Pena also discussed the 1998 energy ministerial meeting in Moscow, theemployment options for the Russian scientists and engineers workingwith U.S. companies in Russia, and further development of the importantenergy resources in Russia.

In discussing the issue of energy development and investment, Pena said,"The fact is that Russia has vast energy resources, and by many accounts,international companies are ready to invest $60 billion in Russia's oilindustry, but those investments are awaiting the development of a stableand transparent legal and regulatory framework to support them.

"A recent study by the Petroleum Advisory Foundation estimates thatjust six large projects will create more than 500,000 Russian jobs andgenerate more than $600 billion in wealth for Russia over the life ofthese investments. So it is in everyone's interest to see energymarkets develop and open as quickly as possible here in Russia."

Responding to a question as to what role Russia should or should not playin transporting oil out of the Caspian and Central Asian regions, Penasaid, "We are very hopeful about the extraordinary opportunities in theCaspian region for the development of oil and gas for the world. Ourphilosophy is to encourage all of the countries involved in the exploration and transportation of oil and gas from the Caspian Sea to worktogether.

"So, for example, we support the concept of multiple pipelines and multiple pipeline routes throughout the region as oil and gas are extracted from the Caspian region."

The following is a transcript, provided by the U.S. Embassy in Moscow, ofPena's remarks at the July 23 press conference:

SEC. PENA: Before we begin, I would like to take a momentto thank the people of Russia for giving our United States delegation sucha warm and hospitable welcome here in Moscow. This is my first trip to Russia, but it certainly will not be my last.

I arrived in Moscow on Sunday with three objectives in mind: first,accelerating efforts to prevent the spread of nuclear weapons and nuclearmaterials to rogue states and to terrorists; second, beginning the planning process for the energy ministerial that will be hosted by Russiain 1998; and third, working to increase international investment inRussia's energy sector.

In the last three days, I've been to the Kurchatov Institute; I've met with Chairman of the Government Viktor Chernomyrdin, First Deputy PrimeMinister Boris Nemtsov, Minister of Atomic Energy Viktor Mikhailov,Russian Minister of Natural Resources Viktor Orlov, and representatives ofthe Defense Council and several members of the Duma. And I believe we'vemade progress on these areas of concern to both of our nations.

Let me talk about the first objective. Russia and the United States havethe world's largest stockpiles of nuclear weapons and weapons-gradenuclear material, and we share the belief, formalized through a number ofagreements, that these dangerous weapons and materials must not fall intothe wrong hands.

One important component of our effort is the Materials Protection, Controland Accounting Program, or, for those who use acronyms, the MPC&A Program.Under the Materials Protection, Control and Accounting Program, theDepartment of Energy laboratories work with the Russian nuclear labs todevelop the security controls that will keep the nuclear material atRussian facilities secure.

The Russian government has installed sensors, portal monitors, fences, radiation detectors, and established accounting techniques to secure nuclear materials that would otherwise, at this critical transition pointin Russia, be at risk.

Today I'm pleased to announce that this cooperative effort is growing. OnMonday Minister Mikhailov and I signed a joint statement to include a newfacility, the Lytkarino Scientific Research Institute for Equipment, inthis effort. Lytkarino is a facility that deals with sensitive nuclearmaterials, and its inclusion in the MPC&A security effort bolstersU.S.-Russian non-proliferation cooperative efforts.

Minister Mikhailov and I also discussed a number of key issues in anticipation of the upcoming September meeting between Vice President Goreand Prime Minister Chernomyrdin, including the following subjects:

• Additional measures to strengthen the MPC&A Program;
• Cooperation to dispose of weapons-grade plutonium no longer needed fordefense purposes;
• Implementation of a tri-national or trilateral initiative among theUnited States, Russia and the International Atomic Energy Agency.

We also discussed moving forward to implement the agreement to stop production of weapons-grade plutonium at three reactors in Tomsk and Krasnoyarsk. The energy produced by these reactors is needed to provideelectricity and heat to those cities. Our mutual goal is to eliminate theproduction of weapons-grade material by replacing the cores of thereactors while at the same time meeting the heating and electricity needsfor the two cities.

At the Kurchatov Institute yesterday I signed a joint statement with Academician Velikhov to expand cooperation on the following areas: nuclearsafety, environmental protection, nuclear technology research anddevelopment, cessation of production of weapons-usable material, plutoniumdisposition, non-proliferation, and nuclear materials protection, controland accounting.

I also met with Russian Navy officers to review our MPC&A Program, and weagreed to expand it.

In short, we're making progress accelerating efforts to prevent the spreadof dangerous weapons and materials, which is important to both ourcountries' national security and to the security of the world. And weexpect to announce additional agreements at the September meeting of theGore-Chernomyrdin Commission.

The second goal for my visit to Russia was to begin to lay the groundworkfor the 1998 energy ministerial meeting in Moscow. I discussed possibleagenda topics with the prime minister and with Minister Nemtsov. I seethis meeting, where eight energy ministers will meet for the first timefollowing the climate change negotiations in Kyoto, as important both forits timing and its emphasis on the importance of energy and environmentalpolicy for the world economy.

I'm hopeful that the energy ministerial will discuss the following:

• The energy market outlook;
• Capital formation;
• The policies that would increase interdependence and cooperation,including transportation issues and interconnection among energy systems;
• Post-Kyoto and sustainable development strategies based on the outcomes of the Kyoto Climate Change Conference;
• And, finally, we should discuss improving opportunities for energyinvestments in Russia.

There is still a lot of work to do before this can become a reality, butwe agreed to follow up on the discussions we began this week in order topush this issue forward.

The third purpose of my trip was to address the issue of energy development and investment. The fact is that Russia has vast energy resources, and by many accounts, international companies are ready to invest $60 billion in Russia's oil industry, but those investments are awaiting the development of a stable and transparent legal and regulatoryframework to support them.

When I met with several members of the Duma, I described how the UnitedStates, like many countries, relies on world capital markets for investment. Many Russian leaders were surprised to learn that the largestcrude oil producer in the United States is British Petroleum, that thebiggest operator on our offshore Gulf of Mexico is Shell International,and that Venezuela, through its company Citgo, owns and operates moregasoline service stations than any other company in the United States.Arecent study by the Petroleum Advisory Foundation estimates that just sixlarge projects will create more than 500,000 Russian jobs and generatemore than $600 billion in wealth for Russia over the life of theseinvestments. So it is in everyone's interest to see energy markets developand open as quickly as possible here in Russia.

In my meetings with Prime Minister Chernomyrdin, Minister Nemtsov and Minister Orlov, we discussed production-sharing legislation in addition tothe law on lists.

The Duma took a step in the right direction by passing initial legislationin late June, and I offered my support and assistance to Minister Nemtsovon the important effort to help create a stable legal framework underwhich new investment can take place, and I have been invited to speak toother members of the Duma when I return in September.

I also invited the chairman of the Federal Energy Commission in Russia andthe deputy minister of the Ministry of Fuel and Energy, Mr. Bushuyev, tomeet with the United States Federal Energy Regulatory Commission and otherexperts on regulation from the Department of Energy during the week ofAugust the 18th, when they will be in Washington, D.C.

Ladies and gentlemen, let me conclude my remarks by saying the United States and Russia have important common interests. The issues in my portfolio -- energy security and non-proliferation -- are at the heart ofthe relationship and dialogue between our two countries. I look forward tocontinuing the friendships developed during my time in Moscow, and I'll beback in September with Vice President Gore.

Thank you very much, and I'll be happy to answer your questions.

Q: Did you discuss with Mikhailov whether the question ofthe concern that has been expressed by the workers of Russian nuclearpower plants that things might get out of control, whether this issue wasdiscussed in any of your meetings?

SEC. PENA: Out of control in what way?

Q: Because of the lack of financing.

SEC. PENA: We have a program which is called the IPP Program, where we work very closely with Minister Mikhailov in developingother employment options for the Russian scientists and engineers workingwith U.S. companies here in Russia. It is a very successful program, andtoday there are several thousand Russian scientists and engineers who areparticipating in that program and working in new jobs which will help themcontinue to sustain their families. And we are very hopeful that we canexpand that program with support of the United States Congress.

Q: Mr. Pena, your own role has strong support of new technologies and research-and-development programs. Could you mention somenew programs you are going to launch?

SEC. PENA: I am very happy to say that these scientistsand engineers from the laboratories in the United States work frequentlywith the scientists and engineers in the laboratories here in Russia.Yesterday in my meeting with Mr. Velikhov we talked about the mutual workdone between our scientists in many areas, ranging from oil and gas to plutonium disposition to environmental technologies, and I am confidentthere will even be more areas in the future where we'll work together.

I'm always amazed at how well our scientists work together, and they havethe ability not to worry about any potential political issues because theyare so focused in making the world better for humanity. And I want to doeverything in my power to support their work and to give them even moreencouragement to continue to work together.

Q: I was wondering if you think recent progress is enoughto finally get this mechanism moving on a more than individual,case-by-case basis? And, if not, what more needs to be done? Andspecifically in our talks did you discuss what projects might be added tothe next lists to go through the Duma.

SEC. PENA: We discussed both those subjects, and as I said, we are pleased with the legislation that is going through the Dumanow on production-sharing agreements, and we are hopeful that additionalenabling legislation that will add more clarity will also be passed.

And I also had an opportunity to discuss the question of the next liststhat we hope will be developed later on this year, and our hope andexpectation that the regions where U.S. companies are involved will alsobe included on those lists later on this year.

So I believe we're making progress, because this will be good for the Russian economy, it will be good for the international companies involved,it will produce jobs here in Russia, and it will help further develop theimportant energy resources in Russia.

Q: Immediately before your visit to Moscow, you stated that nuclear fissile materials kept in Russia are equal to 48,000 nuclearweapons. And can you just explain, could you imagine at least one ofthem getting in the hands of Abu Nidal or someone like that? So are you bynow sure, 100 percent sure, that each one kilogram of weapons-gradeplutonium and uranium is kept safe and is accounted here in Russia? Areyou sure that each nuclear weapon is safe nowadays in Russia, in terms ofphysical security I mean?

SEC. PENA: The Materials Protection, Control and Accounting Program we have had for several years working very closely withthe Russian government has been very successful. I believe we arecurrently involved in over 40 sites in Russia, and yesterday we signed anagreement to include another facility to that list. And I also visited theKurchatov Institute, where I saw the multi-layered security system that isnow in place at the institute to protect the material they have. And weare working very hard with the Russian government to cover all theremaining facilities as quickly as possible. So we've made great progressin just a few years.

Q: You said that several thousand Russian scientists havefound new jobs because of this program. Where are these Russian scientistsworking? Here in Russia or abroad?

SEC. PENA: They are working here in Russia, and in manycases they are working with United States companies that have opened upoperations here in Russia and provided jobs that allow them to use theircreative genius and their high scientific skills in areas which may not benecessarily in the defense area, but they might be in other highly technical areas where their knowledge and great expertise is very helpful.

Q: Do you think that the MPC&A system in the UnitedStates precludes, as you said, material falling into the wrong hands? Anddo you think it should be -- this type of a system should be applied inRussia?

SEC. PENA: We work very hard in the United States to have a secure system in all of our facilities. This is particularly challengingin those facilities that we are now beginning to close. For example, in myhome state of Colorado, where we have the Rocky Flats facility that usedto make the plutonium triggers, we are now closing that plant, and it's achallenge to make sure that we have the right security systems when youare reducing the size of the complex.

But we are confident of our security systems in the United States, and weare pleased to see that Russia has installed many of these systems in over40 locations here in Russia. But it is something that we haveto payattention to every day in both our countries.

Q: Well, nuclear safety is a very important issue, ofcourse, but there is such a thing as environmental safety, and perhaps youhave heard of the disaster of the Aral Sea and the greenhouse gasesproblem. While you were here, have you had a chance to see, and what isyour opinion of the environmental issue as applied to Russia?

SEC. PENA: We have discussed how we can work together aswe approach the Kyoto Global Climate Change Conference in December of thisyear. As President Clinton said very recently, we want to have realistic,achievable and flexible targets that the world can agree to in Kyoto. Andwhile I cannot speak, obviously, for the Russian government, I can saythat we had very constructive discussions on how we can work together --the United States and Russia -- on approaches like the trading creditsystem, which will be helpful both to Russia and the United States as wefashion a global climate change treaty in Kyoto.

While we have a lot of work to do, I think we are making progress, andI hope we can reach agreement on this over the next several months.

Q: Could you name those six possible large projects thatcould lead to such enormous economic benefits for Russia?

SEC. PENA: The six projects are listed in a report that we produced very recently. I don't have a report -- I don't have a copy ofit here, but I'm sure we can make one available to all of you. You can geta copy of the report from the Petroleum Advisory Forum here in Moscow.

Q: Reuters. What are views on the role Russia should or should not play in transporting oil out of the Caspian and Central Asianregions?

SEC. PENA: We are very hopeful about the extraordinaryopportunities in the Caspian region for the development of oil and gas for the world. Our philosophy is to encourage all of the countries involved in the exploration and transportation of oil and gas from the Caspian Sea towork together.

So, for example, we support the concept of multiple pipelines and multiplepipeline routes throughout the region as oil and gas are extracted fromthe Caspian region. And we have had conversations with leaders from manyof the countries in the Caspian region, and we are encouraging the UnitedStates companies that are involved to also support the concept of multiplepipelines and regional partnerships. So we believe that the explorationand the transportation of oil and gas in the Caspian region will behelpful both to Russia and to the other countries which are involvedtoday, and we believe this helpful to the United States because it willdiversify the energy supplies throughout the world, which is consistentwith our own energy security strategy.

I'm going to end my statement at this time. Let me thank the charge, JohnTaft, for his strong support. And again I want to thank all the people inRussia who have been so warm and cordial and have helped make my trip herevery successful. Thank you very much.