CHENEY: U.S. TO HELP KEEP ENERGY FLOWING IN CAUCASUS

Houston Chronicle

Sept 3 2008
TX

Vice President Dick Cheney said the U.S. will work with countries in
the Caucasus region to develop additional routes for energy exports
to promote energy security, which is becoming an "increasingly urgent"
issue.

Energy users and producers are best served when "energy export routes
are diverse and reliable," Cheney told reporters in Baku, Azerbaijan,
after a meeting with President Ilham Aliyev at the presidential summer
palace. He said the U.S. will cooperate with Turkey and Caucasus states
"on additional routes for energy exports that ensure the free flow
of resources."

Azerbaijan is the first of three stops Cheney is making on a mission
ordered by President George W. Bush to reinforce alliances and reassure
leaders in Azerbaijan, Georgia and Ukraine of U.S. support and its
interest in the security and stability of the region.

The U.S. is assessing possible sanctions against Russia for its
military incursion into Georgia and recognition of two separatist
Georgian regions last month. More broadly, energy supplies may be at
risk in the region, and Azerbaijan is the starting point for the flow
of Caspian oil and gas westward to Europe.

"We both seek greater stability and security and cooperation in this
vital region of the world," Cheney said. Aliyev said he hopes for a
"strengthening of security measures" with the U.S.

The European Union on Sept. 1 suspended talks on a new Partnership and
Cooperation Agreement, the fundamental document defining EU-Russian
ties, while shying away from tougher measures that would expose the
energy-dependent EU to Russian retaliation.

No EU leader called openly for sanctions, a sign of Europe’s
dependence on Russian energy. Russia delivers over 40 percent of
Europe’s gas imports, a figure that will rise to 60 percent in 2030,
the European Commission says. A third of Europe’s imported oil now
comes from Russia.

Russian President Dmitry Medvedev welcomed the "sensible, realistic
point of view" that he said prevailed at the EU’s emergency summit.

Cheney, reflecting U.S. and European strategic interests in the region,
within hours of arrival in Azerbaijan began private talks on energy. He
met with William Schrader, president of BP’s Azerbaijan venture, and
Robert Dastmalchi, Chevron’s Azerbaijan country manager, according
to the vice president’s office.

A spokeswoman for BP in Baku declined to comment on the talks when
contacted by Bloomberg News. Chevron could not be reached for comment
this evening.

The U.S. has been urging Europe to diversify its energy shipments
from the Caspian region to enhance its energy security.

BP Plc’s Baku-Tbilisi-Ceyhan pipeline, which bypasses Russia, can carry
as much as 1 million barrels of Azeri crude a day through Georgia to
Turkey’s Mediterranean coast. Tankers at the port of Ceyhan began
loading oil from the pipeline on Aug. 26, three weeks after a fire
on a section in Turkey forced its closure.

Another BP-led pipeline, the Baku-Supsa, transports crude from
Azerbaijan to Georgia’s Black Sea coast. BP said Tuesday that the
pipeline, which has a daily capacity of about 100,000 barrels, is
"undamaged" and closed because of security concerns.

The planned Nabucco pipeline, backed by the EU, will bring gas from
the Caspian region via Turkey to Austria and western Europe by 2013.

Cheney also is consulting with the Azeri, Georgian and Ukrainian
leaders on possible sanctions against Russia for its military
operations in Georgia and recognition of the breakaway regions of
South Ossetia and Abkhazia on Aug. 26. Nicaragua became the second
country to recognize South Ossetia, President Daniel Ortega said in
a speech Tuesday.

White House spokeswoman Dana Perino said Tuesday that Cheney isn’t
likely to make any decisions and will instead report to Bush upon
his return to Washington on Sept. 10.

"I don’t expect any announcements from the vice president on this
trip," Perino said.

The conflict over South Ossetia solidified Azerbaijan as a regional
energy giant, U.S. Senator Richard Lugar said after visiting Aliyev
last month.

Aliyev is up for reelection this fall and may be striving to balance
relations with the U.S. and Russia during a time of oil wealth for
his country. Russia has also been concerned about Azerbaijan’s growing
ties with the West.

Azerbaijan has avoided making harsh statements condemning Russia over
its military actions in Georgia, in part because of its long-running
dispute with Armenia over the breakaway region of Nagorno-Karabakh.

The region’s mainly ethnic Armenian population declared self-rule
in 1991, sparking a three-year war between that killed an estimated
30,000 people and drove about 1 million people from their homes. A
cease-fire was declared in 1994 and the Organization for Security
and Cooperation in Europe still mediates in the dispute.