US-Russia Energy Summit Results

This week's US-Russia commercial energy summit in Houston marks the most high-level meeting between US and Russian energy and commerce secretaries under the Bush administration.

Coming amid escalating tensions between the US and the Iraq, the summit underlines the importance for the US to reduce its dependence on oil imports from the Middle East by tapping into Russia.

As a result the US will for the first time take delivery of Russian oil for its Strategic Petroleum Reserve.

A shipment of about 300,000 barrels from Tyumen Oil is expected to arrive next week - a delivery symbolic of growing energy ties between Russia and the US. The ties are being strengthened at a summit this week in Houston, where US and Russian cabinet ministers are meeting executives of more than 100 oil companies.

The Bush administration is pushing hard to fill the strategic reserve to capacity. Volatile oil prices, which could soar with an attack on Iraq, already threaten to sink any economic recovery.

The Bush administration has expanded a "royalty-in-kind" programme, launched in 1999 by the administration of former president Bill Clinton. Under the plan, oil producers that operate oil wells on federally owned land can provide a percentage of the output in lieu of cash royalty payments. However, most of the oil in the reserve has been acquired from abroad. In fact, the first delivery was 412,000 barrels of Saudi Arabian light crude in 1977. Mexico accounts for about 40 per cent of the supply.

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