|
Here's just a small section of the 1998 version. The 2006 bill updates things according to new 'on the ground' info. Unocal eventually backed away from the pipeline deal...for the time being.
------
Mr. BEREUTER. Mr. Secretary, we are pleased to have your attendance today. We look forward to your testimony. Proceed as you wish.
STATEMENT OF ROBERT W. GEE, ASSISTANT SECRETARY FOR POLICY AND INTERNATIONAL AFFAIRS, DEPARTMENT OF ENERGY Mr. GEE. Thank you, Mr. Chairman. Good afternoon, Mr. Chairman and Members of the Committee. My name is Robert Gee, Assistant Secretary for the Office of Policy and International Affairs at the Department of Energy. I am pleased and honored to appear before this Committee today to report on the U.S. energy policy in the Caspian region. I welcome the opportunity to discuss our government's strategic and economic interests in this important region, our policy to advance those interests, and how we can achieve our goals. I also appreciate the opportunity to appear before you as you begin consideration of H.R. 2867, the House version of the Silk Road Strategy Act. While the Administration does not yet have a formal position on the bill, the underlying theme of the proposed legislation is consistent with our policy objectives and strategic goals in the region. To begin, you may ask why is the United States active in the region? The United States has energy security, strategic, and commercial interests in promoting Caspian region energy development. We have an interest in strengthening global energy security through diversification, and the development of these new sources of supply. Caspian export routes would diversify rather than concentrate world energy supplies, while avoiding over-reliance on the Persian Gulf. We have strategic interests in supporting the independence, sovereignty, and prosperity of the Newly Independent States of the Caspian Basin. We want to assist the development of these States into democratic, sovereign members of the world community of nations, enjoying unfettered access to world markets without pressure or undue influence from regional powers.
Page 11 PREV PAGE TOP OF DOC We also have an interest in maximizing commercial opportunities for U.S. firms and for U.S. and other foreign investment in the region's energy development. In short, our interests are rooted in achieving multiple objectives. Rapid development of the region's energy resources and trade linkages are critical to the independence, prosperity, democracy, and stability of all of the countries of that region. Four factors frame our policy. First, promoting multiple export routes. The Administration's policy is centered on rapid development of the region's resources and the transportation and sale of those resources to hard-currency markets to secure the independence of these new countries. Accordingly, our government has promoted the development of multiple pipelines and diversified infrastructure networks to open and integrate these countries into the global market and to foster regional cooperation. We have given priority to supporting efforts by the regional governments themselves and the private sector to develop and improve east-west trade linkages and infrastructure networks through Central Asia and the Caucasus. A Eurasian energy transport corridor incorporating a trans-Caspian segment with a route from Baku, Azerbaijan, through the Caucasus and Turkey to the Mediterranean port of Ceyhan is inclusive, providing benefits to transit as well as energy-producing countries. Second, emphasizing commerciality. While we recognize the influence regional politics will play on the development of export routes, we have always maintained that commercial considerations will principally determine the outcome. These massive infrastructure projects must be commercially competitive before the private sector and the international financial community can move forward. Our support of specific pipelines, such as the Baku-Ceyhan oil pipeline and trans-Caspian oil and gas lines, is not driven by any desire to intervene in private commercial decisions. Rather, it derives from our conclusion that it is not in the commercial interest of companies operating in the Caspian States, nor in the strategic interests of those host States, to rely on a major competitor for transit rights.
Page 12 PREV PAGE TOP OF DOC In general, we support those transportation solutions that are commercially viable and address our environmental concerns and policy objectives. Based on discussions with the companies involved, a Baku-Ceyhan pipeline appears to be the most viable option. We have urged the Turks to take steps to make Baku-Ceyhan a commercially attractive option. For our part, we are also looking at steps the United States can take to provide political risk guarantees and to foster cooperation among the regional States on an approach that can lead to a regional solution for the longer term. Third, cooperating with Russia. Our Caspian policy is not intended to bypass or to thwart Russia. In fact, two key projects closest to fruition go through Russia, those of the Azerbaijan International Operating Company northern early pipeline, and the Caspian Pipeline Consortium from Kazakhstan through Russia to the Black Sea port of Novorossiysk. We have also financed a major study to look at ways to export more volumes through the existing Russian pipeline system. Russia is in the midst of tremendous change in its energy policy, moving toward privatization and embracing market reform. Russian energy companies are deeply involved in Azerbaijan and Kazakhstan. We support continued Russian participation in Caspian production and transportation. We would also welcome their participation in the Eurasian corridor. U.S. companies are working in partnership with Russian firms in the Caspian, and there will be future opportunities to expand that commercial cooperation. Development of the region's energy resources creates opportunities for these countries to cooperate in new ways for the benefit of all. The pace and extent of that regional cooperation will have a direct effect upon the future economic prosperity of the individual States. The United States supports regional approaches to Caspian energy development. The Eurasian corridor will enhance Turkey's energy security through diversification, and will ensure that Kazakhstan, Uzbekistan, Turkmenistan and Azerbaijan have reliable and diversified outlets for their resources.
Page 13 PREV PAGE TOP OF DOC This corridor also addresses squarely the environmental issues associated with the Bosporus. We share Turkey's environmental concerns about the potential increase in traffic through the straits. Further, we seek to avoid having the Bosporus become a chokepoint for a significant share of the world's oil supplies, heightening environmental concerns and possibly impeding the development of Caspian energy. Fourth, isolating Iran. Our policy on Iran is unchanged. The U.S. Government opposes pipelines through Iran. Development of Iran's oil and gas industry and pipelines from the Caspian Basin south through Iran will seriously undercut the development of east-west infrastructure, and give Iran improper leverage over the economies of the Caucasus and Central Asian States. Moreover, from an energy security standpoint, it makes no sense to move yet more energy resources through the Persian Gulf, a potential major hot spot or chokepoint. From an economic standpoint, Iran competes with Turkmenistan for the lucrative Turkish gas market. Turkmenistan could provide the gas to build the pipeline, only to see itself displaced ultimately by Iran's own gas exports. How are we implementing U.S. policy? First, we have stepped up our engagement with the regional governments through Cabinet level and senior level visits to the region, and have established formal government-to-government dialogs. We also have invited regional leaders to Washington. Our Cabinet officers also are deeply engaged. Last fall Secretary Pena led a very successful Presidential mission to Turkey, Armenia, Azerbaijan, Georgia, and Turkmenistan. Secretary Daly recently returned from a trade mission to Turkey. I had the privilege of leading an inter-agency delegation to Turkey in mid-January to discuss Turkey's strategy for moving forward with development of its energy sector, meeting the growing demand for electricity, diversifying its gas supplies, and identifying further steps for the developing and constructing of oil and gas pipelines through Turkey. Second, we are pursuing an aggressive strategy with the regional governments. The Eurasian energy transport corridor, spanning at least six countries and disputed regions, presents complicated problems for even the most efficient governments. The number of potential players ensures that negotiations and equity structures will be enormously complicated. The United States has stressed the importance of achieving agreement on concrete project proposals among the relevant countries as early as possible. Along these lines, we have encouraged the regional governments to accelerate multilateral discussions with their neighboring States and with the private sector shippers through the establishment of national working groups. These groups have a critical role in resolving regulatory, legal, tariff, and other issues that will make the Eurasian corridor most commercially attractive.
Page 14 PREV PAGE TOP OF DOC In sum, we enthusiastically support an ongoing dialog with Congress on Caspian and Central Asian issues. We also support and encourage the positive contribution of the numerous congressional delegations that have traveled to the Caspian region. We must maintain the momentum behind our support for these governments and for our private sector. Developments this year will be critical in advancing regional energy development and export. We look forward to working with you in meeting the upcoming challenges. Mr. Chairman, that concludes my prepared remarks. I stand available to answer any questions you may have. Thank you.
..snip..
Mr. BEREUTER. Switching geography slightly, what is the status of proposals by Unocal and others to build a gas pipeline through Afghanistan to Pakistan? Mr. GEE. Perhaps the Unocal witness can give you more detail. I do understand that they do have an agreement with the government of Turkmenistan. They have also been in discussions with the various factions within Afghanistan through which that proposed pipeline would be routed. The U.S. Government's position is that we support multiple pipelines with the exception of the southern pipeline that would transit Iran. The Unocal pipeline is among those pipelines that would receive our support under that policy. I would caution that while we do support the project, the U.S. Government has not at this point recognized any governing regime of the transit country, one of the transit countries, Afghanistan, through which that pipeline would be routed. But we do support the project. Mr. BEREUTER. Secretary Gee, could you briefly tell us what the formal Chinese involvement in the region is at this moment with respect to energy resources?
|