US backs Caspian gas pipe to Europe, no Iran supply

WASHINGTON (Reuters) - The Obama administration
told Congress Thursday it strongly supported a Southern
Corridor pipeline to bring natural gas from the Caspian region
to Europe, which would reduce the role of Russian supplies.
    Russia is a big provider of gas to Europe, which has been
looking to diversify suppliers since Russian gas shipments to
it were blocked in recent years after transit country Ukraine
refused to pay higher prices for fuel from its neighbor.
    ``From the standpoint of U.S. policy goals, the best outcome
is one that brings the most gas, soonest and most reliably, to
those parts of Europe that need it most,'' Richard Morningstar,
U.S. energy envoy for the Eurasian region, told a House Foreign
Affairs subcommittee.
    Three pipeline consortiums are competing to bring natural
gas from Azerbaijan's Shah Deniz gas field to Europe, and the
investment decisions to make that possible should be made by
the end of this year, Morningstar said.
    Other countries will also contribute gas volumes to the
pipeline, including Turkmenistan, which Morningstar said was
investing in infrastructure that could export gas to the West.
    He said Iraq would be able to export gas once it met
domestic demand for fueling more power plants.
    However, the United States does not want the pipeline to
move gas from Iran, Morningstar reiterated.
    Morningstar said the United States faces a difficult
decision if it chooses to sanction the Shah Deniz gas project
because a subsidiary of Iran's national oil company owns 10
percent of the operation.
    ``The unintended consequence is the resources, which are
absolutely necessary for the Southern Corridor, wouldn't go to
Europe,'' he said.
    Instead, the gas would likely go to Russia, China or Iran,
Morningstar said.
    He said Iran would probably benefit if the project were hit
with sanctions, because Iran needed gas. ``It's a serious policy
issue,'' he said.