Text: Policy Group Recommends Stronger Global Energy Alliances

17 May 2001

Text: Policy Group Recommends Stronger Global Energy Alliances

Energy security should be a priority of U.S. trade and foreign policy, according to the administration's National Energy Policy report released May 17.

The report recommends support of an initiative to expand investment in trade-related goods and services and reviewing trade sanctions, taking into consideration energy security. The report was developed by the National Energy Policy Development Group (NEPD) established by President Bush early in his administration.

The report says the United States should work through the International Energy Agency (IEA) to ensure that net oil-importing member states have at least 90 days of oil reserves and to encourage major oil-consuming countries to develop strategic oil reserves. It urges more international cooperation on finding alternatives to oil, especially for transportation.

The United States should work with companies and countries to support the Baku-Tbilisi-Ceyhan oil pipline and Shah Deniz natural gas pipeline, the report says. Research into global climate change is recommended to identify environmentally sound and cost-effective ways to use market mechanisms and incentives and to develop new technologies.

The report includes a summary of the NEPD's recommendations to the president on international aspects of energy policy in Chapter 8, "Strengthening Global Alliances: Enhancing National Energy Security and International Relationships."

For more information on the energy policy, go to http://usinfo.state.gov/global/energy/.

Following are terms and abbreviations used in the text:

-- BTC: Baku-Tbilisi-Ceyhan
-- PSA: Production Sharing Agreement
-- APEC: Asia-Pacific Economic Cooperation forum
-- SPR: Strategic Petroleum Reserve

Following is text from the report summarizing the Chapter 8 recommendations on national energy security and international relationships:

CHAPTER 8 -- Strengthening Global Alliances: Enhancing National Energy Security and International Relationships

The NEPD Group recommends that the President make energy security a priority of our trade and foreign policy.

The NEPD Group recommends the President support initiatives by Saudi Arabia, Kuwait, Algeria, Qatar, the UAE, and other suppliers to open up areas of their energy sectors to foreign investment.

The NEPD Group recommends that the President direct the Secretaries of State, Energy and Commerce work to improve dialogue among energy producing and consuming nations.

The NEPD Group recommends that the President direct the Secretaries of State, Commerce, and Energy to continue supporting American energy firms competing in markets abroad and use our membership in multilateral organizations, such as the Asia-Pacific Economic Cooperation (APEC) forum, the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO) Energy Services Negotiations, the Free Trade Area of the Americas (FTAA), and our bilateral relationships to implement a system of clear, open, and transparent rules and procedures governing foreign investment; to level the playing field for U. S. companies overseas; and to reduce barriers to trade and investment.

The NEPD Group recommends that the President direct the Secretaries of Commerce and Energy, and the U. S. Trade Representative, to support a sectoral trade initiative to expand investment and trade in energy-related goods and services that will enhance exploration, production, and refining, as well as the development of new technologies.

The NEPD Group recommends that the President direct the Secretaries of State, Treasury, and Commerce to initiate a comprehensive review of sanctions. Energy security should be one of the factors considered in such a review.

The NEPD Group recommends that the President direct the Secretaries of State, Commerce, and Energy to engage in a dialogue through the North American Energy Working Group to develop closer energy integration among Canada, Mexico, and the United States and identify areas of cooperation, fully consistent with the countries' respective sovereignties.

The NEPD Group recommends that the President direct the Secretaries of Energy and State, in consultation with the Federal Energy Regulatory Commission, to review their respective oil, natural gas, and electricity cross-boundary "Presidential Permitting" authorities, and to propose reforms as necessary in order to make their own regulatory regimes more compatible for cross-border trade.

The NEPD Group recommends that the President direct the Secretaries of Energy and State, coordinating with the Secretary of the Interior and the Federal Energy Regulatory Commission, to work closely with Canada, the State of Alaska, and all other interested parties to expedite the construction of a pipeline to deliver natural gas to the lower 48 states. This should include proposing to Congress any changes or waivers of law pursuant to the Alaska Natural Gas Transportation Act of 1976 that may be required. The NEPD Group recommends that the President direct the Secretaries of State and Commerce to conclude negotiations with Venezuela on a Bilateral Investment Treaty, and propose formal energy consultations with Brazil, to improve the energy investment climate for the growing level of energy investment flows between the United States and each of these countries.

The NEPD Group recommends that the President direct the Secretaries of Energy, Commerce, and State to work through the Summit of the Americas Hemispheric Energy Initiative to develop effective and stable regulatory frameworks and foster reliable supply sources of all fuels within the region.

The NEPD Group recommends that the President direct the Secretaries of State, Energy, and Commerce to reinvigorate the U. S.-Africa Trade and Economic Cooperation Forum and the U. S.-African Energy Ministerial process; deepen bilateral and multilateral engagement to promote a more receptive environment for U. S. oil and gas trade, investment, and operations; and promote geographic diversification of energy supplies, addressing such issues as transparency, sanctity of contracts, and security.

The NEPD Group recommends that the President direct the Secretaries of State, Commerce, and Energy to support more transparent, accountable, and responsible use of oil resources in African producer countries to enhance the stability and security of trade and investment environments.

The NEPD Group recommends that the President direct the Secretaries of State, Commerce, and Energy to support the BTC oil pipeline as it demonstrates its commercial viability.

The NEPD Group recommends that the President direct the Secretaries of Commerce, State, and Energy to continue working with relevant companies and countries to establish the commercial conditions that will allow oil companies operating in Kazakhstan the option of exporting their oil via the BTC pipeline.

The NEPD Group recommends that the President direct the Secretaries of State, Commerce, and Energy to support the efforts of private investors and regional governments to develop the Shah Deniz gas pipeline as a way to help Turkey and Georgia diversify their natural gas supplies and help Azerbaijan export its gas via a pipeline that will continue diversification of secure energy supply routes.

The NEPD Group recommends that the President direct appropriate federal agencies to complete the current cycle of oil spill response readiness workshops and to consider further appropriate steps to ensure the implementation of the workshops' recommendations.

The NEPD Group recommends that the President direct the Secretary of State to encourage Greece and Turkey to link their gas pipeline systems to allow European consumers to diversify their gas supplies by purchasing Caspian gas.

The NEPD Group recommends that the President direct the Secretaries of Commerce, Energy, and State to deepen their commercial dialogue with Kazakhstan, Azerbaijan, and other Caspian states to provide a strong, transparent, and stable business climate for energy and related infrastructure projects.

The NEPD Group recommends that the President direct the Secretaries of State, Commerce, and Energy to deepen the focus of the discussions with Russia on energy and the investment climate.

The NEPD Group recommends that the President direct the Secretaries of Commerce, State, and Energy to assist U. S. companies in their dialogue on the investment and trade climate with Russian officials, to encourage reform of the PSA law and other regulations and related tax provisions, as well as general improvements in the overall investment climate. This will help expand private investment opportunities in Russia and will increase the international role of Russian firms.

The NEPD Group recommends that the President direct the Secretaries of State, Commerce, and Energy to continue to work in the APEC Energy Working Group to examine oil market data transparency issues and the variety of ways petroleum stocks can be used as an option to address oil market disruptions.

The NEPD Group recommends that the President direct the Secretaries of State and Energy to work with India's Ministry of Petroleum and Natural Gas to help India maximize its domestic oil and gas production.

The NEPD Group recommends that the President direct the Secretaries of Commerce, State, and Energy to promote market-based solutions to environmental concerns; support exports of U. S. clean energy technologies and encourage their overseas development; engage bilaterally and multilaterally to promote best practices; explore collaborative international basic research and development in energy alternatives and energy-efficient technologies; and explore innovative programs to support the global adoption of these technologies.

The NEPD Group recommends that the President direct federal agencies to support continued research into global climate change; continue efforts to identify environmentally and cost-effective ways to use market mechanisms and incentives; continue development of new technologies; and cooperate with allies, including through international processes, to develop technologies, market-based incentives, and other innovative approaches to address the issue of global climate change.

The NEPD Group recommends that the President seek to increase international cooperation on finding alternatives to oil, especially for the transportation sector.

The NEPD Group recommends that the President direct the Secretary of State to reinvigorate its dialogue with the European Union on energy issues, and resume the consultative process this year in Washington.

The NEPD Group recommends that the President promote a coordinated approach to energy security by calling for an annual meeting of G-8 Energy Ministers or their equivalents.

The NEPD Group recommends that the President reaffirm that the SPR is designed for addressing an imminent or actual disruption in oil supplies, and not for managing prices.

The NEPD Group recommend that the President direct the Secretary of Energy to work within the International Energy Agency (IEA) to ensure that member states fulfill their stockholding.

The NEPD Group recommends that the President direct the Secretary of Energy to encourage major oil-consuming countries that are not IEA members to consider strategic stocks as an option for addressing potential supply disruptions. In this regard, we should work closely with Asian economies, especially through APEC.

The NEPD Group recommends that the President direct the Secretary of Energy offer to lease excess SPR storage facilities to countries (both IEA and non-IEA members) that might not otherwise build storage facilities or hold sufficient strategic stocks, consistent with statutory authorities.

The NEPD Group recommends that the President, at such time that exchanged SPR barrels are returned to the SPR, should determine whether offshore Gulf of Mexico royalty oil deposits to the SPR should be resumed, thereby increasing the size of our reserve.

The NEPD Group recommends that the President direct the Secretary of Energy to work closely with Congress to ensure that our SPR protection is maintained.

The NEPD Group recommends that the President direct the Secretary of Energy to work with producer and consumer country allies and the IEA to craft a more comprehensive and timely world oil data reporting system.

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