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                     Office of the Press Secretary
                           (Istanbul, Turkey)
For Immediate Release                                  November 18, 1999
                             PRESS BRIEFING

                            The Conrad Hotel
                           (Istanbul, Turkey)

6:30 P.M. (L)

MR. TOIV: Good evening, everybody. We're going to have three briefings for you this evening -- two here and one in D.C. that will be piped in. First, we're going to have Energy Secretary Bill Richardson and John Wolf, who's title is so long I have to read it: Special Advisor to the President and Secretary of State for Caspian Basin Energy Diplomacy. And they will be briefing, obviously, on the agreement -- the two documents that the President witnessed signing of today on the pipeline agreement.

Then they will be followed by Sandy Berger, who will brief on everything else that happened today. And then we're going to pipe in for you a briefing from D.C. Chief of Staff John Podesta and OMB Director Jack Lew are going to brief on the budget agreement that was reached late last night, in the early hours of this morning. And they will be hopefully following right after Sandy.

So Secretary Richardson.

SECRETARY RICHARDSON: Thank you very much. This is a major foreign policy victory for President Clinton. He's been intensely engaged in the last week to ensure that these two deals go through. This is my third visit to the region in one year. I was here in Turkey 13 months ago to witness the signing of the Ankara Declaration.

What we are witnessing today in the signing of the Baku-Tbilisi-Ceyhan agreement was only a vision back then. We've come a long way. And on the trans-Caspian gas pipeline we've also made significant strides. This is a big day for American diplomacy and for Turkish diplomacy.

Today's signing is the culmination of many months of hard work involving many governments and many Presidents. Today, we congratulated the leaders of these countries for demonstrating that shared economic and political interests, coupled with determination, can overcome traditional rivalries.

This is clearly not the end of the process. While we should celebrate today's oil pipeline agreement and the trans-Caspian Gas Pipeline Declaration, much work remains if we are to achieve our goals. And our ultimate goals extend beyond the completion of these pipelines and, indeed, beyond the energy sector. This is not just another oil and gas deal, and this is not just another pipeline. It is a strategic framework that advances America's national security interests. It is a strategic vision for the future of the Caspian region. And as President Clinton said, these agreements will help fulfill our commitment to the continued prosperity and independence of the Caspian state.

We support these agreements because they will achieve several goals. The development of the Caspian nations' resources will contribute to the nation's economic futures and improve our own nation's energy security, as well as that of Turkey and other allies. It will create and advance commercial opportunities for U.S. companies and other companies around the world.

It will help facilitate the development of their societies into democratic, stable commonwealths, and it will bolster relationships among these states that will support economic and political independence in a region that has been buffeted by too many stresses and strains.

These are tangible benefits which we can all gain. This has been a high priority for President Clinton, and I'm pleased to have been part of this effort. Our government will continue to be actively engaged in this process. Over the next two days, we will assure the Caspian Presidents directly that we will play a supportive role, especially in financing options, as we enter the next phase, which brings us closer to the construction of the Baku-Tbilisi-Ceyhan pipeline.

So what are the next steps in making these pipelines a reality. One more host government agreement with Georgia must be completed, and all the parties have agreed it will be finished by December 15th. Once that occurs, the legal foundation for construction of Baku-Tbilisi-Ceyhan will be complete.

In addition, there's a planning meeting of potential shippers and sponsors in the works for December. Once all that happens, the Main Export Pipeline Company, known as MEPCO, will be formed and will finalize the financing package. This will pave the way for construction planning to begin.

I want to emphasize one point. Today's agreements clear the way to answering the question that has surrounded this project from the outset -- is the Baku-Ceyhan pipeline commercially viable? We continue to believe that it is commercially viable, but the true test of commercial viability lies in the marketplace. Now we have a foundation to build on. In the weeks and months ahead, the countries will meet with interested companies to form a project implementation group that will complete the group that was begun today.

As another indication of the viability of the project, our U.S. government trade and investment finance agencies, Ex-Im Bank and OPIC, stand ready to provide the necessary financing and insurance -- on a commercial basis, of course -- to help bring these projects to fruition.

The Baku-Ceyhan pipeline is also the most environmentally sound approach to transporting oil resources from the Caspian -- as anyone who looks over the Bosphorus can easily see that increasing tanker traffic can only add to the threat of environmental damage. In fact, because of our concern about the risk, the Energy Department recently sponsored a successful initiative in the Black Sea that encourages regional cooperation in the area of oil spill planning. We are hoping to replicate this initiative among the Caspian Sea countries.

Finally, let me say a word about the trans-Caspian gas pipeline. It is also a critical component of the East-West border. TCP, the trans-Caspian pipeline, must be a regional pipeline, one that advances the economic interests of all four countries along the right of way. The TCP agreement signed today is yet another important step. It demonstrates political solidarity about the route and lays out the principles for cooperation among the parties.

Finally, these agreements are significant because companies and countries on both sides of the Caspian are working together. It's truly remarkable that Azerbaijan, Turkey, Georgia, Kazakhstan and Turkmenistan are united here by a single vision.

We understand that construction on CPC started today. We congratulate Chevron and the other members of the consortium on reaching this milestone.

I want to introduce the principal architect of this agreement, the negotiator who steadfastly in the last intensive weeks is responsible for the agreements today, and I'd like to recognize Ambassador John Wolf for a brief comment and then we'll take your questions.

AMBASSADOR WOLF: Thank you, Mr. Secretary. I had a chance to talk with many of you already, so I will simply say that what we anticipated yesterday happened today. It is, as the Secretary and the President earlier said, a historic day because it brings together the governments of this region and it is a demonstration of the importance also that the United States places on helping to build the energy security and economic security of the region.

The fact that the President of the United States witnessed the oil declaration and the trans-Caspian Gas Pipeline Declaration I think is an indication of the commitment that the President and his entire administration has shown to reaching this point. And I think it is ample demonstration of the commitment that we will continue to show in the weeks and months ahead, as we move the projects from paper to pipe. And that's the real goal -- gas to Turkey by late 2002; oil through the Baku-Ceyhan pipeline by the first quarter of 2004.

For those things to happen, the kind of cooperation, the kind of compromise and the kind of effort that we've put in so intensively over the weeks and months passed is going to have to even be redoubled because there is still much work to do. But this is a huge step forward and I, too, would like to recognize the enormous contribution that President Demirel and his foreign affairs and energy team have played; the constructive work that we have seen, as well, on behalf of the regional countries and the energy companies. I think it has all come together. This was a super day. Thank you.


Q The U.S.-Russia relations have clearly taken a hit over this issue. You stress that it's not just another oil deal. I'm wondering if you could articulate for the American people just what are the stakes -- large in this for Americans?

SECRETARY RICHARDSON: For the American people. Number one, this enhances our energy security because it brings forth a new secure route for the West. Secondly, what we are building is a bridge between Central Asia and the West.

Thirdly, we are putting forth construction of new pipelines that bring to the region unity rather than division, promotes democracy among the nations; but most importantly for the West, it ensures that the West has secure and stable pipelines.

Q Mr. Secretary, right, the TCP is moving, but the Turkish side still seems to be very much interested with the Blue Stream, getting Russian gas. What's the latest on that or how do you see its future?

SECRETARY RICHARDSON: Well, the game in town right no is TCP, what happened today. You know, the Blue Stream has -- it's a Russian issue, the Russians have to resolve those problems. I want to focus on the positive components of the TCP that have happened today. A framework declaration was signed, presidents put their names on statements, meetings are taking place on financing and structure, and I want to concentrate on that.

Q A number of the oil companies don't support this or haven't signed onto it, and they haven't even found the oil; the oil is not being discovered in the amounts that you want for the pipeline. Why is this such a great foreign policy victory, and what are you going to do to encourage American companies to sign on this?

SECRETARY RICHARDSON: Let me say that financing by Ex-Im and OPIC is going to be substantial. Now that signatures are on paper, agreements are in force, sound investment and financing decisions can be made. So that's an important step forward.

The reason it's a major foreign policy victory for this administration is that we've been working on this for quite some time. And today we have a route that involves one of our major allies, Turkey. It's an east-west route. It brings energy security between Central Asia and the West. It's another secure supply. And we believe, most importantly, it is commercially viable.

We do believe that there are some very promising statistics about some new finds and developments that I'll have the Ambassador mention. But I want to say to you, the North Sea, when that was developed, there was -- first brought 100 dry holes before any substantial resources were found. We are confident that this has enormous resources.

AMBASSADOR WOLF: I think, you know, a lot of the debate heretofore has been an artificial debate in which the companies operating in Azerbaijan, and really just the Azeri International Operating Company, have dominated the debate. What this framework -- what the Leaders' Protocol that was signed today demonstrates is that Kazakhstan, as well, is going to be a participant in this.

So now that this is moving to the commercial phase, now that we're going to get away from one set of negotiation tables and move to the planning stage, the attractiveness of this route will be determined by the tariff -- what will the price be to get oil from Kazakhstan, or Azerbaijan, to the Mediterranean -- and a host of other issues that are embedded in the agreement, not the least of which is the environmental concerns.

And so even though BP/Amoco may be saying that they're concerned about the viability, they also say they're concerned about the environmental consequences of trying to put more oil through the Bosphorus. Go out of this hotel, take a look over the bank -- that's what we're talking about, trying to protect the Bosphorus against ever-increasing flows of oil. We believe that can be done on a cost-effective basis. And if it can be done on a cost-effective basis, and you marry that up with the environmental concerns, it becomes a highly attractive deal that we believe shippers will take advantage of.

Q Secretary Richardson, up to now the oil companies have been asking Turkey to provide some kind of a guarantee against cost overruns. They said they'd be willing to accept a certain price for building the pipeline, as long as Turkey -- or other entities outside the oil companies -- would guarantee that they would absorb the costs of any overruns. Is that envisioned in your agreement?


Q Can you give us an idea of what the figure is, that the Turks have agreed to support, and to pay any additional tariffs above that?

SECRETARY RICHARDSON: The ambassador will do that. Let me just make one point about BP/Amoco, because I had had a conversation with Sir John Brown about two weeks ago in which he indicated that BP/Amoco was now supportive of Baku-Ceyhan, so the statement that I believe was made today is a stepping back.

AMBASSADOR WOLF: On the question of the guarantee, that's one of the documents that was initialled the other day. There is a guarantee. The Turks have guaranteed that the price of the piece of pipeline that will go from Ceyhan to the Georgian border will be approximately $1.4 billion, and they believe they have guaranteed that they can deliver it to the Main Export Pipeline Company for that price, and so the guarantee is a sort of complicated formula of what would happen if the actual construction costs rose above $1.4 billion.

THE PRESS: Thank you.

END 6:47 P.M. (L)