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Cablegate: Russian Minister Visits Croatia to Discuss South Stream

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UNCLAS ZAGREB 000681

SIPDIS
SENSITIVE

Department for EEB/ESC/IEP

E.O. 12958: N/A
TAGS: ENRG PGOV HR RS
SUBJECT: RUSSIAN MINISTER VISITS CROATIA TO DISCUSS SOUTH STREAM
PIPELINE AND DRUZBA ADRIA PROJECT

1. (U) Russian Emergency Situations Minister Dmitri Shoigu visited
Zagreb on September 22 for a brief one-hour meeting with Deputy
Prime Minister Damir Polancec. The goal of the visit was reportedly
to discuss preparations for an upcoming meeting of the
Croatia-Russia Intergovernmental Technical Commission for Trade,
Economic, Scientific, and Technical Cooperation, which has been
dormant for four years. The major topic of discussion was Croatian
access to Russian energy sources. Shoigu reportedly told the
Croatians that Russia was willing to revisit the Druzba Adria oil
pipeline project, but was not willing to negotiate any changes to
its terms. Previously, Croatia had proposed the pipeline be
extended to Slovenia and Italy via Istria, rather than terminating
on the island of Krk. The Croatians have environmental concerns
about the Krk terminus due to the potential for increased tanker
traffic along the Croatian coast.

2. (U) Shoigu also reiterated a Russian offer to connect Croatia to
the planned South Stream gas pipeline to Italy. However,
unidentified press sources claim Russia will link this offer to a
successful final agreement on the Druzba Adria project. A senior
strategic advisor at the INA national oil company confirmed to us
that an eventual Croatian connection to South Stream was highly
likely (should the pipeline be built), although the time-frame for
the project is still 7 - 8 years out.

3. (SBU) Comment: According to the INA representative, Croatian
demand for natural gas will grow to 6.5 bcm by 2015 and Croatia can
supply only 3 bcm from domestic sources. For this reason, access to
Russian energy supplies through either South Stream or Druzba Adria
will continue to be of strong interest to the Croatians. A proposed
LNG terminal on Krk could help significantly diversify supply, with
or without connection to Russian sources. The terminal would
reportedly reach a capacity of 6.5 bcm per annum by 2016. However,
progress on that project continues to be slowed by Croatian
foot-dragging on selecting a site, and continuing debates over
whether Croatian participants, who will hold about 25 percent of the
consortium, will have a veto on decisions related to the project.
Even if the LNG project moves forward in earnest soon, however,
Croatia will still have a major task ahead of it in locating and
securing stable gas supplies for the terminal. END COMMENT.

BRADTKE

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