European and eurasian energy: developing capabilities for security and prosperity

Chairman Burton, Ranking Member Meeks, Members of the Committee:

It is a great pleasure to be here today to talk about one of the important pillars of U. S. diplomacy, energy security. I’d like to thank the Committee for inviting me to talk to you about what the U. S. is doing with regard to energy security. We’ll examine the overall U. S. Eurasian energy strategy and then discuss the specific areas where we are implementing it.

What is the U. S. strategy?
There are three main components of our Eurasian energy strategy. First, we want to encourage the development of new oil and gas resources and also promote efficiency and conservation in the use of all energy resources. Because there is a world market for oil, new production contributes to meeting growing demand anywhere in the world, including in the United States. When we are talking about new natural gas production in the Caspian region, it is unlikely that any of that gas will reach the U. S., but it is still important because it will add to international gas supply. Additional supply in one place naturally frees up supply in another. As the market for liquefied natural gas continues to grow, we can start to think about gas moving around markets in much the same way oil does.

Second, we want to assist Europe in its quest for energy security. With the combination of goods and services, the EU27 and the U. S. account for the largest bilateral trade and investment relationship in the world. Europe is our partner on any number of global issues from Afghanistan to Libya to the Middle East, from human rights to free trade. We have an interest in an economically strong Europe. Of course, Europe is composed of many different states and energy security is a more pressing issue to some than to others. Some countries in Europe do not have a diverse energy mix and depend largely on a single supplier and transport route. When that route is disrupted, as we witnessed in January 2009,

the consequences can be severe.

The populations of Bulgaria and Serbia and others who suffered in the cold can attest to that. So our aim is to encourage the development of a balanced and diverse energy strategy with multiple energy sources with multiple routes to market. This approach furthers competitive, efficient markets and the best prices for consumers.

Third, we want to help Caspian and Central Asian countries find new routes to market. We want to help foster economic growth and prosperity in these countries. By expanding export routes, they can increase competition for their resources, demand a fair price, and create strong links to the global economy. These countries should also be able to make their own independent choices regarding how they deal with energy resources.

How will we achieve our energy security goals?
Energy markets work best when free market forces drive decisions on how oil and gas are produced, transported, and purchased. This is normally the case for private firms and can even be the case for state-owned oil and gas companies. But governments can and should play a facilitating role. Governments should put in place the right business climate to attract investment and should work with neighboring states to expand the market and increase interconnectivities. We can encourage these efforts, and work with our partners to create the political framework in which businesses and commercial projects can thrive.

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European and eurasian energy: developing capabilities for security and prosperity