Address to Conference on U.N. Resolution for Reliable and Stable Transit of Energy

John Watson

By John Watson, Vice Chairman
Chevron Corporation

Address to Conference on U.N. Resolution for Reliable and Stable Transit of Energy

Ashgabat, Turkmenistan, Apr. 23, 2009

It's an honor to address such a distinguished audience about one of the defining challenges of today and tomorrow - meeting the world's energy needs. The safe, reliable and efficient transportation of energy worldwide is absolutely critical to meeting the energy challenge, and I congratulate President Berdimuhamedov on his leadership in initiating a U.N. Special Resolution that addresses this important issue. The president's commitment to the economic development and growth of Turkmenistan is truly impressive.

Turkmenistan's special resolution was unanimously passed by the U.N. General Assembly. As the Caspian region's leading private oil producer, Chevron supports this important resolution, and we encourage the community of nations to implement it.

We believe that the special resolution demonstrates two key points. One is Turkmenistan's growing profile on the world stage. Your nation's active participation at the United Nations speaks to a growing influence in world affairs. The second point is the resolution itself — its recognition of the critical importance of safe and efficient transit of energy to global energy security — which is what I want to focus on today.

The current economic environment presents unprecedented challenges to many global economies. Yet some things will not change. Despite the turmoil in the world's financial markets, global economic growth over the long run is still driven by the same fundamental forces - rising population, technological advances and human desire for improved living standards.

That will continue. And in this context, the critical catalyst for restoring global economic growth is energy.

But finding, producing and delivering affordable and abundant energy requires investment. To ensure sufficient energy supplies, the International Energy Agency has projected total energy investment needs of US$400 billion to $500 billion per year — half a trillion dollars each year — between 2007 and 2030. At the same time, the energy we need for global economic recovery requires the safe, reliable and efficient transit of oil and natural gas.

In our view, safe and reliable transit of energy cannot happen unless the global energy system and all its moving parts — upstream, midstream, downstream — come together in an efficient and sustainable manner. Efficient production and transportation systems guarantee a fair market price for producers and a reliable supply of energy for consumers. For producers, this means demonstrating sustained performance and operating excellence, applying advanced technology in ways that drive results, and creating partnerships to enable the efficient execution of projects with global reach.

As we work our way through the economic challenges we face, effective partnerships and continued, robust investment will help us achieve energy security — including the reliable and efficient production, transit and marketing of oil and natural gas. In today's complex global energy environment, partnerships can take many forms, but the common denominators never change. They are: trust, based on dialog and reliable performance; respect; and mutual benefit.

In a world that is more interconnected than it has ever been, there's plenty of room for energy partnership, particularly in this region. The Tengiz project in Kazakhstan is an excellent example of partnership. Our commitment extends back more than 15 years when we made the first of many large investments in Kazakhstan. Over time, we have made additional large investments to increase production and to apply our expertise and technology to produce high-sulphur, high-pressure gas from deeply embedded reservoirs.

And we've been able to bring this advanced expertise and technology to other parts of the world. In 2007, we established a 30-year partnership with Petrochina for the joint development of the Chuandongbei natural gas fields in central China. Just as important, it will create tens of thousands of good jobs throughout their life and establish a platform to support local businesses.

My point is that partnerships are important for resource-producing nations. But they must be the right kind of partnerships, established on a foundation of shared respect, shared capabilities and shared rewards — a foundation that ensures a reliable, long-term relationship.

For resource producing nations, the timely and efficient development of their oil and gas resources requires access to significant levels of capital. It requires application of the most up-to-date technologies by those with the most experience and expertise in applying those technologies.

And finally, the timely and efficient development of a country's hydrocarbon resources requires secure market access and the flexibility for producing nations to realize a true market price for their energy exports.

The right kind of partnership can be a tremendous asset to any resource-producing nation seeking to realize the full value of their oil and gas as a reliable supplier of energy. At the same time, however, resource-consuming nations must be prepared to pay a fair market price for a reliable supply of energy — and they must consume energy more efficiently, for environmental protection and for economic strength.

Going forward, energy security — including the safe and reliable transit of energy — will require strong, long-term partnerships shaped by collaboration, investment and innovative technology. The challenge before us is clear - and so is the opportunity.

In closing, I want to once again thank President Berdimuhamedov and the organizers for inviting me to address this important conference.

Thank you.

Updated: April 2009