VZCZCXRO1648
OO RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR
DE RUEHSF #0711/01 3551057
ZNY CCCCC ZZH
O 211057Z DEC 09
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6545
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000711 
 
SIPDIS 
 
DEPARTMENT FOR SPE MORNINGSTAR, DOE FOR ELKIND,CUTLER, 
EKIMOFF 
 
E.O. 12958: DECL: 12/17/2018 
TAGS: ENRG PREL PGOV BG
SUBJECT: BULGARIA:  WAIVERING ON BELENE NPP 
 
REF: SOFIA 696 
 
Classified By: CDA Susan Sutton for reasons 1.4 (b) and (d). 
 
¶1.  (C) Summary:  In energy meetings with the Russians on 
December 10-11, the Bulgarians held their red-lines on the 
Burgas-Alexandroupolis oil pipeline, proceeded with South 
Stream, and waivered on the Belene Nuclear Power Plant. 
While Russian Energy Minister Schmatko appeared to us to have 
returned home with more than expected, particularly on 
Belene, our contacts tell us that the Russians left seemingly 
displeased with a lack of progress on the major projects, and 
Russian pressure for forward movement continues.  Another 
energy delegation, led by Economy and Energy Minister 
Traikov, will head to Moscow December 23 for additional 
talks.  If those culminate in the eventual Russian ownership 
of Belene, it will represent a dramatic blow to Bulgarian 
energy security.  End Summary. 
 
¶2.  (C) A Russian energy delegation led by Energy Minister 
Sergey Schmatko was in Sofia December 10-11 for regular 
meetings of the  Bulgarian-Russian Intergovernmental Economic 
Commission.  Topping the agenda were three major energy 
projects, the South Stream gas pipeline, 
Burgas-Alexandroupolis oil pipeline and the Belene Nuclear 
Power plant, all of which were agreed to by Bulgaria's last 
government.  After taking office in July, the new government 
of Boyko Borissov began to re-evaluate Bulgaria's 
participation in these projects.  Borissov promised PM Putin 
an answer on Bulgaria's intentions by the end of the 2009. 
The December energy discussions were designed as a forum to 
announce Bulgaria's decisions. 
 
SOUTH STREAM 
------------ 
 
¶3.  (C)  As expected, Bulgaria stated it would proceed with 
the South Stream pipeline, seeing it as a European project 
offering diversification of route.  Our contacts tell us that 
no real progress was made on South Steam during the December 
10-11 meetings, causing Minister Schmatko to half-seriously 
propose to his Bulgarian counterpart that the two governments 
take over project negotiations since the companies involved 
-- Gazprom and the Bulgarian Energy Holding -- were making 
little progress.  Head of the Bulgarian Energy Holding Galina 
Tosheva told us that the shareholders agreement on South 
Stream was "80 percent ready" and the Bulgarian-Russian 
project company would likely be registered in Sofia in the 
first quarter of 2010.   Once the company is registered, a 
project feasibility study would be conducted, after which an 
investment decision would be made by the Bulgarian side. 
 
BURGAS-ALEXANDROUPOLIS 
---------------------- 
 
¶4.  (C)  The Bulgarians held their ground on BAP, insisting 
that the Bulgarian side must do an environmental impact study 
of the project before it decides whether to proceed.  The 
study is likely to take as long as 18 months.  The new 
Bulgarian Government is skeptical of the benefits of this 
project in terms of revenues and is exploring whether the 
deal can be made more attractive to the Bulgarian side. 
 
 
BACK-STEPPING ON BELENE 
----------------------- 
 
¶5.  (C)  The real drama of the December talks surrounded the 
Belene Nuclear Power Plant.  The new government took office 
highly skeptical of the project.  When strategic investor RWE 
pulled out on October 28, the project was frozen.  Russian 
pressure to restart Belene has been intense, with Moscow 
offering to become a majority owne.  Our contacts have given 
conflicting read-outsof whatwas discussed and agreed with 
the Russias.  Minister Traikov told us December 14 that 
Bulgaria may consider offering Russia a majority stake in the 
project "initially" but he could not explain exactly what 
that would entail.  Deputy Energy Minister Maya Hristova told 
us the talk of offering a majority stake to Russia was a 
Bulgarian strategy to buy time while Sofia searches for other 
strategic investors.  Bulgarian Energy Holding CEO told us 
she sees any offer of an ownership stake to Russia as a 
national security concern, but she worried she was 
increasingly being over-ruled by the Ministry of Economy and 
Energy on Belene matters.  Tosheva said BEH would issue a 
tender for an independent adviser to help Bulgaria think 
 
SOFIA 00000711  002 OF 002 
 
 
through the financial aspects of Belene and explore its 
options. 
 
 
¶6.   (C) Comment:  When RWE pulled out of Belene in October, 
the project seemed dead.  Russia has put it on life support, 
with both sweeteners and new forms of pressure.  Unsatisfied 
with the progress made at the intergovernmental meetings, 
according to our energy contacts Moscow has summoned Energy 
Minister Traikov for additional Belene talks on December 23. 
If Bulgaria agrees to Russian ownership in Belene, energy 
security will take a dramatic step backward in Bulgaria and a 
huge opportunity to correct the mis-steps of the previous 
government will have been lost -- points we have repeatedly 
stressed. 
 
SUTTON