Published by Wikileaks & Bivol.bg
id: 240907 date: 12/21/2009 10:57 refid: 09SOFIA711 origin: Embassy Sofia classification: CONFIDENTIAL destination: 09SOFIA696 header: 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
