- Jeff,
-
- Attached is a telling excerpt from Congress in
1998:
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- Link
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- It's patently obvious to me now, that this entire
horrendous
situation has been deliberately engineered to sieze control of these vast
oil and gas reserves by the NWO. I'm sick for America. Read on...
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- U.S. INTERESTS IN THE CENTRAL ASIAN REPUBLICS HEARING
BEFORE THE SUBCOMMITTEE ON ASIA AND THE PACIFIC OF THE COMMITTEE ON
INTERNATIONAL
RELATIONS HOUSE OF REPRESENTATIVES
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- ONE HUNDRED FIFTH CONGRESS SECOND SESSION
FEBRUARY 12, 1998
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- Next we would like to hear from Mr. John J. Maresca,
vice president of international relations, Unocal Corporation. You may
proceed as you wish.
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- STATEMENT OF JOHN J. MARESCA, VICE PRESIDENT
OF INTERNATIONAL RELATIONS, UNOCAL CORPORATION
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- Mr. Maresca. Thank you, Mr. Chairman. It's nice to see
you again. I am John Maresca, vice president for international relations
of the Unocal Corporation. Unocal, as you know, is one of the world's
leading
energy resource and project development companies. I appreciate your
invitation
to speak here today. I believe these hearings are important and timely.
I congratulate you for focusing on Central Asia oil and gas reserves and
the role they play in shaping U.S. policy.
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- I would like to focus today on three issues. First, the
need for multiple pipeline routes for Central Asian oil and gas resources.
Second, the need for U.S. support for international and regional efforts
to achieve balanced and lasting political settlements to the conflicts
in the region, including Afghanistan. Third, the need for structured
assistance
to encourage economic reforms and the development of appropriate investment
climates in the region. In this regard, we specifically support repeal
or removal of section 907 of the Freedom Support Act.
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- Mr. Chairman, the Caspian region contains tremendous
untapped hydrocarbon reserves. Just to give an idea of the scale, proven
natural gas reserves equal more than 236 trillion cubic feet. The region's
total oil reserves may well reach more than 60 billion barrels of oil.
Some estimates are as high as 200 billion barrels. In 1995, the region
was producing only 870,000 barrels per day. By 2010, western companies
could increase production to about 4.5 million barrels a day, an increase
of more than 500 percent in only 15 years. If this occurs, the region would
represent about 5 percent of the world's total oil production.
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- One major problem has yet to be resolved: how to get
the region's vast energy resources to the markets where they are needed.
Central Asia is isolated. Their natural resources are landlocked, both
geographically and politically. Each of the countries in the Caucasus and
Central Asia faces difficult political challenges. Some have unsettled
wars or latent conflicts. Others have evolving systems where the laws and
even the courts are dynamic and changing. In addition, a chief technical
obstacle which we in the industry face in transporting oil is the region's
existing pipeline infrastructure.
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- Because the region's pipelines were constructed during
the Moscow-centered Soviet period, they tend to head north and west toward
Russia. There are no connections to the south and east. But Russia is
currently
unlikely to absorb large new quantities of foreign oil. It's unlikely to
be a significant market for new energy in the next decade. It lacks the
capacity to deliver it to other markets.
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- Two major infrastructure projects are seeking to meet
the need for additional export capacity. One, under the aegis of the
Caspian
Pipeline Consortium, plans to build a pipeline west from the northern
Caspian
to the Russian Black Sea port of Novorossiysk. Oil would then go by tanker
through the Bosporus to the Mediterranean and world markets.
-
- The other project is sponsored by the Azerbaijan
International
Operating Company, a consortium of 11 foreign oil companies, including
four American companies, Unocal, Amoco, Exxon and Pennzoil. This consortium
conceives of two possible routes, one line would angle north and cross
the north Caucasus to Novorossiysk. The other route would cross Georgia
to a shipping terminal on the Black Sea. This second route could be
extended
west and south across Turkey to the Mediterranean port of Ceyhan.
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- But even if both pipelines were built, they would not
have enough total capacity to transport all the oil expected to flow from
the region in the future. Nor would they have the capability to move it
to the right markets. Other export pipelines must be built.
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- At Unocal, we believe that the central factor in planning
these pipelines should be the location of the future energy markets that
are most likely to need these new supplies. Western Europe, Central and
Eastern Europe, and the Newly Independent States of the former Soviet Union
are all slow growth markets where demand will grow at only a half a percent
to perhaps 1.2 percent per year during the period 1995 to 2010.
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- Asia is a different story all together. It will have
a rapidly increasing energy consumption need. Prior to the recent
turbulence
in the Asian Pacific economies, we at Unocal anticipated that this region's
demand for oil would almost double by 2010. Although the short-term
increase
in demand will probably not meet these expectations, we stand behind our
long-term estimates.
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- I should note that it is in everyone's interest that
there be adequate supplies for Asia's increasing energy requirements. If
Asia's energy needs are not satisfied, they will simply put pressure on
all world markets, driving prices upwards everywhere.
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- The key question then is how the energy resources of
Central Asia can be made available to nearby Asian markets. There are two
possible solutions, with several variations. One option is to go east across China, but this would mean constructing a pipeline of more than 3,000 k
ilometers
just to reach Central China. In addition, there would have to be a
2,000-kilometer
connection to reach the main population centers along the coast. The
question
then is what will be the cost of transporting oil through this pipeline,
and what would be the netback which the producers would receive.
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- For those who are not familiar with the terminology,
the netback is the price which the producer receives for his oil or gas
at the wellhead after all the transportation costs have been deducted.
So it's the price he receives for the oil he produces at the
wellhead.
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- The second option is to build a pipeline south from
Central
Asia to the Indian Ocean. One obvious route south would cross Iran, but
this is foreclosed for American companies because of U.S. sanctions
legislation.
The only other possible route is across Afghanistan, which has of course
its own unique challenges. The country has been involved in bitter warfare
for almost two decades, and is still divided by civil war. From the outset,
we have made it clear that construction of the pipeline we have proposed
across Afghanistan could not begin until a recognized government is in
place that has the confidence of governments, lenders, and our
company.
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- Mr. Chairman, as you know, we have worked very closely
with the University of Nebraska at Omaha in developing a training program
for Afghanistan which will be open to both men and women, and which will
operate in both parts of the country, the north and south.
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- Unocal foresees a pipeline which would become part of
a regional system that will gather oil from existing pipeline
infrastructure
in Turkmenistan, Uzbekistan, Kazakhstan and Russia. The 1,040-mile long
oil pipeline would extend south through Afghanistan to an export terminal
that would be constructed on the Pakistan coast. This 42-inch diameter
pipeline will have a shipping capacity of one million barrels of oil per
day. The estimated cost of the project, which is similar in scope to the
trans-Alaska pipeline, is about $2.5 billion.
-
- Given the plentiful natural gas supplies of Central Asia,
our aim is to link gas resources with the nearest viable markets. This
is basic for the commercial viability of any gas project. But these
projects
also face geopolitical challenges. Unocal and the Turkish company Koc
Holding
are interested in bringing competitive gas supplies to Turkey. The proposed
Eurasia natural gas pipeline would transport gas from Turkmenistan directly
across the Caspian Sea through Azerbaijan and Georgia to Turkey. Of course
the demarcation of the Caspian remains an issue.
-
- Last October, the Central Asia Gas Pipeline Consortium,
called CentGas, in which Unocal holds an interest, was formed to develop
a gas pipeline which will link Turkmenistan's vast Dauletabad gas field
with markets in Pakistan and possibly India. The proposed 790-mile pipeline
will open up new markets for this gas, traveling from Turkmenistan through
Afghanistan to Multan in Pakistan. The proposed extension would move gas
on to New Delhi, where it would connect with an existing pipeline. As with
the proposed Central Asia oil pipeline, CentGas can not begin construction
until an internationally recognized Afghanistan Government is in
place.
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- The Central Asia and Caspian region is blessed with
abundant
oil and gas that can enhance the lives of the region's residents, and
provide
energy for growth in both Europe and Asia. The impact of these resources
on U.S. commercial interests and U.S. foreign policy is also significant.
Without peaceful settlement of the conflicts in the region, cross-border
oil and gas pipelines are not likely to be built. We urge the
Administration
and the Congress to give strong support to the U.N.-led peace process in
Afghanistan. The U.S. Government should use its influence to help find
solutions to all of the region's conflicts.
-
- U.S. assistance in developing these new economies will
be crucial to business success. We thus also encourage strong technical
assistance programs throughout the region. Specifically, we urge repeal
or removal of section 907 of the Freedom Support Act. This section unfairly
restricts U.S. Government assistance to the government of Azerbaijan and
limits U.S. influence in the region.
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- Developing cost-effective export routes for Central Asian
resources is a formidable task, but not an impossible one. Unocal and other
American companies like it are fully prepared to undertake the job and
to make Central Asia once again into the crossroads it has been in the
past. Thank you, Mr. Chairman.
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- [The prepared statement of Mr. Maresca appears in the
appendix.]
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