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Viewing cable 06BERLIN1132, GERMANY'S GAS IMPORTS FROM RUSSIA: BACKGROUND TO

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Reference ID Created Released Classification Origin
06BERLIN1132 2006-04-27 05:00 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Berlin
VZCZCXRO6132
OO RUEHAG RUEHDF RUEHIK RUEHLZ
DE RUEHRL #1132/01 1170500
ZNR UUUUU ZZH
O 270500Z APR 06
FM AMEMBASSY BERLIN
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2783
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUCNFRG/FRG COLLECTIVE PRIORITY
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUCNMEU/EU INTEREST
RUEHMO/AMEMBASSY MOSCOW 1605
UNCLAS SECTION 01 OF 02 BERLIN 001132 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
PASS TO EC/ESC/IEC GALLOGLY 
DOE FOR PUMPHREY 
 
E.O. 12958: N/A 
TAGS: ENRG EINV PREL PGOV GM RUEUN
SUBJECT: GERMANY'S GAS IMPORTS FROM RUSSIA: BACKGROUND TO 
CHANCELLOR MERKEL'S VISIT TO TOMSK 
 
 
SENSITIVE BUT UNCLASSIFED.  PLEASE HANDLE ACCORDINGLY. 
 
1. (SBU) SUMMARY: Energy issues will feature in Chancellor 
Merkel's agenda for April 26-27 talks with Russian President 
Vladimir Putin in Siberia.  Recent EU-Gazprom exchanges and 
German media have played up the emotional side of Russian gas 
deliveries to the EU.  Economics Minister Glos and an all-star 
cast of German business leaders will accompany Merkel to 
Tomsk, including energy giant Eon and BASF executives.  BASF 
is likely to sign an agreement in Tomsk with Gazprom giving it 
a 35 percent share in the Yushno Russkoje gasfield, while 
competitor Eon may sign a deal for a 15 percent stake. 
Gazprom is seen here as increasing the pressure to gain access 
to downstream markets in Europe, including German markets that 
Eon seeks to shield.  END SUMMARY. 
 
2. (SBU) A key German Economics Ministry energy official told 
Embassy April 19 the Ministry was concerned and "puzzled" over 
recent Gazprom complaints that the EU allegedly politicized 
gas supply issues during an April 18 Gazprom meeting with EU 
ambassadors.  The German press has given strong play to 
Gazprom's statements about shifting more of its shipments to 
China and other markets, suggesting the sales to the East 
imply future possible shortfalls of Russian gas for EU 
markets.  Gazprom officials also reportedly complain about 
alleged EU (and German) efforts to obstruct Gazprom's entry to 
downstream gas markets in the EU.  Germany's Eon executives, 
according to press and other sources, have stonewalled 
Gazprom's bid to obtain major stakes in German gas 
distribution firms.  The German Economics Ministry official 
expressed dismay that Gazprom had made the issue an emotional 
one.  Economics Minister Glos sought this week to defuse the 
issue, stating Gazprom had always been reliable as a gas 
supplier and could have no interest in abridging long-term 
contracts. (Eon has contracts for Gazprom supplies valid at 
least until 2020). 
 
3. (U) German firms have developed strong ties to Russian gas 
exploration and delivery.  German officials and industry 
leaders have often viewed Germany's reliance on these ties as 
part of a profitable "two way street" that involves 
considerable German investment and technology exports to 
Russia and what they have repeatedly described to us as 
"reliable energy supplies for Germany."  Although the chemical 
giant BASF's officials in Berlin are reluctant to confirm a 
deal will be concluded in Tomsk, BASF's oil and gas subsidiary 
Wintershall is widely expected to sign a contract with Gazprom 
for a 35 percent share of the Yushno Russkoje gas field. 
Gazprom would retain a slight majority in the field's 
development and agree to a 15 percent stake in the field as 
part of a second expected Tomsk agreement with Eon. 
Accompanying Merkel to Tomsk are BASF board chair Juergen 
Hambrecht and Eon's chair Wulf Bernotat.  The media reports 
that, in return for BASF's new stake in the Russian field, 
BASF would arrange for Gazprom's increasing its stake in 
Wingas, BASF's German gas distribution joint venture, from 35 
to 49 percent and would also sell Gazprom shares in 
Wintershall's oil and gas operations in Libya.  The Yushno 
Russkoje field would be a main supply source for gas for the 
Baltic Sea pipeline, whose construction was launched in a late 
2005 agreement between then Chancellor Schroeder and Putin. 
 
4. (U) Although Germany's largest energy firm, Eon has taken 
second place to BASF in recent agreements on Russian gas 
fields.  According to the media, Gazprom wants to pressure Eon 
for more access to the German gas market.  Besides growing 
ties with BASF, Gazprom is reportedly negotiating directly on 
wellhead access with RWE, Eon's largest German competitor, as 
well as with Hamburg-based Concord Power. 
 
5. (U) In addition to energy executives, Merkel has included 
in her entourage an all-star roster of German business 
leaders, whose firms' are involved in the growing German- 
Russian trade in goods that amounted to 39 billion euros in 
2005.  Participants include Deutsche Bank chief Josef 
Ackermann and Commerzbank's Klaus-Peter Mueller, who have 
provided financing to Gazprom, including for the new Baltic 
Sea pipeline.  The chief of the German government's 
development bank, KfW, will also be in Tomsk.  German railways 
(Deutsche Bahn) chief Hartmut Mehdorn and the Airbus parent 
company EADS' chief Thomas Enders will participate as they 
look to more sales and cooperation in the transport sector. 
Germany has a major stake in engine and rolling stock exports 
to upgrade Russia's railway system. 
 
BERLIN 00001132  002 OF 002 
 
 
TIMKEN JR