November 17, 1999
PRESS BRIEFING BY SENIOR ADMINISTRATION OFFICIAL ON CASPIAN SEA DIPLOMACY AND THE BAKU-CEYHAN PIPELINE
9:13 P.M. (L)
THE WHITE HOUSE
Office of the Press Secretary
(Istanbul, Turkey)
___________________________________________________________________________
___ For Immediate Release November 17,
1999
PRESS BRIEFING
BY
SENIOR ADMINISTRATION OFFICIAL
ON CASPIAN SEA DIPLOMACY AND THE BAKU-CEYHAN PIPELINE
Conrad International Hotel
Istanbul, Turkey
9:13 P.M. (L)
SENIOR ADMINISTRATION OFFICIAL: Hello. I'd like to go over briefly
the reasons why we support an east-west multiple pipeline strategy for the
Caspian and Caucasus. I'd like to talk a little bit about the history
behind where this has all come from, and then briefly about what will
happen tomorrow and beyond tomorrow.
We usually talk about four basic principles that underly our support
for a Caspian energy policy. They include our commitment to the
sovereignty and independence of the new states of the Caspian region, and
an effort to enhance their economic prospects.
The second one has to do with improving the energy security of the
United States, Turkey and our other allies; the free flow of energy
resources from the Caspian to western markets. The third has to do with
creating and advancing commercial opportunities for American companies --
and other companies, as well.
And the fourth, which is probably the most important, is to prove that
economic cooperation -- economic and political cooperation is a much better
path for the region than the political rivalry which has characterized much
of their history. And it is creating a new web of relationships that will
support the economic and political independence of these states.
All of this dates back five, six years -- five years ago, in 1994,
Azerbaijan signed production-sharing agreements with a consortium of
companies, the Azeri International Operating Company, and that has explored
and developed oil wells in the offshore waters of Azerbaijan. In 1995,
these companies decided to build two pipelines from Azerbaijan, one going
north to the Russian Black Sea port of Novorossisk -- and we'll hand out
fact sheets that will give you the spelling -- and a second early oil
pipeline to Supsa, Georgia, also on the Black Sea.
The western line to Supsa opened in April 1999, and it is operating at
its full capacity of 115,000 barrels a day. The pipeline to Novorossisk
opened; it has been closed because of events in Chechnya.
In 1996, at the Gore-Chernomyrdin level, there was agreement that
broke a logjam and led to agreement on a Caspian pipeline consortium
pipeline from Kazakhstan on the east side of the Caspian to Novorossisk, as
well. That pipeline is now under construction.
In 1998, the U.S. Trade and Development Agency, Export-Import Bank and
OPIC created a financing center here in Ankara to help facilitate the U.S.
financial participation in the multiple-
pipeline strategy. In 1998, in July 1998, the President appointed a
Special Advisor to the President and Secretary of State for Caspian Basin
Energy Diplomacy -- long title -- and that job has been filled since. In
1998, the presidents of Turkey, Georgia, Azerbaijan, Kazakhstan, and
Uzbekistan signed an Ankara Declaration, which talked about Baku-Ceyhan as
the main oil export route from Baku to Ceyhan and the idea that oil would
go trans-Caspian into that pipeline. And they also announced support for a
trans-Caspian gas pipeline.
In February of 1999, Turkmenistan selected a consortium, PSG
International, and later Shell, to build that pipeline as part of
Turkmenistan's sales-purchase agreement and bilateral relationship to sell
the gas to Turkey.
I'd like to try to describe, I'd like to suggest to you, that this is
really quite spectacular stuff that is happening. Last Sunday evening, we
were sitting there negotiating the trans-Caspian Gas Pipeline Framework
Declaration, which will be signed tomorrow, and in the room we had senior
representatives from Turkmenistan, Azarbaijan, Georgia, Turkey and the
United States. It was the 72nd anniversary of the Bolshevic Revolution.
And the idea of sitting in a room and talking about a pipeline which will
be a commercial pipeline to sell gas from Turkmenistan through Georgia and
Azerbaijan to Turkey and on to Europe, eventually, is really quite
remarkable.
Similarly, for the Baku-Ceyhan pipeline. The idea that these oil
countries will be able to develop a pipeline system that goes westward is
an important new step. Our policy is a multiple pipeline strategy. We
have supported pipelines that go north, as I described -- the
Baku-Novorossisk early pipeline, and now the trans-Caspian Caspian Pipeline
Corporation pipeline; these go through Russia, but the company and the
countries have all said they need to have multiple routes, they need to be
able to have multiple ways to the marketplace, they want to be able to
export their oil and gas directly to hard currency markets without going
north or south through countries that compete with them.
The Baku-Ceyhan main oil pipeline will be a million-barrel pipeline.
The object will be to put it into service in 2004. The trans-Caspian gas
pipeline from Turkmenistan to Turkey, size is still to be determined, but
the sales-purchase agreement was for 16 billion cubic meters a year.
So these are substantial undertakings. They are long pipelines that
go across multiple national borders. Political cooperation is essential.
It is almost unprecedented to see supplier countries sending oil across
other potential competitors to the western markets. We are absolutely
delighted with the progress and the cooperation that has been shown by the
countries and the energy companies that are involved. A U.S.
representative, speaking in September, talked about how, on the oil
pipeline, the companies were using the process of negotiation to block a
test of the project in the marketplace.
What will be signed tomorrow? Tomorrow, there will be signed the
inter-governmental agreement between Azerbaijan, Georgia and Turkey for the
Baku-Tbilisi-Ceyhan main export pipeline. This million-barrel pipeline, as
I described, is a significant effort. It will require much more work
before it comes into operation in 2004. The inter-governmental agreement
and the host government agreements and turnkey contract and guarantee --
which will be either initialed and/or signed tomorrow -- though, provide
the legal framework.
This is a first step. There is a lot more work to go. Beyond
Istanbul, the next steps will be meetings of shippers, potential shippers,
development of the actual financial package that will underwrite the
construction, selection of contractors
-- in one case, in Turkey, Botas which is the national energy company, will
be doing the work, but they still need to select contractors for Azerbaijan
and Georgia. It will require a what's known as open season, in which the
actual shippers pledge their volumes to the pipeline; and all of this will
come together, hopefully, at the end of next year or in early 2001, when
this will go to the marketplace and construction will commence.
The gas pipeline, we hope, will go on a faster track, it's a little
simpler project. There's already a sales-purchase agreement which provides
the basis for financing. The real difficulties for the trans-Caspian
pipeline have been trying to deal with the right-of-way questions that are
necessary to get the pipeline from Turkmenistan to Turkey. But the object
for that is to reach financial closing at the end of 2000, start
construction and deliver the first gas to Turkey by the end of 2002.
These are major projects, these are major steps forward, these are
historic documents in terms of the cooperation; but nobody should
underestimate the hard work and the need for continued cooperation, both
between the governments and with the companies that will be necessary to
make all this come together.
The United States, starting with the President, has made this a high
object for U.S. foreign policy. As the President said the other day, these
pipelines are not often in the U.S. headlines, but the impact that they can
have for world energy markets, the impact that they will have for U.S.
energy security, the impact that they can have for regional security and
security on the eastern flank of NATO and Europe, it's a profound impact.
It may be 10 or 20 years before we're actually able to gauge the benefit
that this multiple pipeline strategy will have. But he said to President
Demirel and others that this is really an important achievement, a step
forward and we, the United States, will continue to support this effort
with our diplomacy and through the Export-Import Bank, Overseas Private
Development Corporation and Trade and Development Agency.
They work in the context of a commercial deal, though, and so the
effort now is to prove that these pipeline projects are actually
commercially viable.
That's probably enough to say.
Q If it's all so good, why do Russians think that it's so bad?
They seem to be fearing that they'll be cut out somehow. How will it
affect them?
SENIOR ADMINISTRATION OFFICIAL: Historically, energy from the Caspian
has gone north, only north, and then from Russia into world markets. As I
said, the countries and the energy companies that are operating in the
region believe that they need to have a multiple pipeline system, and
that's what we support -- western routes, as well as the routes that
already are established or are under construction in Russia. They're not
being cut out; the Caspian Pipeline Consortium is a major pipeline from
Kazakhstan to the Russian port of Novorossisk.
But as part of the development of their own identity and their own
economic vitality, the countries of the region and Turkey, and the United
States in support, believe that the countries can -- need, and should have,
multiple routes to the world market. So we're supporting an effort that is
the effort of Turkey and the regional countries.
Q Sir, you referred to the million-barrel pipeline. I assume you
mean million barrel a day? Also, what is the specific U.S. corporate and
U.S. government participation on these deals?
SENIOR ADMINISTRATION OFFICIAL: The specific corporate involvement in
the oil pipeline remains to be determined now that this will go to the
marketplace. There are three American companies that are part of the Azeri
International Operating Company: Exxon, Unocal and Pennzoil. There are
other American companies that are exploring in Azerbaijan. There are a
number of major American companies -- Chevron, Texaco, Mobil -- which are
active in Kazakhstan or Turkmenistan. So that in terms of U.S. energy
companies, there are a number of companies that are active either on the
east or west. They are supported by oil service companies, several of
which are American.
The contractor for the Azeri-Georgia fraction may or may not include
representative American companies. The gas pipeline -- you know, the
consortium that will build it includes the PSG International Corporation,
which is a joint venture by GE Capital and Bechtel. So there are
significant interests there.
Q What does the President -- when he signed, what does he sign
tomorrow and what does he commit the United States to do?
SENIOR ADMINISTRATION OFFICIAL: The President is not committing us to
do anything; the President is witnessing the signature of an Istanbul
declaration that will be part of the oil package, and he is witnessing the
trans-Caspian Gas Pipeline Declaration, which is a framework document that
will provide the basis for negotiating the actual legal package for the gas
pipeline.
What the President has said, and I suspect may say again tomorrow, is
that as these deals move to the commercial phase, and when they show that
they are commercially viable, part of that commercial viability will
include support by Ex-Im, OPIC and TDA. TDA has been active all through
the process in terms of project analysis and feasibility studies. OPIC and
Ex-Im will now come in to cover risk or the sale of U.S. goods and
services.
Q Any security guarantee, though, for the --
SENIOR ADMINISTRATION OFFICIAL: No.
Q Has Turkey made an agreement to guarantee cost over runs, which I
understand is part of the financial package you're trying to put together?
SENIOR ADMINISTRATION OFFICIAL: One of the documents for the oil
pipeline will be a guarantee by Turkey for the costs of that fraction of
the pipeline that is being built by Botas, in Turkey. The approximate cost
of that fraction of the pipeline will be $1.4 billion, more or less. The
overall Baku-Ceyhan oil pipeline is estimated at about $2.4 billion, but
that will now be -- that number will become much more specific once basic
and detailed engineering is done.
Q And what prospects do you see for getting a commercially viable
supply of oil through the pipeline? I understand maybe 10 percent of what
is needed is now being produced.
SENIOR ADMINISTRATION OFFICIAL: We believe that in some ways, the
discussions have revolved around the oil that is available to AIOC. And
what we've been talking about, what Secretary Richardson and other
officials have talked about is a main export pipeline that draws volumes
from both sides of the Caspian, from Kazakhstan and/or Turkmenistan, as
well as Azerbaijan. And even in Azerbaijan, there are volumes and
potential volumes beyond AIOC.
They've always argued that they're the only game in town, and that's
why you couldn't have this pipeline. We've always said that if you take a
good deal to the marketplace, with the right price and the right
construction schedule, that the marketplace will respond. Now we're
finally going to get a chance to see next year whether or not there are the
volumes. We believe there are.
Q Yes, I want to clarify your earlier comments. Turkey's cost
guarantee now is $1.4 billion because that's the fraction of the pipeline
cost that's being built on their territory. Was their earlier cost
guarantee $2.5 billion?
SENIOR ADMINISTRATION OFFICIAL: There was a discussion of whether or
not Turkey would be the turnkey contractor for the whole pipeline, from
Baku -- well, I better do it right -- from Baku all the way to Ceyhan. And
the approximate costs of that pipeline would have been -- or the estimated
costs would have been $2.4 billion. But because of a series of issues that
related to third-country risk, and the difficulty of Turkey guaranteeing
what would happen in Georgia and Azerbaijan. They settled on just building
the Turkish portion and changed the guarantee commensurately.
Q Can I ask another question also? There seems to be a problem in
Georgia actually allocated land for a trans-Caspian gas line. Has that
been resolved yet?
SENIOR ADMINISTRATION OFFICIAL: We're not -- on the gas line, we're
not to that point.
Q But maybe with the pipeline
SENIOR ADMINISTRATION OFFICIAL: What President Shevardnadze will sign
tomorrow is an agreement that he will help facilitate, in a variety of
ways, the early development of a gas pipeline. That will require land
acquisition in Georgia, land that's privately owned. And the companies
will have to go out and buy the land -- but hopefully, with the help or
encouragement of the government.
Q Yes, I have a two-fold question. The first is, how close are you
to some sort of -- how close are you to some sort of financial framework,
first of all? And second of all, how much has the falling price of oil
affected your being able to come to some sort of financial framework
agreement?
SENIOR ADMINISTRATION OFFICIAL: How close are we to a financial
package? I think the financial package is still to be developed. This is
the legal basis, these four documents -- well, it's more than four; it's
six documents: one inter-governmental agreement, three host government
agreements, the turnkey contract and the guarantee. Those are the six
documents that are part of the Baku-Ceyhan package. That's the legal
framework. The next step will be probably early next, or middle next
month, a preliminary meeting of shippers. After the intergovernmental
agreements are ratified by parliaments early in 2000 -- hopefully in
January, 2000 -- then there will be a creation of a main export pipeline
company, those companies that are going to be sponsors of the pipeline.
And then, there will be an open season where shippers will make actual
commitments, and out of that process, the package will be taken to the
marketplace for financing.
Q So you're months away from a financing framework, do you think?
SENIOR ADMINISTRATION OFFICIAL: The financing framework, we are
necessarily months away, because until you have actual shippers in the
room, until you do basic engineering six months, until you do detailed
engineering nine months, until you have the open season and pledges of
through-put, you can't go to the marketplace. There is a lot of work
between creating the legal framework and actually getting a banker to put
$2.4 billion out, or whatever the share they'll put out is.
Q And the second part of the question about the cost of oil, and if
you could explain what you mean by the "turnkey paper" that you're going to
be signing tomorrow?
SENIOR ADMINISTRATION OFFICIAL: Actually, the price of oil has gone
up substantially in the last year from whatever it was, $10, $12 to
whatever it is now. The companies are very conservative in terms of the
dollar -- different companies use different figures, but they're quite
conservative in regard to the current price of oil, so if you assume that
the world economy is going to continue to go forward, that oil prices will
remain firm you have to link a lot of things together -- what will OPEC do,
what will economic growth be.
But if you assume that prices aren't going to come down to last year's
lows, then this pipeline is going to work. The turnkey contract is simply
the choice by Turkey of Botas, their energy pipeline company, to do the
construction of the pipeline in Turkey. And it is a legal contract that
says how far apart the posts will be for the fence and what the capacity of
the pipe will be and thickness of the pipe and pressure of the pipe and a
whole lot of things that I don't begin to understand.
Q Do you need three other turnkey contracts then, to make four --
SENIOR ADMINISTRATION OFFICIAL: There will be contracts for
Azerbaijan and Georgia; that will be done by the MEPCO, the main export
pipeline company, when it's created.
Q I just want to get back to Russia. No matter how you might try
to soft-pedal it, isn't the real significance of this is that this is a
long-term strategic triumph over Russia's historic aspirations and
interests in Central Asia? And how will that strategic defeat for Russia,
do you think, affect U.S.-Russian relations? I mean, you talked about the
intensity of opposition, nationalist opposition, in Russia to this project.
SENIOR ADMINISTRATION OFFICIAL: The answer to that is, I don't
actually still beat my wife.
Q It's not a strategic triumph over Russian interests in Central
Asia?
SENIOR ADMINISTRATION OFFICIAL: No. I mean, look, what we're talking
about is countries which, in 1992, became independent. As independent
countries, the world is really quite different now. And we're talking
about a multiple-pipelines system. Some pipelines will go north to Russia,
following the traditional routes. Other pipelines will go west to
hard-currency markets. It is conceivable that some pipelines -- from
Kazakhstan, for instance, or Turkmenistan, for instance -- may go east,
towards China.
The fact of the matter is that the world on the verge of the new
millennium is quite different that was the last half of the 20th century.
So with countries that are independent, and integrating themselves into the
western marketplace, it makes sense for them to want to have multiple
avenues to export their oil and gas.
Q But even Russian interests and aspirations in Central Asia have
changed.
SENIOR ADMINISTRATION OFFICIAL: The Russians are part of this
package. Lukoil is part of AIOC. The CPC pipeline goes through Russia to
Novorossisk. We would welcome Russian oil into Baku-Ceyhan. So it's not
excluding them; it's just a different kind of cooperation.
Q On the second of the two early pipelines you mentioned, one
that's been shut down due to the fighting in Chechnya. Could you tell us
what the points -- where that pipeline begins and ends, how much oil it
moves, when it opened and when it got shut down?
SENIOR ADMINISTRATION OFFICIAL: It was shut down earlier this -- it
operates on and off. It was shut down earlier this summer, and is on and
off. It goes from Baku to Novorossisk. And I forget how much oil it
carries. But maybe we can find that out for you.
Q Can you address the issue that Doctor --
SENIOR ADMINISTRATION OFFICIAL: About 100,000 barrels a day, I think;
maybe a little bit more.
Q Dr. Brzezinsky raised the issue in connection with this, that to
the extent that the Russians keep hammering away at the Chechnyans, it puts
pressure -- continues to put pressure on Shevardnadze, and it sort of
raises the issue of what is the strategic importance or value of a pipeline
that goes through a Georgia that's going to be under Russia's thumb one way
or the other?
SENIOR ADMINISTRATION OFFICIAL: Well, we actually have welcomed the
democratic elections a few weeks ago. We think that Georgia is making
progress in terms of -- remarkable progress in terms of developing
participatory democracy and in terms of addressing a series of issues that
they need to. And we are quite confident that that support for Georgia --
which we give and is important to the countries of the region -- is going
to continue.
We strongly support the idea of Georgian independence, and the
pipelines, the multiple-pipeline strategy in the east-west energy corridor,
which is part of a vision that President Shevardnadze has helped to set,
he's talked a lot about an east-west transportation corridor -- all of
these things provide kind of the economic and political ties which will
help to strengthen Georgia's independence and help them to develop their
links to the west.
Q I have two questions. Back on Russia -- there were reports that
the Russian Deputy Foreign Minister and Energy Minister went to Baku this
weekend to try to scuttle this deal. Do you know anything about that, and
do you worry that they may continue to try to undermine this?
The second question is, you're making this sound like a done deal,
that after the documents are signed tomorrow, that this will all happen.
Isn't it true that some in the Azari Consortium have not signed off on this
and have grave concerns about the feasibility of it?
SENIOR ADMINISTRATION OFFICIAL: On the first question, I will simply
tell you that I guess what you say is true; I was here, but I read what you
said, or read that he visited, but President Aliyev will be one of the
presidents who signs the documents tomorrow for Baku-Ceyhan and for the
trans-Caspian gas pipeline.
On the question of a done deal, if that's what you thought, what I was
trying to say is, this is a first step, but there is a whole lot of work
that is going to remain, that will need to be done, to bring these
pipelines to fruition. But this first step is quite historic, this kind of
cooperation, this kind of economic and political cooperation just hasn't
happened among these countries.
But the work that will be required -- I mean, signing on the 18th,
we'll all wear our coats, ties; you know, we'll look spiffy -- but it's
back to work right on the 19th, because if these pipelines are to arrive on
time in 2004 and 2002 for the gas pipeline, there's not a second to lose.
In fact, the same senior spokesman who spoke in Ankara also said there last
week that it's already time to be working on planning the next phase: how
will Turkey build the pipeline? How will Botas do it? You know, how will
the project be financed? All of those issues are issues that need to start
working right now.
This is a tight, tight time schedule that is going to be necessary to
do this. The scope of this project is very ambitious. There are many ways
that the process could be detoured. But we believe that the momentum that
will come out of Istanbul tomorrow will help to keep the projects going
forward. And that's why it is such a significant event for these
presidents to be signing these documents.
Q To get back to the question of the President's role tomorrow, you
said that he will be a witness, essentially, to the signing of these
documents. Can you elaborate some? While he may not be making specific
commitments of the United States, at least symbolically what is his role
and what does it mean to have the President of the United States as a
witness on these documents?
SENIOR ADMINISTRATION OFFICIAL: I think that's summed up in the
effort that we have made for several years to help the countries to move
forward. The Vice President, Secretaries Pena and Richardson, and then the
constant engagement of the President's Special Advisor for Caspian Basin
Energy Diplomacy -- all of these are part of -- and, of course, our
ambassadors and embassies in the region. All of this has been part of a
constant diplomatic effort. And I can tell you that having watched --
actually, having watched very closely the negotiations over the last three
months, it is clear that without the continued support -- and, indeed, the
continued -- I don't want to say pressure, but the continued engagement of
the United States diplomatically -- it is difficult to imagine that these
agreements would have come together.
We didn't do this alone. Turkey has played a key role. But so has
each one of the governments that will be involved tomorrow. There have
been compromises. There has been cooperation that just hasn't happened
before. But I think it would be fair to say that the President and the
Vice President, the Secretary of Energy and others, Secretary of State,
because I've heard her talk in several meetings with regional leaders about
the importance of this. Without our engagement, these projects might have
taken longer.
The President will indicate tomorrow that we intend to remain fully
and actively engaged to help realize these projects.
Q There was another project called the Blue Stream that has been
under negotiation to bring gas from Russia into Turkey. Is the project
still on, and would it be in competition with this project, or can both of
them go on at the same time?
SENIOR ADMINISTRATION OFFICIAL: I really can't tell you much about
Blue Stream, it's a Russian project in cooperation with Turkey and
contractors from Italy. I read about it. I know that they are working to
solidify their financial package and to demonstrate their technical
capacity not only to build the pipeline, but to repair it, for instance, if
it breaks under 2000 meters under the Black Sea. It's a project that will
have to stand on its own.
Turkey's gas market is currently about 12 billion cubic meters, but we
expect that to grow over the next 10 years to maybe 50 billion cubic meters
per year. It depends on continued economic reform, et cetera. But our
interest is in getting the trans-Caspian gas to Turkey, and to do it by
late 2002. Turkey wants it then, that's what the contract calls for, and
our effort is going to be to get the gas here by then.
Q So the U.S. is not against the project?
SENIOR ADMINISTRATION OFFICIAL: I didn't actually say that, I said
that's a Russian issue.
Q Sir, what would be the planned financial contribution --
SENIOR ADMINISTRATION OFFICIAL: Let me go back to that. We've never
opposed multiple pipelines. They operate in the marketplace and they rise
and fall in the marketplace. The Russians have to build their gas
pipeline, we're not going to worry about their gas pipeline. If it's done
transparently on the basis of the commercial marketplace, the same as we
expect trans-Caspian to be done, then it's each one moving forward on its
own.
Q What would be the planned financial contribution by TDA, OPIC or
Ex-Im to Baku-Ceyhan?
SENIOR ADMINISTRATION OFFICIAL: The TDA contribution has been in
terms of feasibility studies, support for technical advisors, legal and
financial advisors for the different countries, and we'll see how much more
of that will happen. I think, for instance, they've provided $1.3 million
to Turkey in terms of technical assistance during the negotiation phase.
The dollar value of Ex-Im or OPIC financial support is going to
develop and it's going to depend on the nature of the commercial deal. If
you can tell me how much the U.S. goods and services will be, for instance,
I would tell you that Ex-Im might cover 85 percent of the value of U.S.
goods and services in the Baku-Ceyhan pipeline. How much U.S. content
there is, it remains to be developed.
Q One of the issues that we didn't go over yet is what do the
countries actually get out of the pipeline now? Presumably, they get some
income from the pipeline. Is that based on a royalty? Can you just talk
about that? Is it significant for any of these countries like Azerbaijan?
SENIOR ADMINISTRATION OFFICIAL: For Kazakhstan or Turkmenistan or
Azerbaijan, all of which are resource producers, Kazakhstan, if they choose
to commit oil to the pipeline or the companies in Kazakhstan or the
companies in Azerbaijan, there will be upstream revenue from the production
of oil, and there will be transit revenue from the passage of the oil
through individual countries. For Georgia, it is basically transit
revenue, but if somebody was describing to me, if you have a pipeline going
through your country and you negotiate a firm contract of supply for, let's
say, oil, you could then develop an oil refinery.
So if oil costs $140 a ton and you refine it in-country and you sell
the product for $200 or $300 a ton, you get that value added in-country.
So it's not just the transit revenue; from the oil pipeline, you can get
the material for oil refining; from the gas pipeline, you can get gas
supply.
For Turkey, it is several things. And I think -- one thing I didn't
mention in my opening remarks, one reason why the signing ceremony will
take place -- and this is the fifth reason, I'm not sure where -- I must
have missed it -- this is the fifth and a very important reason for Turkey,
for Baku-Ceyhan. And that is, the Bosphorus cannot sustain ever-growing
transit of oil from the Black Sea to the Mediterranean. This is the heart
-- I mean, Bosphorus means "throat" -- but this is really the heart of
Turkey. And the idea that there can be an ever-increasing traffic of oil
tankers carrying ever-larger amounts of oil without a safety and
environmental risk is just not there.
So for Turkey, on oil they not only begin to level off the risk that
they face in the Bosphorus from a serious ecological disaster, but the oil
that comes through to Ceyhan can help to create economic activity in a
reasonably depressed part of Turkey.
And the gas supply is absolutely vital. And over time, trans-Caspian
-- the gas from Turkmenistan, probably also from Azerbaijan; gas from Blue
Stream eventually -- all of those are going to be needed as Turkey's
economy grows.
MR. HAMMER: All right. Thank you very much.
END 7:50 P.M. (L)
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