American Commercial Interests, Commitments and Strategies in the Caspian Area Sheila Heslin Without getting into the specific strategies of individual companies, who really need to speak for themselves, there is a broad convergence, at the overall level, between U.S. government policy and American commercial interests at this time, with the possible exception of U.S. policy toward Iran. I will outline what the broad themes are that frame this issue. First of all, in terms of what U.S. commercial interests are, the U.S. government is looking at this more broadly than simply,“can we have a few more oil suppliers in the market”. There is a great interest in diversifying western energy supplies, reducing to the greatest extent possible dependence on Middle Eastern sources of energy. And, what a lot of people will tell you, is that the Caspian may only produce 3-4% of what we will eventually need – or will buy. But it is important to keep in mind that it was exactly a 3­4% shortfall in the 1970s that caused the great oil price shocks we had in the West. So, 3-4% is an important incremental addition to world energy supply. In addition, something that is not often noted, but turns out to be very important, is that the U.S.(and the West in general) has a great interest in encouraging Caspian development because it nudges along the Russians and the Gulf states, in terms of competition, access to production sharing agreements(PSAs) and investment. There are three potential producing regions: Russia, the Caspian and the Gulf. The Russians and the Gulf states actually have more in terms of reserves. But, they have been very reluctant to do things like grant PSAs. They have been pretty tough on all western companies. And, what we have seen is both the Russians and the Gulf States responding to a development that they did not think would happen. This development is western companies investing large amounts of money in the Caspian. More than in the entire former Soviet Union energy sector at this stage is in the ground in the Caspian. While the 51