US seeks Russian help in diversifying energy supplies

Moscow (Platts)--28May2004

US Energy Secretary Spencer Abraham said Friday he is holding a series of high
level meetings with government and industry leaders in Moscow to discuss
opportunities for America to diverisfy its energy supplies by importing more
oil and natural gas from energy-rich Russia. 

Abraham, who is rounding off an official tour in Europe with a visit to
Moscow, said he met Thursday with Russia's new prime minister Mikhail Fradkov
and the new energy and industry minister Viktor Khristenko. Friday's schedule
includes calls on Alexei Miller, CEO of Gazprom, Simon Weinstock, President of
state crude oil pipeline company Transneft and officals from Lukoil, Abraham
told a press briefing. During talks Khristenko took particular note of the
current (low) percentage of Russian oil exports to the US, and talked about
how those exports could be increased, Abraham said. Discussions at Transneft
are likely to focus on the possibility of building a pipeline leading to a new
export terminal on the northwest coast of Russia to facilitate trans Atlantic
oil exports.

Abraham said the US had been encouraged by President Putin's call early this
week for faster approval of new pipeline projects that could ease constraints
on Russian oil exports. In an address to parliament's upper house, the
Federation Council, Putin complained that the government was dragging its feet
on deciding which pipeline routes would best help Russia diversify its oil
exports. "The discussion, speaking frankly, is over-ripe," Putin said. Without
actually specifying oil pipelines, Putin said that private investors could
make a "weighty contribution" in the creation of diverse, high quality and
reliable transport infrastructure. Abraham admitted that Russia's reluctance
to allow private equity in pipelines might deter some investors. "My guess is
that there is a disincentive to take a major risk unless a reward is
available," Abraham said, adding that he could not speak for US companies.
"The energy secretary's priority is to diversify energy supplies to the US,"
he said.

The US is eager to stimulate its energy dialogue with Russia, formalised in a
declaration signed by President Bush and President Putin in May 2001, Abraham
said. Discussions Thursday with Russian government officials should help bring
a "more action-oriented approach" to the dialogue, which, some observers
claim, has stalled in the past year, Abraham added. US deputy energy secretary
Kyle McSlarrow is scheduled to visit Moscow Jun 7 to continue talks about the
dialogue, Abraham said. Identification of "specific projects that could move
forward" is important for the future of the energy dialogue, he said. Two
US-Russia energy summits have been held since the dialogue began and it is
possible that another may be held in the future, he said, adding "it is
important to move beyond the talking stage." A commercial working group set up
at the Houston energy summit in Oct 2001 was tasked to seek commercial energy
opportunities and take down barriers to trade and investment between the US
and Russia. Progress towards these goals has not been rapid.

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