[Congressional Record Volume 151, Number 33 (Thursday, March 17, 2005)]
[Extensions of Remarks]
[Pages E467-E468]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 UNITED STATES AND RUSSIA ENERGY DIALOG

                                 ______
                                 

                           HON. PETE SESSIONS

                                of texas

                    in the house of representatives

                       Wednesday, March 16, 2005

  Mr. SESSIONS. Mr. Speaker, much attention has been paid to the recent 
conversations President Bush and President Putin have had about 
democracy. Less attention has been paid to their other discussions 
regarding market economics, supply and demand, and U.S. energy 
security.
  Although there are varying ideas in American political discourse 
about the proper role of government, in the post-September 11th world 
there can be no disagreement that our government's main concern is 
security of American citizens. National security discussions usually 
focus on threats to public safety, but I would like to call attention 
to a less-noticed facet of American security: the importance of our 
energy security. One of the great strengths of our nation is our access 
to affordable, reliable energy. Safeguarding that energy security means 
ensuring that access to energy continues.
  In earlier Administrations, energy policies concentrated on lowering 
the United States' increasing dependence on imported oil. But the oil 
embargo of 1973 changed America's approach to energy policy. The focus 
shifted to reducing dependence on other countries to meet our energy 
needs and to minimizing the economic impact of future oil disruptions. 
The measures put in place (enhanced energy efficiency, increased 
industrial fuel switching capabilities, decreased use of oil for power 
generation, and others) altered America's use of energy by decoupling 
energy growth from GDP growth and decreasing our average energy 
intensity, important factors in making the U.S. less vulnerable to oil 
supply disruptions. Other measures such as developing strategic stocks 
(building and filling the strategic petroleum reserve, or SPR), 
developing international institutions to respond collectively to energy 
disruptions, and diversifying the sources of oil imported into the 
United States have brought more certainty and stability to the energy 
market. While energy security policies have not stopped oil disruptions 
(nor stopped the growth of oil imports which are at 58 percent of to 
day's consumption) they have enhanced our ability cope with disruptions 
while limiting economic and market impacts.
  Diversifying the sources of energy refers to both fuel and geographic 
diversity, as well as work to develop other types of energy supplies. 
Increasingly, America is looking to imports of liquefied natural gas 
(LNG) to fill the supply gap with diverse, reliable, long-term supplies 
as United States demand increases, domestic supplies decrease and 
imports from Canada stabilize. The Bush Administration has identified 
liquefied natural gas (LNG) imports as one important way to decrease 
our over-dependence on a small number of countries.
  Russia plays an important role in both gas and oil markets, as the 
location of the world's largest gas reserves and the world's largest 
producer and exporter. In the international oil market, Russia is 
challenging Saudi Arabia as the largest crude oil producer. The Bush 
Administration recognized Russia's increased importance in energy 
markets, and launched an energy dialogue in May 2002 to enhance United 
States investment opportunities in Russia and to enhance Russian 
opportunities for energy trade with the United States.

  Results under the Energy Dialogue have been mixed. American company 
investment opportunities in Russia have been dampened by recent events. 
Despite President Putin's attempts to mollify the international 
investment community by indicating that Russia is open to foreign 
investment, the Russian investment environment has deteriorated through 
actions undermining the rule of law and contract sanctity such as 
renationalizing oil assets and limiting bidding on strategic leases in 
oil, gas, and mining sectors. U.S.-Russian oil trade, however, has been 
stymied through lack of Russian infrastructure (a deepwater port that

[[Page E468]]

would make it economical to ship crude in large vessels to the U.S.) 
and pipeline decisions directing future crude oil shipments to the Far 
East. The more rational, economic choice of a pipeline to the Barents 
Sea in the north of Russia and the development of a deepwater port near 
Murmansk has been delayed despite backing by both Russian and American 
firms.
  But there is positive news coming from the Russian gas market, which 
is dominated by Gazprom, of which the government owns 38 percent. 
Gazprom exports one third of its production to Europe via pipeline 
supplying about 25 percent of Europe's gas needs. Over the last two or 
three decades of service, there has been only one day of interruption 
in gas service due to a payment problem in Belarus. Gazprom now is 
seeking to expand and diversify its markets, through both expansion of 
its pipelines and entry into the LNG trade. Gazprom spoke at the U.S. 
LNG Summit in December 2003, and the U.S. held a workshop at Gazprom's 
headquarters in June 2004, again urging Gazprom to focus on the U.S. 
market. Gazprom President Alexsey Miller signed agreements last year 
with three U.S. multinationals to explore developing Russian gas and 
LNG facilities, and marketing the LNG to the U.S. In fact, Gazprom 
expects to enter the U.S. LNG market indirectly by 2006, and directly 
by 2010. After the summit meeting, the joint communique from President 
Bush and President Putin referred to this issue, saying, ``We are 
interested in increasing U.S. commercial investment in Russia, so as to 
create additional capacity for liquefied natural gas (LNG) in Russia, 
and also with the aim of increasing LNG exports to U.S. markets. We 
would welcome increased Russian oil exports to the world market and an 
increased presence of imports from Russia in the United States.'' That 
would be welcome news to the U.S. market.
  The U.S. must remain engaged in the U.S.-Russia Energy Dialogue, 
despite recent adversities. We should not shrink from discussing these 
setbacks openly, frankly and seriously. But we need to support the May 
2002 agreement to increase energy trade between the U.S. and Russia in 
both oil and gas, since it would enhance U.S. energy security through 
diversity of supply, while helping to stabilize Russia's economy and 
tie its interests to American success. Both countries will benefit from 
a long-term, stable trade in both oil and gas.

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