In a meeting of the Economic Partnership Commission in Washington on December 2, the United States and Turkey reaffirmed that energy is a critical component of their strategic cooperation. The U.S. and Turkey have taken major strides in establishing the East-West Energy Corridor, which will help bring the vast energy resources of the Caspian region to world markets.

The Baku-Tbilisi-Ceyhan pipeline is the centerpiece of the East-West Corridor. The two delegations welcomed the commencement of construction in April 2003 on the one-million-barrel-per-day, 1,760 km pipeline, which is now more than 40 percent complete. The first oil from this pipeline will be delivered to world markets in 2005.

The Baku-Tbilisi-Ceyhan project recently received affirmation from the International Financial Institutions and U.S. lending and development institutions. The Boards of the International Financial Corporation and European Bank for Reconstruction and Development, on November 4, 2003 and November 11, 2003, respectively, each approved up to $310 million in total lending packages. Their support includes $155 million in direct loans for the Baku-Tbilisi-Ceyhan project and the oil field that will supply the pipeline, and $155 million through commercially syndicated loans.

U.S. institutions echoed this support for the Baku-Tbilisi-Ceyhan project. The Overseas Private Investment Corporation Board approved up to $125 million in political risk insurance on November 14, 2003, and the Export-Import Bank Board approved financing for $160 million in support of U.S. exports during its November 21, 2003 meeting.

These votes are evidence of the strong U.S. and international support for this benchmark energy project, and recognition of the significant work that has been done in terms of environment and social assessments.

Construction is set to begin next year on the parallel South Caucasus gas pipeline, running from Azerbaijan to Erzurum in central Turkey. Initially, the pipeline is expected to bring 6.6 billion cubic meters of competitively priced Azeri gas to Turkey, and onward to possible markets in Western Europe, in 2006.

The United States remains firmly committed to both the Baku-Tbilisi-Ceyhan and South Caucasus gas pipelines and welcomes Turkey's essential involvement in both efforts. These routes not only diversify world energy supplies, but also strengthen the sovereignty, economic viability and stability of the nations in the region, promote trade and investment opportunities for U.S. companies, and support Turkey in minimizing environmental risks to the Turkish Straits.

The U.S. and Turkey also are working to identify European markets for surplus gas and new gas volumes from the Caspian. With European gas growth expected to reach up to 200 billion [200,000 million] cubic meters over the next 15 years, there will be strong demand opportunities for new suppliers. Turkey is well positioned to serve as central transit supplier for this burgeoning European demand.

The U.S. government is supporting Turkey and Greece in their efforts to link their gas systems via the Greek-Turkish Inter-connector, the first step in developing European markets. Other possible onward markets include Italy, or Bulgaria and Romania.

The Turkish government has expressed concern about increased shipping traffic through the Turkish Straits. The United States shares their concern about shipping safety in the Straits and is pleased with the introduction of the Vessel Traffic System to protect the environment, historical buildings and Istanbul's 12 million inhabitants.