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Cablegate: Romania: Energy Scenesetter for Se Morningstar

VZCZCXRO5803
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSL RUEHSR RUEHVK
RUEHYG
DE RUEHBM #0655/01 2711135
ZNR UUUUU ZZH
P 281135Z SEP 09
FM AMEMBASSY BUCHAREST
TO RUEHC/SECSTATE WASHDC PRIORITY 9924
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RHMCSUU/DEPT OF ENERGY WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 BUCHAREST 000655

SENSITIVE

DEPT FOR SE MORNINGSTAR AND EUR/CE ASCHIEBE

SIPDIS

E.O. 12958: N/A
TAGS: ENRG ECON PGOV PREL OREP RO
SUBJECT: ROMANIA: ENERGY SCENESETTER FOR SE MORNINGSTAR

Sensitive but Unclassified; not for Internet distribution.

1. (SBU) Post warmly welcomes the visit of Special Envoy for
Eurasian Energy Richard Morningstar. Your visit comes at just the
right time to send an important signal to our Romanian allies that
the United States remains fully engaged in Eastern Europe,
especially when it comes to energy security. The Black Sea Energy
and Economic Forum, where you will deliver the opening night
address, will bring together a broad spectrum of ministers and
business leaders to discuss energy security and cooperation. As
event organizer, the Atlantic Council envisions this Forum as the
first of what will become a regular series of conferences around the
Black Sea on transnational energy issues. As co-host, the Romanian
Government hopes the Forum will burnish Romania's credentials as a
serious player in regional energy issues and enhance Romanian
aspirations to be the primary European gateway to the Black Sea and
beyond to the Caspian region and Central Asia.

2. (SBU) You will be the first high-level State visitor from
Washington to meet with President Traian Basescu since DAS Matt
Bryza in January. Basescu is a big-picture strategic thinker and
very well informed on energy issues from a national (and EU)
security perspective. He has personally driven Romania's own
"energy diplomacy" by pursuing closer bilateral relations with
Turkey, Georgia, and Kazakhstan, and has made overtures to
Turkmenistan. Basescu has been particularly successful in forging
close ties with President Aliyev of Azerbaijan, who just concluded
his most recent visit to Bucharest on September 28. Despite
Romania's rough-and-tumble domestic politics, there is broad
consensus on geostrategic issues like energy security, and
differences are more of nuance than substance. Likely to run for
re-election this November, President Basescu has faced some media
criticism for putting too much faith in Romania's relationship with
the United States. However, in recent statements he has strongly
reaffirmed our bilateral partnership as the cornerstone of Romanian
foreign policy. Despite budgetary constraints due to the current
recession, Romania remains a staunch NATO ally and contributor to
missions in Afghanistan and the Western Balkans.

3. (SBU) Views on energy security tend to be closely aligned with
our own. Romania is a member and steadfast supporter of the Nabucco
consortium and seeks to use its ties with Central Asia to encourage
gas exports via Nabucco, complementing U.S. efforts. The draft bill
for Romania's ratification of the Nabucco Inter-governmental
Agreement should be submitted to Parliament shortly. Looking
further ahead, Romania also sees promise in the White Stream
project. Romania is interested in reviving the stalled Pan-European
Oil Pipeline (PEOP) and in exploring other avenues of transit for
crude and refined oil products through Romania to the rest of the
EU. KazMunayGaz (KMG), owner of Rompetrol (Romania's second largest
oil refiner and distributor), wants to leverage its refining
capacity here to export Kazakh oil to the European market.

4. (SBU) While domestic natural gas production still meets 60
percent of Romanian consumption, the 40 percent that is imported
comes entirely from Russia via Ukraine. In the wake of last
winter's gas cutoff, Romania is eager to diversify its gas sources.
Beyond new pipelines like Nabucco, Romania sees promise in liquified
natural gas (LNG) imports through a proposed terminal at the port of
Constanta. The U.S. Trade and Development Agency (USTDA) is
financing a one-year feasibility study for which state-owned Romgaz
and U.S. contractor Granherne concluded a contract on September 15.
A key issue will be sea routes for LNG to Constanta. Although
Romania enjoys good relations with Turkey -- due in part to
Romania's vocal support for Turkish accession to the EU -- LNG
transit through the Bosporus remains a contentious topic, and the
Romanians have frequently signaled their interest in U.S. engagement
with Turkey on this question. Romania hopes that LNG transit across
the Black Sea may be possible in the future, although USTDA recently
declined to pursue a feasibility study for a gas liquefaction plant
in Georgia. Romania is also pursuing better gas connectivity with
its neighbors; a pipeline linking its national grid with Hungary
will be completed soon, and talks are underway for a similar hookup
with Bulgaria.

5. (SBU) Romania maintains a cautious but pragmatic energy
relationship with Russia. Officials have been in talks with Gazprom
over development of a two billion cubic meter underground gas
storage facility. As part of a broader engagement with Russia,
Romania would like to see forward progress on the EU Energy Charter
Treaty. Romania and Russia are also finding ways to cooperate on
commercial projects outside of the energy sphere. Even though
Romanians are reluctant to cede too much control over national
energy infrastructure to any third party, they recognize their need
for the investment money and technical expertise required to upgrade
domestic infrastructure and exploit unconventional energy sources.
If the Russians can supply these, Romania is willing to talk.


BUCHAREST 00000655 002 OF 002


6. (SBU) Despite membership in the EU, Romania is still a
developing country and is sympathetic to other developing countries'
concerns on global issues such as climate change. This is usually
expressed quietly, however, as an effort to influence policy
decisions within the EU. Publicly Romania follows the EU lead.
Romania's large hydroelectric base and growing nuclear power
capacity, coupled with less reliance on coal-fired plants, put the
country much closer to meeting EU emissions targets than most other
states in Eastern Europe. Romania sees great promise in renewable
energies, especially wind power. However, in spite of efforts to
build substantial wind farms in the Dobrogea region along the Black
Sea coast, transmission grid capacity limits and problems obtaining
financing have slowed progress.

GITENSTEIN

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