[09SOFIA561] BULGARIA: IN PURSUIT OF ENERGY DIVERSIFICATION, PM TURNS TO U.S. COMPANIES

Published by Wikileaks & Bivol.bg

 id: 228261 date: 10/5/2009 8:01 refid: 09SOFIA561 origin: Embassy Sofia classification: CONFIDENTIAL destination: 09SOFIA507|09SOFIA538 header: VZCZCXRO1432 OO RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR DE RUEHSF #0561/01 2780801 ZNY CCCCC ZZH O 050801Z OCT 09 FM AMEMBASSY SOFIA TO RUEHC/SECSTATE WASHDC IMMEDIATE 6374 INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY RUEAIIA/CIA WASHINGTON DC PRIORITY RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY   C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000561    SIPDIS    E.O. 12958: DECL: 09/30/2019  TAGS: ENRG, PGOV, PREL, BU  SUBJECT: BULGARIA:  IN PURSUIT OF ENERGY DIVERSIFICATION,  PM TURNS TO U.S. COMPANIES    REF: A. SOFIA 538       B. SOFIA 507    Classified By: CDA John Ordway for reasons 1.4 (b) and (d).    1. (C) Summary/Introduction:  PM Borissov met with  representatives of three U.S. energy corporations September  29 to discuss diversification alternatives.  As a result, the  government is engaging in negotiations to use U.S. technology  to diversify its nuclear fuel supply and create a spent  nuclear fuel storage facility.  Upon taking office in July,  the Borissov government announced intentions to re-examine  all Russian-linked major energy deals made by the last  government.  The cash-strapped new administration seeks not  only to rid itself of projects of questionable commercial  viability but also to increase its energy security through  diversification.  Post's new Department of Energy Regional  Office arranged the meeting with U.S. energy executives in  response to the PM's request for U.S. assistance on  diversification options.  End Summary/Introduction.    ALTERNATIVE NUCLEAR FUEL SUPPLIES AND DOMESTIC SPENT FUEL  MANAGEMENT    2.  (C) Dr. Kris Singh, CEO of NJ-based Holtec International,  described his company's willingness to build storage  facilities for spent fuel from units 5 & 6 of the Kozluduy  Nuclear Power Plant.  Currently, Bulgaria ships this fuel  back to Russia at considerable cost.  It is the only EU  country to continue this practice, making Bulgaria vulnerable  to Russian price hikes and threats to refuse future storage.  After hearing Holtec's presentation, the PM and Minister of  Economy and Energy asked the company to prepare a contract.    3.  (C) Westinghouse VP for Europe, Michael Kirst, detailed  his company's proposal to eliminate Bulgaria's dependence on  Russian nuclear fuel.  Taking advantage of a USG-funded  nuclear fuel qualification program designed for a reactor  similar to Kozluduy in Ukraine, Bulgaria could begin to buy  its nuclear fuel from Westinghouse within the next two years.   Currently, Bulgaria buys 100 percent of its nuclear fuel  from Russia, which has made indirect threats to cut the  supply if Bulgaria does not go forward with the proposed  Belene nuclear power plant.  As a result of the September 29  meeting, Westinghouse will send a team of technical experts  to Kozluduy to launch discussions.    OPENING EYES ON BELENE    4.  (C) The Westinghouse representative also presented a  comparison of Westinghouse technology to the reactors Russia  plans to build at Belene.  In a detailed presentation, he  noted that current plans at Belene will leave Bulgaria with  less than state-of-the-art technology (Generation 2) at a  considerably higher price than Westinghouse and other western  firms are selling Generation 3 technology.  He warned that  Bulgaria runs the risk of owning a "technology orphan" found  only in Russia, Iran, India and China that would bind  Bulgaria to Russia for the next 60-80 years.  The Prime  Minister lamented his position, saying that "kill costs"  payable if Bulgaria walks away from Belene were too steep,  although no formal decision on the plant had been taken.    GOB SUPPORTS DOMESTIC GAS EXPLORATION BUT CAN'T AFFORD TO  TAKE PART    5.  (C) Finally, Ed Gendelman, CEO of Denver-based Direct  Petroleum (DP), detailed his company's gas find in  north-central Bulgaria, for which DP is seeking a partnership  with Bulgargaz.  The PM and Minister of Energy Traikov  offered support for project, saying they would ensure the  company faced no bureaucratic obstacles as it developed its  field.  But both were adamant that neither the Government not  the state-owned Bulgarian Energy Holding could afford to take  on the risk of partnership in the project at this time.    COMMENT    6.  (C) PM Borissov is clearly under pressure to give Russian  PM Putin a decision on whether Bulgaria will move forward  with major, Russian-backed energy projects.  Describing his  September 1 meeting with Putin in Gdansk, Borissov said Putin  implied (in an off-hand remark) that Bulgarians "risk being  cold" this winter if Borissov did not move forward with the  projects.  In the September 29 meeting Borissov expressed  satisfaction with the opening of DOE's first Regional Energy  Office at Embassy Sofia.  He again requested USG advice on  diversification options and sought increased engagement over    SOFIA 00000561  002 OF 002      the next several months as the new government makes critical  decisions about its energy future.  SUTTON 

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