Richard Morningstar
Special Envoy for Eurasian Energy
Prague, Czech Republic
May 8, 2009

Thank you to Prime Minister Topolanek and President Barroso for organizing this summit and thank you for inviting the U.S. to take part, as an observer, in an important strategic moment here in Prague. President Obama and Secretary of State Clinton share your support for the Southern Corridor and consider Eurasian energy issues to be of the highest importance. I can tell you that Secretary Clinton has a direct interest in this conference and is looking forward to hearing the results.

Given current global financial and economic conditions, it is more important than ever to have a reliable international energy supply. Greater energy interconnectivity, competitiveness, and transparency will increase energy security and propel economic development and prosperity.

The United States fully supports the efforts reiterated here today, to think strategically as we further develop a Southern Corridor. We also strongly believe that a Southern Corridor will ultimately mean little without Europe taking the necessary steps for interconnectivity.

I will briefly address the three questions:

1. What is your basic approach to the Caspian Development Corporation (CDC) concept?

We endorse the European Commission's proposal for a World Bank CDC feasibility study to examine, define and refine the CDC concept and have expressed our support to the World Bank. The proposed World Bank study will help guide the CDC concept and ensure it supports Commission goals.

Why is the CDC concept important? It is a vehicle that will give comfort to Turkmenistan to ship gas to its borders and the west and allow international companies to help Turkmenistan to develop upstream production onshore. The key issue is to increase upstream development of Turkmenistan’s gas reserves, both off-shore and on-shore, on a non-discriminatory basis.

We must also focus on achieving resolution of other critical issues, Turkey and the EU reaching an IGA before the end of June, reaching a gas transit agreement between Turkey and Azerbaijan. If the United States can help these processes in a constructive way without interfering we are ready and willing.

2. On which principles should the transit conditions of the Corridor be based and what do you identify as possible obstacles?

The G8 St. Petersburg Energy Principles form a sound foundation for principles that can be applied to transit conditions, as well as the principles adopted at the Sofia summit two weeks ago and today here in Prague. Free market forces and the private sector should be the primary means through which gas is produced, transported and purchased. Governments can and should play a necessary role to facilitate achieving our goals in the region. Transparency and the respect for the rule of law are essential principles that must be applied.

The United States shares the view expressed in the Joint Declaration that interconnections are a "basic prerequisite" for developing the Southern Corridor. Interconnectivity maximizes the potential of Southern Corridor projects, such as Nabucco and ITGI; likewise, when these projects add diverse sources and routes to an interconnected market, they act as protection against supply disruptions. Nabucco opens up many possibilities for enhancing European energy security, though it is not a cure-all. Nabucco, of course, will also contribute to the development of countries in the region.

3. Which volumes can be realistically identified and allocated to the Southern Corridor?

Azerbaijani gas is the only realistically available gas in the short term, but accessing it requires agreement with Turkey on transit terms. We must also concentrate on other sources, such as Turkmenistan, Iraq, Kazakhstan, Uzbekistan, Egypt, and other related countries.