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Viewing cable 06LISBON1814, PORTUGUESE TO MEET WITH RUSSIANS ON NATURAL GAS

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Reference ID Created Released Classification Origin
06LISBON1814 2006-08-25 16:18 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Lisbon
VZCZCXRO1515
RR RUEHAG RUEHDF RUEHIK RUEHLZ
DE RUEHLI #1814 2371618
ZNR UUUUU ZZH
R 251618Z AUG 06 ZDK
FM AMEMBASSY LISBON
TO RUEHC/SECSTATE WASHDC 5101
INFO RUCNMEM/EU MEMBER STATES
RUEHMO/AMEMBASSY MOSCOW 0448
RUEHAS/AMEMBASSY ALGIERS 0058
RUEHLU/AMEMBASSY LUANDA 0532
RHEBAAA/DEPT OF ENERGY WASHDC
UNCLAS LISBON 001814 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/WE KEVIN OPSTRUP 
 
E.O. 12958: N/A 
TAGS: ENRG TRGY EPET ECIN ECON EMIN PREL PO RS
SUBJECT: PORTUGUESE TO MEET WITH RUSSIANS ON NATURAL GAS 
DEAL 
 
 
1. (U) SUMMARY: MFA Senior European Political Advisor 
informed Pol/Econ officer that Gazprom representatives were 
in Portugal in April to discuss the sale of liquified natural 
gas (LNG) from Gazprom to Portuguese Energy Company Galp 
Energia (Galp) via Algeria.  A follow-up meeting is scheduled 
for this Fall to discuss the proposal further as well as a 
possible joint-venture for natural gas exploration in Angola. 
 Gazprom's growing interest in supplying gas to Europe and 
its August 2006 MOU with Algerian state-owned gas provider 
Sonatrach Petroleum have sparked debates in the EU over 
energy security in Europe. END SUMMARY. 
 
PRELIMINARY MEETINGS CONFIRMED 
------------------------------ 
2.  (U) On August 17, Pol/Econ officer met with Senior 
European Political Advisor Liliana Araujo to discuss the 
potential impact on Portugal of the August 2006 
Gazprom-Sonatrach Petroleum MOU to jointly increase natural 
gas exploration and production.  (Note: Eighty percent of 
Portugal's natural gas comes from Algeria.)  Araujo noted 
that energy security was a priority of every EU country and 
that Portugal was no exception.  She commented that Portugal 
was planning to diversify its energy sources by lowering its 
dependency on oil and creating a balance between importation 
of natural gas in its normal state and as LNG. 
 
3.  (SBU) Araujo explained that Gazprom representatives 
approached Portuguese government officials with a proposal to 
procure LNG from Gazprom via Algeria when it learned of 
Portugal's intentions to diversify.  In April 2006, then MFA 
Deputy StateSec for Foreign Affairs Bernardo Ivo Cruz and 
Gazprom CEO Alexander Medvedev met to discuss the sale of LNG 
from Gazprom to Galp.  A follow-up meeting between Galp 
officials and Gazprom representatives is scheduled for the 
Fall.  Arauja underscored that discussions were in the 
preliminary stage and that no agreement had been reached. 
 
4.  (SBU) With regard to reports of a joint-venture 
initiative in Angola,  Araujo suggested that the proposal was 
"too ambitious" for now, but that the idea could be included 
in future discussions. 
 
 
NATURAL GAS IN PORTUGAL 
----------------------- 
5.  (U) Portugal has limited domestic energy reserves and 
imports 90% of its energy.  To reduce its dependency on oil 
and diversify its energy supply, Portugal began importing 
natural gas in 1997.  By 2005, natural gas represented around 
12% of total energy consumption in Portugal, with oil 
representing 66%, coal 12%, and renewable energies 10%. 
Portugal imports 100% of its natural gas, with 80% coming 
from Algeria and 20% coming from Nigeria.  Natural gas from 
Algeria is transported via the Maghreb-Europe pipeline 
through Spain and LNG  is transported via vessels from 
Nigeria to the Sines regasification-import terminal in 
southwestern Portugal. 
 
 
6.  (SBU) COMMENT: Arraujo acknowledged that some EU 
countries are concerned about Russia's increasing influence 
in the energy affairs of Western Europe and expected the 
Gazprom-Sonatrach MOU to raise eyebrows within the Union. 
Despite this,  Portugal appears willing to work with Gazprom 
as part of its energy security strategy and is likely to 
pursue a Gazprom-Galp deal beyond the preliminary stage. 
O'Neal