Search

 

Cablegate: Druzhbadria and Cpot Pipelines -- Croatia Moving

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 05 ZAGREB 000799

SIPDIS

SENSITIVE

STATE FOR EB/CBED
STATE PASS OPIC AND TDA

E.O. 12958: N/A
TAGS: ECON ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV HR HRECON
SUBJECT: DRUZHBADRIA AND CPOT PIPELINES -- CROATIA MOVING
FORWARD BUT SOME QUESTIONS RAISED

UNCLASSIFIED

PAGE 03 ZAGREB 00799 01 OF 05 110814Z
SENSITIVE BUT UNCLASSIFIED -- PLEASE HANDLE ACCORDINGLY.

SUMMARY
-------

1. (SBU) THE DRUZHBADRIA PIPELINE PROJECT IS ONE POSSIBLE
ROUTE TO BRING RUSSIAN OIL TO WESTERN MARKETS, SOMETHING
WHICH WOULD ENHANCE GLOBAL ENERGY SECURITY BY INCREASING
DIVERSIFICATION OF OIL SUPPLIES. THE CROATIAN PRESS HAS
SOUGHT TO PORTRAY CROATIA AS A NEW PLAYER IN WORLD OIL
POLITICS. HOWEVER, ACTUAL CROATIAN INFLUENCE ON THE SUCCESS
OF THE PROJECT, AND THE UPFRONT INVESTMENT AND THUS RISK
CROATIA IS WILLING TO TAKE ON, ARE RELATIVELY SMALL.
ENVIRONMENTAL OPPOSITION TO THE PIPELINE HAS ARISEN, AND THE
GOVERNMENT'S WILLINGNESS TO MAKE MORE-THAN-BARE-MINIMUM
INVESTMENTS IN THE PROJECT COULD WEAKEN IF IT DOES NOT
RECEIVE CLEAR COMMITMENTS FROM SUPPLIERS AND BUYERS. SIMILAR
ISSUES SURROUND THE CPOT (CONSTANTA-PANCEVO-OMISALJ-TRIESTE)
BOSPORUS BYPASS PIPELINE PROJECT, AS WELL AS CONCERN OVER THE
LOSS OF SERBIAN AND BOSNIAN EXPORT MARKETS. END SUMMARY.

THE DRUZHBADRIA PROJECT
-----------------------

2. (SBU) ON DECEMBER 16, REPRESENTATIVES OF THE SIX
COUNTRIES INVOLVED IN THE DRUZHBADRIA OIL PIPELINE PROJECT
SIGNED AN AGREEMENT ON COOPERATION ON IMPLEMENTATION OF THE
PROJECT OF INTEGRATION OF THE "DRUZHBA" AND "ADRIA" OIL
PIPELINES IN ZAGREB. THE AGREEMENT WAS THE CULMINATION OF
FIVE YEARS OF NEGOTIATIONS, BUT IMPORTANT ISSUES REMAIN TO BE
WORKED OUT BEFORE ANY OIL ACTUALLY FLOWS FROM RUSSIAN OIL
UNCLASSIFIED

PAGE 04 ZAGREB 00799 01 OF 05 110814Z
FIELDS, THROUGH UKRAINE, BELARUS, SLOVAKIA AND HUNGARY TO THE
TERMINUS OF THE DRUZHBA PIPELINE, THEN INTO THE ADRIA
PIPELINE TO THE CROATIAN PORT OF OMISALJ.

3. (U) CURRENTLY JANAF, THE CROATIAN STATE-OWNED OIL
PIPELINE COMPANY, RECEIVES OIL AT THE DEEP-WATER PORT OF
OMISALJ, ON THE NORTHERN CROATIAN ADRIATIC COAST, LESS THAN A
HUNDRED MILES FROM TRIESTE. SOME OIL GOES TO THE RIJEKA
REFINERY, AND THE REST IS PUMPED VIA PIPELINE OVER THE GORSKI
KOTAR MOUNTAINS TO A REFINERY IN SISAK (SOUTH OF ZAGREB),
THEN EASTWARDS TOWARDS SERBIA AND NORTHWARD TOWARDS HUNGARY.

4. (U) IN ORDER FOR CROATIA TO PARTICIPATE IN THE PLAN TO
CREATE A NEW ROUTE FOR THE EXPORT OF RUSSIAN CRUDE TO WESTERN
EUROPE AND THE U.S., IT WILL NEED TO INSTALL PUMPS CAPABLE OF
PUMPING OIL IN BOTH DIRECTIONS. THE INITIAL INVESTMENT
REQUIRED TO ENABLE JANAF TO ACCOMPLISH THE FIRST-PHASE GOAL
OF BEING ABLE TO EXPORT FIVE MILLION TONS OF OIL A YEAR COULD
BE AS LITTLE AS $20 MILLION. INVESTMENTS OF UP TO $70 TO 80
MILLION WOULD BE NEEDED TO REALIZE THE FINAL OUTPUT GOAL OF
15 MILLION TONS PER YEAR. MUCH OF THE NEW INVESTMENT IS FOR
STRENGTHENING ENVIRONMENTAL PROTECTION MEASURES.

UNCLASSIFIED

UNCLASSIFIED PTQ8450

PAGE 01 ZAGREB 00799 02 OF 05 110814Z
ACTION EB-00

INFO LOG-00 NP-00 AGRE-00 AID-00 CEA-01 CIAE-00 CTME-00
INL-00 DINT-00 DODE-00 ITCE-00 DOTE-00 WHA-00 SRPP-00
EXME-00 EUR-00 E-00 FAAE-00 FBIE-00 UTED-00 VC-00
FRB-00 H-01 TEDE-00 INR-00 IO-00 ITC-01 LAB-01
L-00 VCE-00 AC-01 NSAE-00 NSCE-00 NSF-01 OES-00
OIC-02 OMB-02 OPIC-01 PC-01 PM-00 PRS-00 ACE-00
SP-00 SSO-00 SS-00 STR-00 TEST-00 T-00 USIE-00
EPAE-00 PMB-00 PRM-00 DRL-01 G-00 NFAT-00 SAS-00
SWCI-00 /013W
------------------5427E6 110815Z /38
R 110815Z APR 03
FM AMEMBASSY ZAGREB
TO SECSTATE WASHDC 9929
INFO AMEMBASSY ALMATY
AMEMBASSY ASHGABAT
AMEMBASSY ATHENS
AMEMBASSY BELGRADE
AMEMBASSY BISHKEK
AMEMBASSY BRATISLAVA
AMEMBASSY BRUSSELS
AMEMBASSY BUCHAREST
AMEMBASSY BUDAPEST
AMEMBASSY CARACAS
AMEMBASSY CHISINAU
AMEMBASSY KIEV
AMEMBASSY LJUBLJANA
AMEMBASSY LONDON
UNCLASSIFIED

PAGE 02 ZAGREB 00799 02 OF 05 110814Z
AMEMBASSY MINSK
AMEMBASSY MOSCOW
AMEMBASSY PARIS
AMEMBASSY PRAGUE
AMEMBASSY RIGA
AMEMBASSY ROME
AMEMBASSY SKOPJE
AMEMBASSY SOFIA
AMEMBASSY TASHKENT
AMEMBASSY TBILISI
AMEMBASSY TIRANA
AMEMBASSY VIENNA
AMEMBASSY VILNIUS
AMEMBASSY WARSAW
AMEMBASSY YEREVAN
DEPT OF COMMERCE WASHDC
DEPT OF ENERGY WASHDC
DEPT OF TREASURY WASHDC

UNCLAS SECTION 02 OF 05 ZAGREB 000799

SIPDIS

SENSITIVE

STATE FOR EB/CBED
STATE PASS OPIC AND TDA

E.O. 12958: N/A
TAGS: ECON ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV HR HRECON
SUBJECT: DRUZHBADRIA AND CPOT PIPELINES -- CROATIA MOVING
FORWARD BUT SOME QUESTIONS RAISED

UNCLASSIFIED

PAGE 03 ZAGREB 00799 02 OF 05 110814Z
5. (SBU) A RELATIVELY SMALL INVESTMENT IS NEEDED IN THE
SHORT-TERM BECAUSE JANAF'S FACILITIES ARE WOEFULLY
UNDERUTILIZED. KRESIMIR BARANOVIC, HEAD OF DEVELOPMENT
PROJECTS FOR JANAF SAID MOST OF THE NEAR-TERM INVESTMENTS
WILL BE FOR REVERSIBLE PUMPS AT THE SISAK REFINERY, SOME
PUMPS AT OMISALJ FOR LOADING OIL ONTO TANKERS, ADDITIONAL
STORAGE TANKS AT SISAK, AND SOME PIPING AND CONTROL
EQUIPMENT. MUCH OF THIS EQUIPMENT HAS BEEN BOUGHT AND SOME
DELIVERED. SOME EXISTING PUMPS ARE SIMPLY BEING REPOSITIONED.

PIPELINE BRINGS EXISTING PROBLEMS INTO FOCUS
--------------------------------------------

6. (U) SOON AFTER THE SIGNING OF THE DRUZHBADRIA AGREEMENT,
THE MEDIA AND NGOS PROMINENTLY RAISED ENVIRONMENTAL
QUESTIONS. THE "ENVIRONMENTALISTS" BREAK DOWN INTO TWO
GROUPS -- THOSE WHO SIMPLY WANT TO ENSURE THAT THE GOVERNMENT
AND JANAF CONDUCT APPROPRIATE STUDIES AND TAKE THE ADEQUATE
PRECAUTIONS, AND THOSE WHO THINK THAT ANY ADDITIONAL
ENVIRONMENTAL RISK TO THE CROATIAN COAST IS UNACCEPTABLE.
CONCERNS CENTERED ON TWO ISSUES -- THE POSSIBILITY OF AN OIL
SPILL AND THE EFFECT OF DISCHARGES OF LARGE AMOUNTS OF
BALLAST WATERS, WHICH COULD INTRODUCE NEW AQUATIC INVASIVE
SPECIES TO THE CROATIAN ADRIATIC COAST. LOCALS AND OTHERS
CITED CONCERNS THAT A LARGE SPILL COULD ENDANGER TOURISM,
WHICH IS BY FAR CROATIA'S BIGGEST FOREIGN CURRENCY EARNER,
BRINGING IN AN ESTIMATED $4 BILLION IN REVENUE IN 2002.
MEDIA REPORTS QUOTE THE PRESIDENT OF JANAF AS SAYING REVENUE
FLOWS FROM THE DRUZHBADRIA PROJECT WOULD BE $30 MILLION PER
YEAR AT THE BEGINNING OF THE PROJECT, INCREASING TO $80
MILLION AT FULL CAPACITY.
UNCLASSIFIED

PAGE 04 ZAGREB 00799 02 OF 05 110814Z

7. (SBU) THE GOVERNMENT, SOMEWHAT SUCCESSFULLY, HAS REBUTTED
THE OIL-SPILL ARGUMENT BY NOTING THAT THE INTENSITY OF
TRAFFIC ENVISIONED UNDER THE DRUZHBADRIA PROJECT -- AT ITS
PEAK, 80 LARGE (250 THOUSAND PLUS TON ) TANKERS PER YEAR --
WILL HARDLY CHANGE. CURRENTLY, ABOUT 50-60 TANKERS A YEAR
DOCK AT OMISALJ (IN THE PRE-WAR YEARS IT WAS OVER A HUNDRED),
AND OVER 400 AT TRIESTE. THE GOVERNMENT'S ARGUMENT IS NOT
THAT IT IS PERFECTLY SAFE -- AN IMPOSSIBLE ASSURANCE TO GIVE
-- BUT THAT IT WOULD BE NO MORE DANGEROUS THAN THE CURRENT
SITUATION.

8. (SBU) THE GOVERNMENT IS CURRENTLY WORKING WITH OTHER
GOVERNMENTS IN THE REGION TO UPGRADE REQUIREMENTS FOR TANKERS
(E.G., TO REQUIRE THAT TANKERS BE DOUBLE HULLED) AND TO
ESTABLISH TRAFFIC LANES IN THE ADRIATIC. (CURRENTLY THERE
ARE NO TRAFFIC LANES, ACCORDING TO THE MARITIME MINISTRY.
WHEN WE QUIPPED "THANK GOODNESS THERE ARE NO ICEBERGS IN THE
ADRIATIC" THE REJOINDER WAS "AH, YES, BUT WE HAVE LOTS OF
ISLANDS.")

9. (SBU) CONTACTS AT THE ENVIRONMENTAL AND MARITIME
MINISTRIES BELIEVE THAT A SMALL SPILL NEAR OMISALJ, PERHAPS

UNCLASSIFIED

UNCLASSIFIED PTQ8454

PAGE 01 ZAGREB 00799 03 OF 05 110815Z
ACTION EB-00

INFO LOG-00 NP-00 AGRE-00 AID-00 CEA-01 CIAE-00 CTME-00
INL-00 DINT-00 DODE-00 ITCE-00 DOTE-00 WHA-00 SRPP-00
EXME-00 EUR-00 E-00 FAAE-00 FBIE-00 UTED-00 VC-00
FRB-00 H-01 TEDE-00 INR-00 IO-00 ITC-01 LAB-01
L-00 VCE-00 AC-01 NSAE-00 NSCE-00 NSF-01 OES-00
OIC-02 OMB-02 OPIC-01 PC-01 PM-00 PRS-00 ACE-00
SP-00 SSO-00 SS-00 STR-00 TEST-00 T-00 USIE-00
EPAE-00 PMB-00 PRM-00 DRL-01 G-00 NFAT-00 SAS-00
SWCI-00 /013W
------------------5427F2 110815Z /38
R 110815Z APR 03
FM AMEMBASSY ZAGREB
TO SECSTATE WASHDC 9930
INFO AMEMBASSY ALMATY
AMEMBASSY ASHGABAT
AMEMBASSY ATHENS
AMEMBASSY BELGRADE
AMEMBASSY BISHKEK
AMEMBASSY BRATISLAVA
AMEMBASSY BRUSSELS
AMEMBASSY BUCHAREST
AMEMBASSY BUDAPEST
AMEMBASSY CARACAS
AMEMBASSY CHISINAU
AMEMBASSY KIEV
AMEMBASSY LJUBLJANA
AMEMBASSY LONDON
UNCLASSIFIED

PAGE 02 ZAGREB 00799 03 OF 05 110815Z
AMEMBASSY MINSK
AMEMBASSY MOSCOW
AMEMBASSY PARIS
AMEMBASSY PRAGUE
AMEMBASSY RIGA
AMEMBASSY ROME
AMEMBASSY SKOPJE
AMEMBASSY SOFIA
AMEMBASSY TASHKENT
AMEMBASSY TBILISI
AMEMBASSY TIRANA
AMEMBASSY VIENNA
AMEMBASSY VILNIUS
AMEMBASSY WARSAW
AMEMBASSY YEREVAN
DEPT OF COMMERCE WASHDC
DEPT OF ENERGY WASHDC
DEPT OF TREASURY WASHDC

UNCLAS SECTION 03 OF 05 ZAGREB 000799

SIPDIS

SENSITIVE

STATE FOR EB/CBED
STATE PASS OPIC AND TDA

E.O. 12958: N/A
TAGS: ECON ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV HR HRECON
SUBJECT: DRUZHBADRIA AND CPOT PIPELINES -- CROATIA MOVING
FORWARD BUT SOME QUESTIONS RAISED

UNCLASSIFIED

PAGE 03 ZAGREB 00799 03 OF 05 110815Z
WHILE OFF-LOADING OR LOADING A SHIP, COULD BE EASILY
CONTAINED BY JANAF'S MODERN EQUIPMENT. MUCH MORE DIFFICULT
WOULD BE A SPILL AT OPEN SEA. IN THAT CASE, THEY CONCEDED,
CROATIA'S RESOURCES WOULD BE OVERWHELMED, AND THEY WOULD
REQUIRE SUBSTANTIAL INTERNATIONAL HELP.

BALLAST WATER PROBLEM
---------------------

10. (SBU) THE BALLAST WATER PROBLEM IS NEW ONLY IN ITS SCOPE
AND IN THE ATTENTION IT HAS DRAWN. CURRENTLY, SHIPS THAT
TAKE ON CROATIAN EXPORTS ARE DUMPING BALLAST WATER IN UNKNOWN
LOCATIONS -- THERE ARE NO CONTROLS. THE QUANTITIES ARE
PROBABLY SMALL, AND MANY OF THESE SHIPS ARE MOVING BETWEEN
MEDITERRANEAN PORTS, RATHER THAN BRINGING BALLAST WATERS FROM
FARTHER AFIELD. THUS, THE QUESTIONS RAISED OVER THE
DRUZHBADRIA PIPELINE ARE HIGHLIGHTING A PROBLEM THAT HAS
EXISTED FOR QUITE A WHILE, IF IN LESS DRASTIC FORM. IDEALLY,
BALLAST WATERS SHOULD BE EXCHANGED 200 MILES FROM SHORE --
WHICH MEANS NOWHERE IN THE ADRIATIC -- AND THERE ARE
QUESTIONS ABOUT THE WISDOM OF DOING IT IN THE MEDITERRANEAN.
CROATIA IS LOOKING AT THIS PROBLEM IN THE CONTEXT OF THE
INTERNATIONAL MARITIME ORGANIZATION (IMO) AND AS PART OF THE
ADRIATIC UNION INITIATIVE.

11. (SBU) IN DECEMBER OF LAST YEAR, JANAF FORMED AN EXPERT
GROUP TO LOOK AT THE BALLAST WATER PROBLEM, INCLUDING MEMBERS
FROM RESEARCH AND UNIVERSITY INSTITUTIONS, ACCORDING TO THE
JANAF WEBSITE. OUR GOVERNMENT CONTACTS TELL US THIS GROUP
MET ONCE, THEN DECIDED THAT THE PROBLEM HAD TO BE ADDRESSED
BY THE GOVERNMENT. AN INTER-GOVERNMENTAL COMMITTEE WAS
UNCLASSIFIED

PAGE 04 ZAGREB 00799 03 OF 05 110815Z
FORMED, BUT APPARENTLY HAS YET TO MEET.

12. (SBU) ACCORDING TO VARIOUS GOVERNMENT CONTACTS, JANAF
TECHNICALLY DOES NOT NEED TO DO AN ENVIRONMENTAL IMPACT STUDY
(EIS) FOR THE DRUZHBADRIA PIPELINE, SINCE THE EXISTING
PIPELINE AND ON- AND OFF-LOADING FACILITIES AT OMISALJ ARE
ALREADY LICENSED FOR TRANSPORTING UP TO 30 MILLION TONS A
YEAR. HOWEVER, GIVEN THE PUBLIC ATTENTION TO THE PIPELINE,
THE GOVERNMENT DIRECTED JANAF TO DO AN EIS, AT JANAF'S
EXPENSE. THE MINISTRY OF ENVIRONMENT BELIEVES THIS WILL TAKE
ONLY TWO TO THREE MONTHS, PLUS ANOTHER FOUR TO FIVE MONTHS
FOR PUBLIC COMMENT. (NOTE: PER THE SCOPE OF WORK OF A
TDA-FINANCED FEASIBILITY STUDY OF THE CPOT PROJECT -- SEE
PARA 16 BELOW -- THERE WILL BE AT LEAST A PARTIAL EIS DONE AS
PART OF THAT STUDY. WE ARE TRYING TO CLARIFY THE
RELATIONSHIP BETWEEN THESE TWO STUDIES.)

CROATIA WANTS TO SEE THE MONEY
------------------------------

13. (SBU) DESPITE THE HOOPLA SURROUNDING THE SIGNING OF THE
DRUZHBADRIA PROJECT, AND THE FACT THAT THE PRELIMINARY
INVESTMENT NECESSARY IS GOING FORWARD, IT IS STILL NOT A DONE

UNCLASSIFIED

UNCLASSIFIED PTQ8455

PAGE 01 ZAGREB 00799 04 OF 05 110815Z
ACTION EB-00

INFO LOG-00 NP-00 AGRE-00 AID-00 CEA-01 CIAE-00 CTME-00
INL-00 DINT-00 DODE-00 ITCE-00 DOTE-00 WHA-00 SRPP-00
EXME-00 EUR-00 E-00 FAAE-00 FBIE-00 UTED-00 VC-00
FRB-00 H-01 TEDE-00 INR-00 IO-00 ITC-01 LAB-01
L-00 VCE-00 AC-01 NSAE-00 NSCE-00 NSF-01 OES-00
OIC-02 OMB-02 OPIC-01 PC-01 PM-00 PRS-00 ACE-00
SP-00 SSO-00 SS-00 STR-00 TEST-00 T-00 USIE-00
EPAE-00 PMB-00 PRM-00 DRL-01 G-00 NFAT-00 SAS-00
SWCI-00 /013W
------------------542804 110815Z /38
R 110815Z APR 03
FM AMEMBASSY ZAGREB
TO SECSTATE WASHDC 9931
INFO AMEMBASSY ALMATY
AMEMBASSY ASHGABAT
AMEMBASSY ATHENS
AMEMBASSY BELGRADE
AMEMBASSY BISHKEK
AMEMBASSY BRATISLAVA
AMEMBASSY BRUSSELS
AMEMBASSY BUCHAREST
AMEMBASSY BUDAPEST
AMEMBASSY CARACAS
AMEMBASSY CHISINAU
AMEMBASSY KIEV
AMEMBASSY LJUBLJANA
AMEMBASSY LONDON
UNCLASSIFIED

PAGE 02 ZAGREB 00799 04 OF 05 110815Z
AMEMBASSY MINSK
AMEMBASSY MOSCOW
AMEMBASSY PARIS
AMEMBASSY PRAGUE
AMEMBASSY RIGA
AMEMBASSY ROME
AMEMBASSY SKOPJE
AMEMBASSY SOFIA
AMEMBASSY TASHKENT
AMEMBASSY TBILISI
AMEMBASSY TIRANA
AMEMBASSY VIENNA
AMEMBASSY VILNIUS
AMEMBASSY WARSAW
AMEMBASSY YEREVAN
DEPT OF COMMERCE WASHDC
DEPT OF ENERGY WASHDC
DEPT OF TREASURY WASHDC

UNCLAS SECTION 04 OF 05 ZAGREB 000799

SIPDIS

SENSITIVE

STATE FOR EB/CBED
STATE PASS OPIC AND TDA

E.O. 12958: N/A
TAGS: ECON ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV HR HRECON
SUBJECT: DRUZHBADRIA AND CPOT PIPELINES -- CROATIA MOVING
FORWARD BUT SOME QUESTIONS RAISED

UNCLASSIFIED

PAGE 03 ZAGREB 00799 04 OF 05 110815Z
DEAL. ASSISTANT MINISTER OF ECONOMY ROMAN NOTA RECENTLY
COMMENTED TO US, HALF SARCASTICALLY, THAT AMERICANS AND
RUSSIANS REGULARLY VISIT HIM TO INQUIRE ABOUT THE STATUS OF
THE DRUZHBADRIA PIPELINE PROJECT. HOWEVER, THEY ARE NOT
SHOWING SUPPORT FOR ANY PARTICULAR ROUTE, AND THEY ARE NOT
COMMITTING TO PUT MONEY INTO THE PROJECT. "IT IS NOT CLEAR
WHO WILL FILL THE PIPELINE, AND WHO WILL BUY WHAT COMES OUT."
INDEED, THE AGREEMENT DOES NOT PROVIDE GUARANTEES FOR
MINIMUM DELIVERIES.

14. (SBU) A FEW U.S. COMPANIES HAVE EXPRESSED PRELIMINARY
INTEREST IN SOURCING FROM THE DRUZHBADRIA PIPELINE, BUT WERE
DIRECTED BY THE GOC AND JANAF TO AK TRANSNEFT -- THE RUSSIAN
ENTITY RESPONSIBLE FOR SECURING SUPPLIES AND BUYERS FOR THE
OIL -- TO NEGOTIATE ANY PURCHASE AGREEMENTS. THE GOC AND
JANAF ARE ALSO NOT INTERESTED IN ANY DEAL THAT WOULD RESULT
IN LOSING OWNERSHIP CONTROL OF ITS PIPELINE, WHICH WAS PART
OF THE OFFER OF AT LEAST ONE OF THE INTERESTED U.S. PARTIES.

15. (SBU) IN THE MEANTIME, THERE ARE RISKS FOR CROATIA --
NAMELY ENVIRONMENTAL RISKS, AND BY EXTENSION, POLITICAL
RISKS. FOR CROATIA, UPGRADING ITS ENVIRONMENTAL MONITORING
AND POLLUTION CONTROLS WILL BE RELATIVELY EXPENSIVE. NOTA
CHARACTERIZED COOPERATION AMONG THE COUNTRIES PARTY TO THE
AGREEMENT AS GOOD, WITH "OCCASIONAL PROBLEMS FROM UKRAINE,"
WHICH HAS A POTENTIALLY COMPETING, "INTERNAL PROJECT," I.E.,
ODESSA-BRODY. WHILE NOTA HAS SIMILAR CONCERNS ABOUT THE CPOT
PROJECT, IF BOTH PROJECTS WERE RUNNING CONCURRENTLY, CROATIA
WOULD GET MORE BENEFIT WITH THE SAME RISK, HE SAID.

CPOT -- ALSO NOT WITHOUT PROBLEMS
UNCLASSIFIED

PAGE 04 ZAGREB 00799 04 OF 05 110815Z
---------------------------------

16. (SBU) THE CONSTANTA-PANCEVO-OMISALJ-TRIESTE (CPOT)
PIPELINE, HAS THE POTENTIAL TO BRING CASPIAN BASIN OIL FIRST
TO AN EXPORT TERMINAL AT OMISALJ, THEN AFTER THE CONSTRUCTION
OF A PIPELINE TO TRIESTE, TO THE TRANS-ALPINE PIPELINE. A
U.S. CONSORTIUM, HLP-PARSONS, IS CURRENTLY CONDUCTING A
TDA-FINANCED TECHNICAL AND FINANCIAL FEASIBILITY STUDY. THE
RELATIVELY MINOR UPGRADES THAT CROATIA WOULD HAVE TO MAKE FOR
THE DRUZHBADRIA PROJECT WOULD COMPLEMENT THE POTENTIALLY
LARGER CPOT PROJECT. HOWEVER, THERE ARE SOME QUESTIONS FOR
CROATIA REGARDING THE CPOT PROJECT. CURRENTLY, SERBIA AND
PARTS OF BOSNIA ARE SERVED BY OIL COMING EAST FROM OMISALJ
AND SISAK, EITHER THROUGH PIPELINE OR TRUCK. SHOULD A CPOT
PIPELINE BE BUILT, CROATIA WOULD LOSE THOSE MARKETS, AS THE
PETROLEUM WOULD FLOW WEST AND SUPPLY REFINERIES IN SERBIA AND
BOSNIA.

17. (SBU) IN A MEETING WITH JANAF PRESIDENT VESNA
TRNOKOP-TANTA AND AN ADVISOR, PROBLEMS WERE CITED WITH THE
PARSONS STUDY. NAMELY, JANAF FELT THAT PARSONS WAS USING
UNREALISTIC ASSUMPTIONS ABOUT ECONOMIC GROWTH AND THE
RESULTANT USE OF ENERGY IN SERBIA AND BOSNIA. THESE

UNCLASSIFIED

UNCLASSIFIED PTQ8457

PAGE 01 ZAGREB 00799 05 OF 05 110815Z
ACTION EB-00

INFO LOG-00 NP-00 AGRE-00 AID-00 CEA-01 CIAE-00 CTME-00
INL-00 DINT-00 DODE-00 ITCE-00 DOTE-00 WHA-00 SRPP-00
EXME-00 EUR-00 E-00 FAAE-00 FBIE-00 UTED-00 VC-00
FRB-00 H-01 TEDE-00 INR-00 IO-00 ITC-01 LAB-01
L-00 VCE-00 AC-01 NSAE-00 NSCE-00 NSF-01 OES-00
OIC-02 OMB-02 OPIC-01 PC-01 PM-00 PRS-00 ACE-00
SP-00 SSO-00 SS-00 STR-00 TEST-00 T-00 USIE-00
EPAE-00 PMB-00 PRM-00 DRL-01 G-00 NFAT-00 SAS-00
SWCI-00 /013W
------------------542808 110815Z /38
R 110815Z APR 03
FM AMEMBASSY ZAGREB
TO SECSTATE WASHDC 9932
INFO AMEMBASSY ALMATY
AMEMBASSY ASHGABAT
AMEMBASSY ATHENS
AMEMBASSY BELGRADE
AMEMBASSY BISHKEK
AMEMBASSY BRATISLAVA
AMEMBASSY BRUSSELS
AMEMBASSY BUCHAREST
AMEMBASSY BUDAPEST
AMEMBASSY CARACAS
AMEMBASSY CHISINAU
AMEMBASSY KIEV
AMEMBASSY LJUBLJANA
AMEMBASSY LONDON
UNCLASSIFIED

PAGE 02 ZAGREB 00799 05 OF 05 110815Z
AMEMBASSY MINSK
AMEMBASSY MOSCOW
AMEMBASSY PARIS
AMEMBASSY PRAGUE
AMEMBASSY RIGA
AMEMBASSY ROME
AMEMBASSY SKOPJE
AMEMBASSY SOFIA
AMEMBASSY TASHKENT
AMEMBASSY TBILISI
AMEMBASSY TIRANA
AMEMBASSY VIENNA
AMEMBASSY VILNIUS
AMEMBASSY WARSAW
AMEMBASSY YEREVAN
DEPT OF COMMERCE WASHDC
DEPT OF ENERGY WASHDC
DEPT OF TREASURY WASHDC

UNCLAS SECTION 05 OF 05 ZAGREB 000799

SIPDIS

SENSITIVE

STATE FOR EB/CBED
STATE PASS OPIC AND TDA

E.O. 12958: N/A
TAGS: ECON ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV ENRG EPET SENV HR HRECON
SUBJECT: DRUZHBADRIA AND CPOT PIPELINES -- CROATIA MOVING
FORWARD BUT SOME QUESTIONS RAISED

UNCLASSIFIED

PAGE 03 ZAGREB 00799 05 OF 05 110815Z
ASSUMPTIONS INCREASED THE COST OF THE PROJECT IN TWO WAYS --
MORE INFRASTRUCTURE WOULD NEED TO BE BUILT IN THE EASTERN
PART OF THE ROUTE, AND LESS OIL WOULD END UP BEING DELIVERED
TO CROATIA AS A RESULT OF CONSUMPTION PROJECTIONS. "IT ISN'T
WORTH IT TO US TO LOSE OUR SERBIAN MARKETS, IF WE ONLY GET 5
MILLION TONS OF OIL," COMPLAINED TRNOKOP. (IN OTHER QUARTERS
WE HAVE HEARD ESTIMATES OF 10-12 MILLION TONS PER YEAR AS THE
MINIMUM ECONOMICALLY FEASIBLE AMOUNT.) ON THE OTHER HAND,
MINISTRY OF ECONOMY OFFICIALS SAID THEIR DISPLEASURE WITH THE
PARSONS STUDY WAS SIMPLY THAT PARSONS WAS USING OLD,
INACCURATE DATA.

COMMENT
-------

18. (SBU) WHILE BOTH PIPELINE PROJECTS COULD BE BENEFICIAL
TO CROATIA, THERE IS LITTLE CROATIA CAN DO, AS A TRANSIT
COUNTRY, TO BRING THE PROJECTS TO FRUITION. IN THE MEANTIME,
ENVIRONMENTAL CONCERNS ARE INCREASING, AND JANAF WILL BE
LOATH TO COMPLETE EXTENSIVE INVESTMENTS , INCLUDING IN
ENVIRONMENTAL UPGRADES, UNTIL THE PROJECTS HAVE FIRM SUPPORT
FROM BUYERS AND SUPPLIERS.
ROSSIN

UNCLASSIFIED

>

© Scoop Media

 
 
 
World Headlines

 

UN News: ‘Things Have To Change’ Canada’s Trudeau Declares Amid COVID-19 Pandemic

The COVID-19 pandemic has revealed that the world must change, as multilateral systems established decades ago are not working as they should, Prime Minister Justin Trudeau of Canada told the UN General Assembly on Friday. “The world is in crisis, and ... More>>

Assange's Hearing: Latest Observations From Court

Despite severe restrictions on observers, Reporters Without Borders (RSF) is the only NGO that has gained access to the hearing, and we’ve managed to monitor proceedings on most days. We will continue to do so whenever possible. Yesterday I was in court ... More>>

ILO: Impact On Workers Of COVID-19 Is ‘catastrophic’

COVID-19 has had a “catastrophic” impact on workers, the head of the International Labour Organization ( ILO ) said on Wednesday, with lost working hours higher than originally forecast, and equivalent to 495 million full-time jobs globally in the ... More>>

UN: WHO Warns Against Potential Ebola Spread In DR Congo And Beyond

Ebola is spreading in a western province in the Democratic Republic of the Congo (DRC), raising fears that the disease could reach neighbouring Republic of Congo and even the capital, Kinshasa, the World Health Organization (WHO) said on Friday. ... More>>