Oil Supplies, Nuclear Controls Focus of U.S. Energy Secretary's Trip

WASHINGTON, DC, May 23, 2005 (ENS) - Secretary of Energy Samuel Bodman travels this week to Moscow, Russia; Baku, Azerbaijan; and Kiev, Ukraine, where he will hold discussions with senior officials on energy and nuclear safety issues.

"A healthy, vibrant and transparent global energy market is critical to the economic success of America and all nations," Bodman said in a statement. "Russia, Azerbaijan and Ukraine are important international partners of the United States. I look forward to discussing ways that we can strengthen cooperation on energy and nuclear nonproliferation issues and ensure the continued growth of the energy sector in this region."

Bodman in Russia

In Moscow, Secretary Bodman will meet with, among others, Viktor Khristenko, Minister of Industry and Energy, and Alexander Rumyantsev, Director of the Federal Atomic Energy Agency.

Their discussions will center on progress in achieving the Bratislava Initiatives, an agreement made by Presidents Bush and Putin at their meeting in Bratislava, Slovakia in February covering cooperation on energy, nuclear security and humanitarian response to disasters.

The two primary goals for the U.S. Energy Department and its Russian counterparts are energy and nuclear security cooperation.


Samuel Bodman is U.S. Energy Secretary (Photo courtesy U.S. State Department)
To expand energy cooperation, Secretary Bodman and his Russian counterparts seek to enhance energy trade and investment in Russia, increase markets for Russian oil and gas, and promote efficient development and use of energy resources.

On the nuclear security side, U.S. and Russian officials will share best practices for improving security at nuclear facilities bilaterally and with other nations that have advanced nuclear programs.

The seek to enhance their emergency response capability to deal with a nuclear or radiological incident by developing new technologies to detect nuclear and radioactive materials.

They will work towards enhancing the security cultures in both countries, and will follow the Bratislava Initiatives' direction to to help ensure full implementation of UN Security Council Resolution 1540 on non-proliferation of weapons of mass destruction.

The two sides will continue working jointly to develop low enriched uranium fuel that cannot be converted to nuclear weapons for use in any research reactors of U.S. and Russian design in third countries now using high enriched uranium fuel that can become the business end of a nuclear weapon.

They will continue the ongoing program of returning fresh and spent high enriched uranium from third country reactors to the United States or Russia for storage and reprocessing.

Secretary Bodman's visit comes as U.S.-Russian cooperation in space develops into a closer relationship. This morning Russia's Proton booster was launched and put the U.S. DIREC TV-8 communication satellite into orbit. The launch was made from Baikonur, the launching site Russia leases from Kazakhstan.

"The space vehicle came off the Briz-M upper stage rocket, and control was handed over to the customer," said Russia's Roskosmos space agency.

Bodman in Azerbaijan

Traveling next to Baku, Azerbaijan, Secretary Bodman will participate in the "First Oil" Ceremony of the Baku-Tbilisi-Ceyhan (BTC) Pipeline, a new East-West transport corridor for Central Asian oil and gas. The ceremony marks the first loading of oil in the $2.9 billion BTC pipeline being built by a team led by BP.

The 1,000-mile BTC pipeline is expected to transport one million barrels of oil a day from the Caspian Sea oilfields of Azerbaijan, through Georgia to the Turkish port of Ceyhan, and onward to world markets.

The BTC pipeline has been a major policy goal of the Bush administration, and is one of the recommendations in the National Energy Policy that was declared in May 2001 by the administration.


Worker rests on one of more than 150,000 steel pipes used in construction of the $2.9 billion pipeline. (Photo courtesy BP)
The pipeline has been opposed by environmentalists locally and around the world in part because it bisects Georgia's Borjomi National Park, an area of outstanding natural beauty and mineral water springs. The Borjomi region also contains the Kodiana Mountains, an area of geological complexity that is vulnerable to landslides and earthquakes. The Georgian government halted work on the pipeline last July because permits to construct it in this region were lacking.

Environmentalists and human rights groups also opposed the pipeline construction, because they say contracts signed between BP and the three host governments bypass social and environmental legislation in those countries.

Much of the area is seismically active. The route passes through three active faults in Azerbaijan, four in Georgia and seven in Turkey. BP says "this potential problem required a number of technical solutions such as reducing the angle at which the line crosses the fault or building in flexibility - installing a line layout that reduces soil resistance along the pipeline, allowing the substrate to move more freely, independent of the pipe in the event of earth movement.

BP insiders have criticized the choice of a safety coating - a three-layer system of fusion bonded epoxy, adhesive and polythene - which they say has been shown to be chemically incapable of adhering to the outside of the pipe. The coating is intended to keep water out of the pipe’s joints, so critics warn that the pipeline will let water in. Consequences could include corrosion and oil leakage as well as “stress corrosion cracking,” pipeline explosions at high temperatures.

Still, Kazakhstan intends to join the widely advertised "oil pipeline of the century" the project - Baku-Tbilisi-Ceyhan. The relevant agreement was discussed during the third meeting of the Azeri-Kazakh intergovernmental commission on economic cooperation in Baku on Sunday.

The draft of the agreement is among the series of documents planned to be signed during the upcoming visit of Kazakh President Nursultan Nazarbayev to Azerbaijan on Tuesday. Bodman in Ukraine

In Kiev, Ukraine, the final leg of the trip, Secretary Bodman will meet with President Victor Yuschenko and with Prime Minister Yulia Tymoshenko to discuss developing a market-based energy sector that attracts Western investment.


Ukraine's President Victor Yuschenko still bears the ashen gray color and scars on his face of dioxin poisoning during last fall's bitter election campaign. (Photo courtesy TAK)
His visit comes as the new Yuschenko government shocked the regional oil market by introducing fixed state prices for petroleum. This amounts to a ban on oil traders raising the selling prices of fuel by more than 13 percent of the price set by Ukraine's Economics Ministry this year. The target appears to be the Russian companies that are the leaders on Ukraine's fuel market.

The Russian firms retaliated by limiting oil deliveries to Ukraine, and on May 16 they introduced a limit of 10 liters per vehicle at TNK-BP Ukraine and LUKoil Ukraine filling stations.

Bodman also has nuclear security objectives in Ukraine. He will discuss with National Security and Defense Council Secretary Petro Poroshenko the return to Russia of Ukraine's high enriched nuclear fuel of Russian origin, and the conversion of its research reactors to the use of low enriched uranium.

Also in Kiev, Bodman will be a principal speaker at Kiev's Eighth Annual Energy Conference titled "Energy Security of Europe for the XXI Century - Eurasia Energy Corridor." The conference theme focuses on world energy security, development of energy resources and investment in Ukraine's fuel and energy sector.

During his discussions with senior officials of each country, Secretary Bodman will emphasize America's interest in generating greater international cooperation to encourage energy security for America and our international partners.

He will also focus on using technology to enhance energy resource development in what the Energy Department calls "the most efficient and environmentally responsible manner," and the benefits of transparent markets that attract foreign investment.