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Cablegate: Nord Stream Execs Admit Pipeline Delayed

VZCZCXRO3785
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHMO #2885 2731104
ZNY CCCCC ZZH
P 291104Z SEP 08 ZDK
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 0154
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY

C O N F I D E N T I A L MOSCOW 002885 SIPDIS DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND WRIGHT EUR/CARC, SCA (GALLAGHER, SUMAR) DOE FOR FREDRIKSEN, HEGBORG, EKIMOFF E.O. 12958: DECL: 09/22/2018 TAGS: EPET ENRG ECON PREL RS

SUBJECT: NORD STREAM EXECS ADMIT PIPELINE DELAYED REF: BERLIN 1258 Classified By: Ambassador John R. Beyrle for Reasons 1.4 (b/d)

---------------------------------------- PROJECT MOVING AHEAD BUT BEHIND SCHEDULE ----------------------------------------

1. (C) In a September 18 meeting, Nord Stream CFO Paul Corcoran and Moscow Representative Vitaly Yusufov told us the pipeline project is about a year behind schedule due to continued fine-tuning of the route. According to Corcoran and Yusufov, the company currently expects to file all required environmental applications by January 2009, start construction by April 2010, and begin gas deliveries in 2011. 2. (C) The two Nord Stream executives said they saw little likelihood of the project being scrapped given rising EU demand for gas, limited alternatives, and strong political and commercial backing. Corcoran said the global financial crisis and credit crunch will also have little effect on the project in that the project's shareholders (Gazprom, E.On/Ruhrgas, BASF/Wintershall, and Gasunie) are bound by agreement to pay for the pipeline if financing can't be found. He said, moreover, that all of the companies have sufficient access to capital to pay, if needed, and that banks are still "lined up" to provide needed financing. He predicted that the only burden on the project from the financial crisis will be slightly higher interest rates on financing. ---------------------------- U.S. POSITION ON NORD STREAM ---------------------------- 3. (C) Corcoran questioned U.S. views on Nord Stream in the wake of Ambassador Wood's September 10 op-ed. He was confident, however, that the USG position is unlikely to affect the project's development. ------- COMMENT ------- 4. (C) Nord Stream may be delayed longer than its executives are willing to admit. In addition to environmental delays, other sector specialists have pointed to potential problems with financing and with the slow development of the new fields intended to fill the pipeline. That said, the Russian Government is almost certain to intervene on behalf of the project if need be. End comment. BEYRLE

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