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(COMTEX) B: Bodman Seeks to Boost Russia Cooperation ( AP Online )

MOSCOW, May 24, 2005 (AP Online via COMTEX) -- U.S. Energy Secretary Samuel
Bodman sought Tuesday to boost energy cooperation with Russia, which has lagged
far behind what American officials say is vast potential amid concerns about
Russia's investment climate and questions about its desire for closer ties.

Amid meetings with Russian officials including Prime Minister Mikhail Fradkov
and the ministers of energy and trade, Bodman stressed the "compelling case" for
the Cold War foes to work together: the United States is seeking more energy
sources, while Russia needs investment to boost exports and revenues from its
vast reserves.

He said Russian officials had expressed their commitment to working more closely
with the United States, but that the government's pursuit of the Yukos oil
company and other decisions have clouded the investment climate and the future
of Russian-U.S. energy cooperation.

Russian oil exports to the United States have reached 230,000 barrels per day,
Bodman said.

"But it should be 10 times that or more, given the reserves that are here," he
said. "And it's a matter of having an environment, getting investments made."

He said a slowdown in the growth of Russian oil exports, from an annual rate of
over 10 percent two years ago to only 4 percent through April, underscores the
need for Russia to clear up a murky legal environment. The figures "reinforce
the need for clarity," he said.

Bodman, whose first visit to Russia came near the end of former Yukos oil
company CEO Mikhail Khodorkovsky's politically charged trial, said the
government's treatment of Yukos "has raised questions about the independence of
the judiciary, the sanctity of contracts and the sort of transparency that
investors are interested in."

Khodorkovsky is expected to be found guilty of fraud and tax evasion in a trial
widely seen as punishment for perceived political ambitions. His company has
been torn apart by back tax claims and partly nationalized.

U.S. officials describe closer energy cooperation with Russia as a win-win
situation, and U.S. President George W. Bush and Russian President Vladimir
Putin ordered their governments to seek to boost cooperation at a February
summit.

"It's in the interest of Russia to have greater exports, particularly at the
prices we're talking about today, and it's in the interests of the United States
to have more diverse sources of supply," Bodman said. "It's a compelling case."

But Washington has been disappointed by foot-dragging on a pipeline to Russia's
north coast that could increase supplies to the United States, as well as
sluggishness on other pipeline plans and mixed signals about Russia's openness
to foreign investment in the energy industry.

The increasingly powerful role of the Russian state in the economy has also
raised concerns. And there have been no deals yet to develop projects that would
provide liquefied natural gas, which Bodman said would be crucial amid a
potentially sharp increase in U.S. gas consumption.

He said that despite positive signals from officials, Russia's commitment to
energy cooperation can only be measured by concrete deals.

"Until they make a decision and a deal is done, then I have to assume there's a
question," he said.

Speaking before a meeting with Russia's nuclear energy agency chief, Bodman said
that the two nations had made "good progress" in cooperation on nuclear
security, but that - amid Russian sensitivity about U.S. involvement at nuclear
sites - they still have differences to surmount.

He said they were close to agreement on a program to use plutonium from nuclear
weapons into a fuel called MOX, which has been held up by a dispute over
liability of American contractors. "There's reason to believe we will be
successful on moving that project forward," he said.

By STEVE GUTTERMAN
Associated Press Writer

Copyright 2005 Associated Press, All rights reserved

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