  Seatter noted that 
discussions on Ukraine are sensitive for the Europeans and 
should be held "informally."   Both Ambassador Morningstar 
and Seatter agreed that the working group should remain 
flexible and "meet when necessary," including by video 
conference.  They agreed that the co-chairs from all three 
working groups should meet via video conference by early 
January at the latest to assess progress on the Energy 
Council. 
 
Kennard 
.