WikiLeaks: Bulgaria in Pursuit of Energy Diversification

The construction site of the frozen Belene NPP in Bulgaria. Photo by BGNES

Diplomatic cable of the US embassy in Sofia, dated September 30, 2009, revealed on WikiLeaks and provided to the project for investigative journalism www.bivol.bg, bringing out new details about Bulgaria's energy sector and its dependence on Russia. The text has also been published at the Balkanleaks site, an analogue of the notorious whistle-blowing WikiLeaks.

C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000561 SIPDIS E.O. 12958: DECL: 09/30/2009 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 the next several months as the new government makes critical decisions about its energy future.

SUTTON

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