(2002/10/18) WASHINGTON (AFX) - Kazakhstan, Azerbaijan and other Caspian republics should be "transparent" in their handling of oil contract payments from US and western oil companies, said Ambassador Steven Mann, a senior US State Department advisor for Caspian Basin Energy Diplomacy.

Talking to reporters in a briefing at the National Press Club here, Mann -- a former US ambassador to Turkmenistan -- said: "The more transparency we have in all of this, the better we are collectively."

US oil groups, including ExxonMobil Corp, ChevronTexaco Corp, and ConocoPhillips Inc, are heavily invested in the region and have often gained the largest shares in key petroleum projects, according to regional analysts.

The ambassador was responding to reporters' questions about whether Caspian state governments and western oil companies should disclose more information about oil contract payments in the wake of concerns that such monies often end up in the private bank accounts of regional officials.

Former Kazakhstan prime minister Akezhan Kazhegeldin has told AFX News that US oil groups including the then Mobil Corp and Amoco Corp paid hundreds of millions of dollars during the 1990s for Kazakhstan oil rights, but that much of the money ended up in the private bank accounts of President Nursultan Nazarbayev and other senior officials.

The issue is gaining attention in the US Congress where Republican Senator John McCain is inking a resolution which, among other things, calls on Caspian state governments to make all government revenues publicly available.

Mann notes that the matter is a "complicated question" for US oil groups because the issue gets into "business strategy and corporate information."

However, the Ambassador notes that "as a general point, the more transparency we have in all of this the better we are collectively, but I realize there has to be a certain part of confidentiality in negotiations with major companies."

"I honestly don't know how we best strike that balance, but my belief is that the greater focus should be on the host countries to do all that they can to publish their budgets, publish their revenue estimates and be transparent in how they handle the revenues that are coming in," Mann said.

Media representatives for ExxonMobil, ChevronTexaco and ConocoPhillips -- three of the largest US energy groups invested in the region -- could not be reached for comment at the time of reporting.

Meanwhile, a federal grand jury in New York continues to probe bribery allegations involving a US oil consultant, James Giffen, and Kazakhstan government officials, according to the New York Daily News.

Giffen is suspected of depositing 60 mln usd in payments from major oil groups into Swiss bank accounts on behalf of Kazak president Nazarbayev and other Kazak officials, the newspaper reported earlier this month.

Kazhegeldin told AFX News that the then Mobil, Amoco and Phillips Petroleum Kazakhstan Ltd, a unit of then Phillips Petroleum Co, credited millions of dollars to Kazak government escrow or holding accounts in Switzerland through 1997, but that sums were then transferred out of these accounts by third parties to offshore accounts in the British Virgin Islands controlled by Nazarbayev, other officials and Giffen.

Washington non-governmental sources who work for organisations that are trying to improve transparency in the process say that in private the oil groups are generally supportive of such initiatives, but that individually they are concerned about breaking from the pack and being the first to support such moves.

AFX, October 21, 2002