USIA - Text: Curtis Says U.S. Must Help Turkey with Energy Issues, 97-02-20

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TEXT: CURTIS SAYS U.S. MUST HELP TURKEY WITH ENERGY ISSUES

(Energy official speech at American-Turkish Council 2/20) (1920)

Curtis said, "Energy has played a significant role in our bilateral agenda in the past, and it is clear it will continue to do so for the foreseeable future." He cited a number of changes that have taken place in and around Turkey in recent years which have had significant effects on Turkey's energy policies and energy needs.

The energy official noted the potential of the Caspian Basin to serve as a viable alternative source of natural gas supplies for Turkey, and pointed out that "a natural parallel to the Baku-Ceyhan oil line could be a companion line to carry available natural gas and oil field-associated gas from the Caspian Basin to Turkey."

Curtis reminded the seminar, "Much of the needed infrastructure to export natural gas supplies from Baku to Turkey already exists, and should the Baku-Turkey gas route become established, the richer gas fields of Turkmenistan, and even Kazakstan, could be more economically viable. We would like to pursue these options further with you in bilateral discussions. U.S. companies are also interested in pursuing investment strategies connecting the Turkish market with Caspian Basin supplies."

Alluding to the Turkey's signing of an agreement last year with Iran for the purchase of natural gas, Curtis said, "We acknowledge we are concerned about recent moves to strengthen energy ties to Iran. We see this as a false security, a diversification strategy that will increase rather than decrease Turkey's geopolitical and economic vulnerability to supply interruptions."

He added, however, that the United States recognizes Turkey's "reasons for signing this agreement, but we urge Turkish policymakers to intensify efforts to seek alternative gas supplies, and we will strengthen our efforts to work with you to achieve a genuine, structured diversification of your gas supply needs."

Following is the text of Curtis' remarks at the conference:

(Begin text)

One only has to look at the conference program for an indication of how important energy is in the bilateral relations between our two countries, to see the broad range of issues associated with energy development in Turkey, and the tremendous interest U.S. companies have shown in investing in Turkey's energy sector.

Energy has played a significant role in our bilateral agenda in the past, and it is clear it will continue to do so for the foreseeable future. A number of changes have taken place in and around Turkey in recent years which have had significant effects on Turkey's energy policies and energy needs. Among the most important are:

• The breakup of the Soviet Union;
• Rapid growth in Turkey's population, accompanied by accelerated urbanization;
• Increased domestic energy demands, and in particular electricity demands -- a trend that is expected to continue;
• Increased vessel traffic through the Turkish Straits;
• Turkey's continued concern for safe navigation and environmental protection of the Bosporus; and
• Major political changes within Turkey.

Against this backdrop, Turkey has embarked on an ambitious program to implement energy policies concentrated on diversifying energy sources and suppliers, privatizing state-owned energy enterprises, attracting foreign investments in Turkey's infrastructure, increasing the efficiency of the energy sector, switching to cleaner sources of energy, and securing a pipeline through Turkey to the Mediterranean for export of Caspian region resources.

The United States is committed to working with Turkish officials in practical ways as they implement these policies. I have visited Turkey -- both Ankara and Istanbul -- and have had an active dialogue with visiting Turkish officials on these important subjects. I believe that the U.S. must take concrete actions to step up its engagement with Turkey on energy issues to assist our long-standing ally. In short, we must do more to help.

Diversifying Energy Supplies

Energy availability is the most critical element in Turkey's development over the next decade. Although neighboring the world's richest oil and gas suppliers -- to the north, south, and east -- geopolitical forces intervene. The geology and the technology are simple, but as we all know, the political realization is fraught with complexities.

• International sanctions have been applied to Iraq since 1990, and only recently have been eased to permit limited sales of oil to finance humanitarian activities within Iraq.
• The U.S. continues to pursue policies to isolate the Iranian regime and to provide regional power alternatives to Iranian energy and will continue to do so until Iran shows itself willing and able to be a responsible member of the family of nations.
• Russia, currently Turkey's dominant gas supplier, is in the midst of fundamental, economic and political change.
• Vast oil and gas supplies lie in the Caspian Basin, but these countries are undergoing political and economic reforms while simultaneously they struggle to recommission infrastructure and transportation networks to carry resources to hard currency markets.

I would like to briefly outline the principles which provide the framework for the U.S. government's policies toward Turkey's energy development and suggestions for Turkey and the U.S. to pursue together in a strategy to address Turkey's energy needs.

We share Turkey's interest in ensuring the economic viability and stability of the region through rapid development and export of the Caspian resources. Turkey has been an important part of our Caspian strategy of developing multiple export routes for this resource. The Baku-Ceyhan line enjoys our solid support as an outlet for Caspian oil. The U.S. has repeatedly renewed its January 1995 announcement of support in numerous bilateral, multilateral and international forums. However, development of the Baku-Ceyhan line will require constant nurturing and advocacy as it competes with alternatives. We encourage Turkish officials to engage the international companies in detailed discussions on constructing a commercially attractive deal.

The U.S. understands and shares Turkey's navigational safety and environmental concerns associated with the growth in recent years in vessel traffic through the Turkish Straits. The United States continues to support Turkey's position that the Caspian exports should not create an additional environmental or safety hazard in the Straits. The installation of a world- class vessel traffic system could improve the safety and operation of the Straits; although alternatives to transit, such as the route through Turkey to Ceyhan, will eventually be needed to carry most of the Caspian's oil and gas to market.

We acknowledge we are concerned about recent moves to strengthen energy ties to Iran. We see this as a false security, a diversification strategy that will increase rather than decrease Turkey's geopolitical and economic vulnerability to supply interruptions. And we, of course, are concerned with any commercial transactions with Iran which might enhance that country's ability to oppose the Middle East peace process, support worldwide terrorism, and destabilize the region. We recognize your reasons for signing this agreement, but we urge Turkish policymakers to intensify efforts to seek alternative gas supplies and we will strengthen our efforts to work with you to achieve a genuine, structured diversification of your gas supply needs.

In this regard, we note and applaud Turkey's efforts to expand and explore additional sources of liquid natural gas (LNG) and the issuance of tenders to construct regasification facilities. Egypt, Algeria, Qatar and Yemen, Nigeria, and Indonesia may all serve as potential additional suppliers of LNG. U.S. companies have submitted proposals to Turkey for consideration which will help bring some of these important supply options to fruition.

The Caspian Basin also has the potential to serve as a viable alternative source of natural gas supplies for Turkey. A natural parallel to the Baku- Ceyhan oil line could be a companion line to carry available natural gas and oil field-associated gas from the Caspian basin to Turkey. Much of the needed infrastructure to export natural gas supplies from Baku to Turkey already exists, and should the Baku-Turkey gas route become established, the richer gas fields of Turkmenistan, and even Kazakstan, could be more economically viable. We would like to pursue these options further with you in bilateral discussions. U.S. companies are also interested in pursuing investment strategies connecting the Turkish market with Caspian Basin supplies.

Private Investment In Turkey's Infrastructure

We applaud Ankara's plans to enlarge and improve its electric power infrastructure, including building numerous electric power plants with private -- especially foreign -- companies' participation. This is an important first step and our companies have responded with enthusiasm. Hopefully, the conference sessions this week and off-line meetings between Turkish officials and private sector bidders will continue to address some of the aspects of the investment framework -- such as the need for speedier approvals, and clarification of investors' rights. We commend Turkey's receptiveness to U.S. private sector comments and suggestions to date.

International financial resources flow to attractive, stable investment climates. It will be up to Turkey to create such an environment and to adopt favorable policies to hold and attract the flow of foreign investment needed to meet Turkey's growth requirements. You have lots of competitors.

We have been unreserved in our advocacy of U.S. company participation in your markets. U.S. firms have pioneered project financing and privatization initiatives around the world. They have been responsible stewards of the environment and have developed sound reliable technologies and practices. Moreover, we believe steadfastly that increased U.S. firm participation in your markets improves understanding and strengthens our bilateral relationship.

The planned privatization of power plants and the restructuring of the state-owned enterprises should have the added benefit of contributing to the efficiency of the energy sector. Energy intensity is still high, despite measures taken by Turkey to increase energy efficiency. The U.S. is prepared to assist Turkey in using its existing energy resources more efficiently. The Department of Energy will start work this year to determine how we might better share expertise, best practices, and best technologies to address these needs.

Conclusion

I look forward to continuing a discussion of these issues with Minister Dogan and other Turkish officials, both here and in Ankara. I want to congratulate the American-Turkish Council for putting together this comprehensive program aimed at addressing Turkey's energy needs. And I wish our Turkish friends an enjoyable and productive stay in Washington.

Thank you.

(end text)

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