|                                                                                                                                                             |  | FROM THE U.S. OMBUDSMAN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               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|**BISNISHome PageSearchBISNISEmbassyReportsCountryReportsIndustryReportsPublicationsSourcesof FinanceLeadsand EventsExchangeRatesState ExportsOtherSources** |  | **July 1998**The oil and gas resources of the Caspian region are of very great economic importance to the United States.  U.S.
companies plan to invest billions of dollars in the region, which of course could bring great benefit to all Americans
through reliable energy access at reasonable prices.  As a result, a major component of my work as NIS
Ombudsman is to promote our commercial as well as our broader interests in the Caspian Basin.Goals
American goals in the Caspian Basin are to:  1) support the independence and prosperity of all the states in the
region,       2) promote regional cooperation and conflict resolution, 3) ensure that Caspian export routes serve to
diversify, not concentrate, world energy supplies, and 4) maximize commercial opportunities for American
companies.  The United States has pursued several strategies to achieve these goals.  We promote the building of
multiple pipelines on commercial terms particularly east-west pipelines to transport Caspian oil and gas to
world markets.  We help to resolve disputes concerning Caspian demarcation, which would expedite the building
of an east-west transportation corridor through the region.  We promote cooperation among the companies and
the countries of the Caspian region, and encourage the most efficient system of exporting petroleum--the
aggregation of volumes from several countries to increase economies of scale.  We also encourage the countries in
the region to create an attractive business climate for foreign investment.It should be noted that the U.S. Government welcomes signs of positive change in Iran.  Nevertheless, we oppose
the construction of pipelines from the region to or through Iran.  Iran is a competitor, not a partner, for the
Caspian states when it comes to oil and gas exports.  It is against our energy security interest for more oil and gas
to go through the Straight of Hormuz.  Furthermore, according to some recent cost estimates, building an oil
pipeline across the Caspian to the Mediterranean is more cost effective than a pipeline running south from
Kazakhstan to the Persian Gulf.Recent Activities
In recent months, my work as Ombudsman has included two trips to the Caspian region, during which I pressed
for a quick resolution of Caspian delimitation issues, emphasized the need to aggregate oil and gas volumes from
the eastern Caspian states, and encouraged regional leaders to avoid dependence upon Iran as an oil and gas
transportation route.  These trips also involved continued advocacy for U.S. petroleum and nonpetroleum
companies in the Caspian region.  In the United States, several meetings were held with Turkmenistani officials
during President Saparmurat Niyazov's visit to Washington in April, and I spoke at the annual meetings of the
U.S.-Azerbaijan and U.S.-Uzbekistan chambers of commerce.  In Istanbul last May, I conducted a series of
bilateral meetings with NIS representatives during the U.S. Trade and Development Agency (TDA) "Crossroads
of the World" Conference and addressed the "Tale of Two Seas" Conference sponsored by Cambridge Energy
Research Associates.In April, Assistant Secretary of Energy Robert Gee and I co-led an interagency delegation to Azerbaijan,
Kazakhstan, and Uzbekistan.  In Azerbaijan, we urged the leadership to work with Turkmenistan to solve the
Caspian delimitation issue, emphasized the need for the aggregation of oil volumes from the eastern Caspian states
to increase the cost-effectiveness of the Main Export Pipeline, and provided specific suggestions for improvements
in the Kazakhstani investment climate.  We also expressed strong U.S. opposition to energy development in and
transportation to and through Iran.  In Uzbekistan, I emphasized the need for improvements in the commercial
environment, specifically the need to move towards a freely convertible currency, and provided advocacy for
several U.S. companies.During a meeting with Turkmenistani President Niyazov in April, Deputy Secretary of Commerce David Mallet
and I pushed strongly for bilateral talks with Azerbaijan on the Caspian delimitation issue and for regional
cooperation on a trans-Caspian pipeline.  During our meeting, we also discussed two recent and two upcoming 
signings of commercial agreements between the Government of Turkmenistan and U.S. oil companies.  To
encourage more such transactions in the future, we emphasized to President Niyazov the need for Turkmenistan
to adopt transparent legislation and regulations to improve the commercial environment and attract foreign
investment.Following on earlier contacts, I also visited the Caspian region in late May and early June, meeting with the
presidents and other leaders in Azerbaijan and Georgia.  During these meetings, we reiterated U.S. opposition to
construction of a pipeline to or through Iran, strongly encouraged the development of trans-Caspian and Baku-Ceyhan transportation routes, and discussed ways to strengthen the environment for future trade and
investment.Jan Kalicki
Counselor to the U.S. Department of Commerce and
U.S. Ombudsman for Energy and Commercial Cooperation
with the New Independent StatesThis report is provided courtesy of the Business Information Service for the Newly Independent
States (BISNIS)