Statements by U.S. Officials

US-Turkish Energy Cooperation

American Ambassador Ross Wilson
Marmara Foundation 11th Eurasian Economic Summit

Istanbul, Turkey
May 1, 2008

Transcript - As Delivered

Distinguished guests, it is a pleasure to be here to have an opportunity to discuss American energy policy and our work with Turkey and others on energy matters. Thank you very much, Dr. Suver, for inviting me to address this distinguished group.

To perhaps state the obvious, global demand for energy is rising rapidly, as every country here has noticed. Our Department of Energy estimates that by 2015, global energy consumption will increase by over 34 percent, with the strongest growth in China, India and other developing Asian nations. Energy demand will likely accelerate further in the decades beyond.

This rising demand is the positive reflection of economic development and prosperity that is improving the lives of millions all around the world. But its speed and size are straining supplies, infrastructure and markets, and there other problems, of which global warming is one. We know that markets over time will provide the necessary resources. But governments have a critical role to play in facilitating development, in promoting technologies, in making necessary international arrangements and in protecting the environment.

In the United States, we are working to promote cleaner, alternative and renewable sources of energy, to encourage nuclear power expansion, invest in science and technology, and improve the efficiency of our electric power infrastructure. We are also engaging with others to bolster the diversity of supply and diversity of demand that will accelerate the investments needed for the world’s energy security future.

One of our strongest partners is Turkey. The reasons are obvious. When President Bush visited Istanbul in 2004, he talked about being at “the meeting place of Europe, Asia and the Middle East.” Around this meeting place, Central Asia, the Caspian, the Caucasus and Iraq all have great potential for supplying and participating in the world’s rising prosperity. Turkey’s role is central.

Many of us in this room worked to make Baku-Tbilisi-Ceyhan a reality. BTC added to global energy supplies, fostered regional cooperation, and bolstered the freedom and independence of countries throughout this region, especially the former Soviet Union. Investors made BTC succeed, but it happened because governments wanted it to. Key leaders, including my friends Suleyman Demirel and the late Haydar Aliyev, had a vision, and it was not the top-down monopolist way of doing business that might otherwise have carried the day – and that some still promote. These and other forward-looking leaders joined us and others in recognizing the value of a market-oriented, transparent and open commercial energy architecture. These are the bases of growing energy exports from the Caspian and Central Asia today.

Now attention has turned to BTC’s counterpart for gas. In 2007, the Southern Caucasus gas corridor transported more than 2.5 billion cubic meters of Azeri gas across Georgia to Turkey. Some of this transits on to Greece via the inter-connector pipeline inaugurated last November by Prime Ministers Erdogan and Karamanlis, with the personal support of US Energy Secretary Bodman.

Just over the horizon are much larger volumes of gas, new pipelines to bring that production to market, and additional, accessible resources that these pipelines can attract – a virtuous circle of cooperation, investment, development and economic prosperity built on diversity of supply and demand. Shah Deniz Phase II, the most likely near-term addition to regional supplies, should raise this project’s output to over 20 billion cubic meters by 2014. Liberalizing energy markets and rapid economic growth here in Turkey make this country a natural destination for a significant share of Shah Deniz gas. Markets elsewhere in Europe are important, too. Development of these supplies and markets is the impetus for Nabucco, for Turkey-Greece-Italy and other pipeline ideas now on the table.

Turning these ideas into reality requires linking buyers, financiers and a regime for transport to market. In this context, clarifying the gas transit arrangements between Turkey and Azerbaijan could accelerate Shah Deniz Phase II development and other much needed projects.

Turkmenistan, Kazakhstan and Iraq are key, additional sources of gas. President Berdymukhamedov is wisely auditing his country’s energy potential as Turkmenistan charts its way forward. Involving major international firms and investors will bring welcome funds, expertise and diversity of partners to that country’s energy development. Of course, it will also be highly desirable for Turkmenistan to have alternative export possibilities. The most viable route is through this country, Turkey. Turkmenistan and Turkey can be important partners as Kazakhstan looks for diverse export routes itself.

Probable gas reserves in Iraq are estimated at over 8 trillion cubic meters, and I’ve seen estimates that are much higher. Energy is an obvious area of common interest between Turkey and Iraq. Iraqi Oil Minister Shahristani had very good meetings here early in March on the margins of President Talabani’s visit to Ankara. The United States is facilitating Turkey-Iraq cooperation through a natural gas working group. These efforts, I think, really take off as soon as the legal status of Iraq’s hydrocarbon development becomes clear.

Turkey’s energy future has a domestic component, as well. To meet demand that is expected to grow by 8-9% per year for a number of years, Turkey needs some $130 billion in energy investment by 2020. American business has taken part in Turkey’s energy development in the past and we hope to continue in the future.

For example, Chevron and Texaco are working with TPAO to explore and develop Turkey’s on- and off-shore oil and gas potential. The Toreador/TPAO joint venture will some time next year account for over half of Turkey’s domestic gas output.

Investments with local partners in thermal and hydroelectric power by such US firms as General Electric, Bechtel, and AES are generating almost 4000 MW per year. In 1998, our governments signed a protocol on the participation of US firms in nine hydroelectric projects in Turkey, and when completed, these projects will immensely expand Turkey’s electricity output and help power this country’s future.

In March, Turkey announced a competition for its first civilian nuclear power plant. The US-Turkey Energy Agreement on the Peaceful Uses of Nuclear Energy that we hope to bring into effect this summer will clear the way for US investment in this sector and for broader nuclear cooperation between our countries.

Business here is eager to take advantage of investment incentives for alternative energy that are contained in a Renewable Energy Act that Parliament passed in 2005. To discuss those opportunities, our energy ministries and the American Turkish Council sponsored a well-attended conference on clean energy technologies in January. To further these efforts, we are now negotiating a science and technology agreement between our countries, and useful exchanges have taken place with some of America’s most advanced energy laboratories.

This is – as I think the theme of this conference suggests- an historic time for energy in this region and in the world. Never before has global prosperity risen so rapidly and broadly. The United States will continue to work with Turkey and with other friends to ensure that we and our partners in the region and the world have the resources to continue this growth for decades to come.

Thank you very much.