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Viewing cable 08SEOUL9, REGIONAL APPROACH TO ENERGY COOPERATION IN NORTHEAST ASIA

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Reference ID Created Released Classification Origin
08SEOUL9 2008-01-02 06:23 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Seoul
VZCZCXRO2914
RR RUEHVK
DE RUEHUL #0009/01 0020623
ZNR UUUUU ZZH
R 020623Z JAN 08
FM AMEMBASSY SEOUL
TO RUEHC/SECSTATE WASHDC 7911
INFO RUEHMO/AMEMBASSY MOSCOW 8409
RUEHBJ/AMEMBASSY BEIJING 3664
RUEHKO/AMEMBASSY TOKYO 3798
RUEHUM/AMEMBASSY ULAANBAATAR 1618
RUEHBK/AMEMBASSY BANGKOK 7061
RUEHFR/AMEMBASSY PARIS 1583
RUEHSH/AMCONSUL SHENYANG 3555
RUEHVK/AMCONSUL VLADIVOSTOK 1362
RHEHNSC/NSC WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC 1751
RUEKJCS/SECDEF WASHINGTON DC//ISA/DSCA/DUSDAT//
RHHMUNA/CDR USPACOM HONOLULU HI//J5//
RHMFISS/COMUSKOREA CC SEOUL KOR
RHMFIUU/CHJUSMAGK SEOUL KOR
UNCLAS SECTION 01 OF 03 SEOUL 000009 
 
SIPDIS 
 
STATE FOR EEB/ESC/IEC/ENR, INR AND EAP/K 
STATE ALSO FOR IO/EDA - DE OTALVARO 
NSC FOR TONG 
DOE FOR INTERNATIONAL AND FE 
USDOC FOR 4440/MAC/EAP/OPB/ITA/TA 
COMM CENTER PLEASE PASS SCJS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG PREL ESCAP ZO RS MG JA KN KS
SUBJECT: REGIONAL APPROACH TO ENERGY COOPERATION IN NORTHEAST ASIA 
ADVANCES SLOWLY 
 
REF: SEOUL 3610 
 
1. (U) SENSITIVE BUT UNCLASSIFIED. 
 
SUMMARY 
------- 
 
2. (SBU) Korea hosted a meeting of the Senior Officials Committee on 
Energy Cooperation in North-East Asia (SOC) on Jeju Island, December 
13-14.  The group approved efforts spearheaded by South Korea to 
produce a set of energy outlook reports for countries in the region, 
and endorsed a modest proposal to identify potential regional energy 
projects.  Despite South Korean, and to a lesser extent, Russian, 
enthusiasm for this multilateral forum, the regional approach to 
energy cooperation is making only very slow progress, and currently 
amounts to little more than a venue for Korean-Russian dialogue. 
Coincidentally, the SOC followed close on the heels of a bilateral 
Korean-Russian consultation on energy held in Moscow (reftel).  End 
summary. 
 
A REGIONAL APPROACH TO ENERGY COOPERATION 
----------------------------------------- 
 
3. (U) The Senior Officials Committee on Energy Cooperation in 
North-East Asia (SOC) is the progenitor of, and steering committee 
for, the Intergovernmental Collaborative Mechanism on Energy 
Cooperation in North-East Asia (the Mechanism), which falls under 
the aegis of the UN Economic and Social Commission for Asia and the 
Pacific (UNESCAP).  The first SOC established the Mechanism at its 
November, 2005 meeting in Ulaanbaatar, aiming "to facilitate energy 
cooperation and trade to enhance energy security in North-East 
Asia."   A Working Group on Energy Planning and Cooperation (WG-EPP) 
carries out the mandates of the SOC and has met four times since 
May, 2006.  The Jeju meeting was the third SOC, following the 
Ulaanbaatar meeting and one in Khabarovsk in December 2006.  The 
next SOC will be held in November, 2008 (see para. 13 below). 
 
GOVERNMENT-BUSINESS DIALOGUE GETS UNDER WAY 
------------------------------------------- 
 
4.  (U) Immediately prior to the SOC, representatives of the 
participating governments held the first in a series of planned 
dialogues with energy companies and sectoral experts.  The December 
11-12 "Government-Business Dialogue on Energy Cooperation in 
North-East Asia" (GBD) recommended a joint government-business study 
group to identify and assess the economic feasibility of energy 
cooperation projects.  Proposed joint studies included potential 
projects in the coal sector; the possible export of electricity from 
Russia to China, North Korea, and South Korea, as well as from 
Mongolia to China; and exploration of oil and gas fields in 
Mongolia. 
 
SENIOR OFFICIALS: WHO CAME, WHO DIDN'T, AND WHY 
--------------------------------------------- -- 
 
5. (U) The Jeju SOC meeting was attended by senior government 
officials from Mongolia, Russia and Korea.  Mongolia sent a 3-person 
delegation led by Tserenpurev Tudev, State Secretary at the Ministry 
of Fuel and Energy.  The 5-person Russian delegation was led by 
Vladimir Saenko, Deputy Director of the Department for State Energy 
Policy at the Ministry of Industry and Energy, and included a 
Foreign Ministry representative.  Korea's official delegation was 
huge. 
 
6.  (U) In contrast, China and Japan were represented only by 
experts (or "resource persons") rather than officials: Gao Shixian, 
Director of the Center for Energy Economics and Development Strategy 
at China's Energy Research Institute; Zhou Shuhui, a researcher at 
 
SEOUL 00000009  002 OF 003 
 
 
the PetroChina Planning and Engineering Institute; and Hiroyuki 
Ishida, Senior Economist at the Institute of Energy Economics, 
Japan.  Though North Korea had participated in several earlier 
meetings of the Mechanism, it was not represented in Jeju.  ESTH 
Chief attended to represent the United States, which was invited as 
an observer.  UNESCAP staff served as the secretariat. 
 
7. (SBU) One participant stated privately that Japan's absence at 
the official level reflected a policy decision to avoid groups that 
have North Korea as a member.  He added that China's absence 
appeared to indicate a lack of conviction that a multilateral 
approach would be more fruitful than a bilateral Sino-Russian 
dialogue.  (Comments by both Russian and Chinese participants 
underscored that price is a major sticking point in Sino-Russian 
energy talks.)  North Korea's absence from a meeting hosted in South 
Korea could be expected, but it had also stayed away, without 
explanation, from the September 2007 meeting of the WG-EPP held in 
Irkutsk. 
 
8. (SBU) Another participant pointed out that Japan's interest in 
regional energy integration involving large-scale infrastructure 
projects, such as a pipeline connecting Sakhalin to Hokkaido, had 
waned in light of Russia's demonstrated willingness (e.g. in 
relations with Ukraine and Belarus) to turn off the tap to gain 
leverage.  Adding to Japan's lack of enthusiasm, he said, is the 
forecast of diminishing energy demand growth due to Japan's 
declining population, and the lack of a nation-wide grid for a 
pipeline to feed into. 
 
9. (SBU) Comment: Given these regional dynamics, and notwithstanding 
Mongolia's high-level involvement, to a large extent the meeting 
devolved into a Korean-Russian conversation about regional energy 
policy.  (Coincidentally, Russia and Korea had held bilateral talks 
on energy cooperation in Moscow on December 11-12, reported reftel.) 
 End comment. 
 
MODEST ACCOMPLISHMENTS, MODEST SHORT-TERM GOALS 
--------------------------------------------- -- 
 
10. (U) Over the two days of the meeting, the Senior Officials and 
"resource persons" made presentations on their national energy 
situations and policies.  They also endorsed the preliminary results 
of the Energy Outlook, focused on China, Mongolia, South Korea, and 
Russia, prepared by the Korea Energy Economics Institute (KEEI) in 
cooperation with research institutions in the three other countries. 
 (Though North Korea did not participate in the preparation of the 
Outlook, KEEI presented its own assessment of North Korea's current 
energy balance and its long-term needs.)  The final version of the 
Outlook is expected to be completed in the spring of 2008.  In the 
reference case, it predicts that total primary energy demand in 
Northeast Asia will grow from 2.8 billion tons of oil equivalent 
(TOE) in 2004 to 4.7 billion TOE in 2020. The study assesses that 
increased regional cooperation could result in increased efficiency 
(e.g. through shorter transmission lines), resulting in a 3.7 
percent savings in total energy consumed by 2020. 
 
11. (U) The SOC adopted a Work Plan for 2008 to guide the activities 
of the WG-EPP.  The main short-term goal is the preparation of a 
report examining the region's energy production potential and a 
development plan.  It also endorsed the recommendation of the GBD to 
develop a joint government-business mechanism to assess the economic 
feasibility of energy cooperation projects, and directed the WG-EPP 
to prepare an implementation plan that avoids duplication of work 
done by other institutions.  The WG-EPP will meet in late April, 
2008, in Chiang Mai, Thailand, with another meeting planned for the 
second half of 2008. 
 
12. (U) The SOC also reviewed KEEI's proposed "5-year strategy for 
 
SEOUL 00000009  003 OF 003 
 
 
energy cooperation in North-East Asia," but decided that further 
consultations within member states were needed. 
 
13. (U) The next meeting of the SOC, and the second GBD, are planned 
for late November 2008.  A venue was not announced. 
 
14. (U) Copies of the documents of the Third SOC are being pouched 
to IO/EDA, EEB/ESC, EAP/K, Beijing, Ulaanbaatar, Moscow, Tokyo and 
Bangkok.  The assessment of North Korea's energy outlook has been 
forwarded to EAP/K electronically. 
 
COMMENT 
------- 
 
15. (SBU) South Korea is clearly the driving force behind the 
UNESCAP energy cooperation initiative.  (Korea was reelected to 
chair the WG-EPP; KEEI was reelected the "nodal institution" doing 
most of the intellectual work while providing financial and 
technical assistance to research institutions in other member states 
if needed for joint studies.)  At the same time, Russia's enthusiasm 
for the group (if not for actual commitments) was evident.  Two 
participants separately asked ESTH Chief for an analysis of why 
Russia was so gung-ho in this regional forum.  (One possible 
explanation is an effort to counter the negative impressions of 
Russia's reliability as a business partner created by its 
widely-reported disputes with trading and investment partners in the 
energy sector.)  Nevertheless, in the absence of clearer indications 
from Russia about what it is willing to supply, and in the absence 
of greater engagement from China, the regional approach to energy 
cooperation appears unlikely to make much of an impact in the 
near-term.  End comment. 
 
VERSHBOW