U.S. State Deptartment energy office to push natural gas

WASHINGTON Wed Nov 16, 2011 5:55pm EST

WASHINGTON (Reuters) - Encouraging the world's major energy consumers to take advantage of a global boom in natural gas can help ease growth in oil dependency and climate-changing emissions, the head of a new U.S. State Department office on energy said on Wednesday.

"That is an issue we are addressing very seriously," Carlos Pascual, who designed and established the State Department's new Bureau of Energy Resources, told reporters.

As Russia, Australia and Indonesia embark on programs to put extensive quantities of natural gas into international markets, the United States can work with oil producers to get them to burn more gas and less crude.

Pascual, a former ambassador to Mexico and Ukraine who assumed his current role in May, said new gas generation allows Saudi Arabia and Kuwait "to look at other opportunities for power generation".

Saudi Arabia, which sits on the world's largest oil and natural gas reserves, has been forced to burn increasing amounts of crude to generate power for its rising domestic electricity demand.

"These are choices that they would have to make, but (it) could present them with options," said Pascual, the State Department's special envoy and coordinator for international energy affairs.

As spare production capacity in the nearly 90-million-barrels-per-day global oil market dwindles to 2 to 5 million bpd, and U.S. oil prices trade above $100 a barrel, introducing alternative fuels has taken on new value.

The natural gas boom, which also includes output from the United States, could help China to curb rising greenhouse gas emissions by encouraging it to slow the burning of coal.

The new State Department bureau, which has more than 50 personnel, will coordinate with the Department of Energy and other agencies on technological and diplomatic efforts to work on three major goals.

Those include managing the geopolitics of energy through diplomacy with producers and consumers, stimulating market forces for wind, solar and other alternatives, and increasing energy access for the world's poor.

TRANSPARENCY

Pascual said the bureau is working directly with the world's biggest producers and consumers and the Paris-based International Energy Agency to improve world energy supply data.

The more the world understands how much oil and gas is being used and produced, the easier it will be to avoid panic buying and price spikes that damage the global economy, the idea goes.

The new bureau is engaged with the IEA on data it coordinates with its members and with other countries that are not full members, including China, India, Mexico and Chile.

The bureau will also be engaged in International Energy Forum talks next week in which producers in the Middle East and other countries hope to increase energy data transparency.

Pascual's office will work with Energy Department officials to maintain close ties with energy producers.

"The challenge that we face now is to sustain the dialogue with major producers Russia and Saudi Arabia on what their production plans are," Pascual said.

The new bureau will closely follow developments in countries that have the potential quickly to produce more, such as Libya and Iraq.

The bureau has already started working with Nigeria, and Brazil could produce more oil in the near future. "Working with those countries to understand the commercial context in which international energy companies can participate is particularly important," Pascual said.

(Editing by Dale Hudson)