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. Last Updated: 07/27/2016

America: No Secret Deals for Iraqi Oil

America is not secretly offering Russia oil concessions in a post-Saddam Hussein Iraq in exchange for political support, and Moscow better think twice about the consequences of blocking Washington's pursuit of war against Baghdad, senior U.S. officials said Wednesday.

"In America, there will certainly be concern about the way other nations respond [to the Iraq crisis]," visiting U.S. Energy Secretary Spencer Abraham told reporters.

"Obviously, those actions have consequences."

Abraham's comments were echoed by U.S. Ambassador Alexander Vershbow, who reiterated earlier remarks that Washington would likely retaliate economically if Russia used its veto in the United Nations to slap down any resolution that could expedite the use of force against Iraq.

"The American people and American congress would see a difference between a veto or an abstention," Vershbow said.

A number of Russian oil companies, most notably LUKoil, have billions of dollars' worth of future business in Iraq lined up if UN sanctions on the country are ever lifted. They are also positioning themselves for new opportunities in the event of a regime change -- but Abraham insisted that he was not in Moscow to discuss Iraq, but rather to pursue energy cooperation.

He said increasing Russia's crude export capacity was among the topics of his meeting with Energy Minister Igor Yusufov.

Russia has been expanding production at breakneck speed, but exports are constricted by port and pipeline bottlenecks.

Abraham said U.S. would welcome Russia's expanding its infrastructure to ease the flow of its crude to world markets, singling out a project put forward by private Russian oil majors that would greatly expand the capacity of the Murmansk port and sharply increase direct supplies to America. Although the Russian government has already warned that all pipelines built -- either with private or state money -- will remain under its control, U.S. investors would be keen to participate in the project, Abraham said.

With global crude supplies likely to suffer in the event of military action in Iraq, Washington has been looking for ways to insure market continuity. Abraham came to Moscow from Vienna, where he attended an OPEC meeting in which the crude cabal promised to boost output in the event of war.

Saudi Arabian Oil Minister Ali al-Naimi, too, is making the rounds, and is due to meet with Yusufov on Thursday to discuss global supply strategies.

The visits by the energy chiefs of the world's top producer and consumer highlights the enviable position that domestic oil companies have put the government in. But it also comes as the government is facing a crucial choice between competing pipelines, without which Russia will not be able to increase its share of the global market.

On Thursday, the Cabinet is to chose, or concoct a compromise, between two ambitious pipeline projects backed by two ambitious and energy-starved rivals -- China and Japan -- who both want access to Siberia's vast oil reserves as fast as possible.

One, backed by Yukos and China, is a $2.5 billion, 2,400 kilometers extension of the existing network from near Irkutsk to Daqing, China.

The other, backed by pipeline monopoly Transneft and Japan, would cost $5.2 billion and circumvent China, running 3,800 kilometers to the Far East city of Nakhodka on the Sea of Japan.

In an interview with The Moscow Times on Wednesday, Yukos CEO Mikhail Khodorkovsky stepped up the pressure on the government to approve his proposal for the China link.

"There is only one sensible decision the government can make -- and that's to build the pipeline to Daqing," Khodorkovsky said.

Staff Writer Catherine Belton contributed to this report.