USSR: ASTRAKHAN NATURAL GAS PROJECT

Created: 12/3/1982

OCR scan of the original document, errors are possible

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USSR: Astrakhan Natural Gas Project

I. The Sovjets In:'recent months have put development of the Astrakhan natural gas projectast track.

p/oject Is scheduled toillionofear5 and probably could produce

oillion cubic meters when development Is completedqual to aboutercent of current Soviet gas output.

with potential Western suppliers forbillion In pipe and equipment needed togas fields have intensified sharply sinceof the Soviets hope to conclude most, all, of the contracts by

project was included in early versions of theeconomic plan and contracts were activelyWestern firms beginning In the. ack burner, and apparently removed from the

five year plan. 1 because of Moscow's concentration on the Yamal pipeline. With the Yamal project well and, the Astrakhan project was moved back into the plan and apparently now has top priority with Moscow among cooperative energy projects with West European firms.

0. The Western countries involved in bidding on the

project, especially France andare trying to find ways around the OECD consensus Interest rate, mainly on the grounds that contract discussions started several year ago.

II. Soviet geologists estimate that thelds--which are located north of the Caspian Sea in the Southern USSR (seeay contain uprillion cubic meters of gas, making It nearly as large as Urengoy.

of these gas reservoirs will be however, since nearlyercent of theof noncombustible contaminants--abouthydrogen sulfide) andhich are highly corrosive andhandle.

the gas reservoirs are located ateters--twice as deep as those at

SFraFT nfrOM

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h reservoir pressures0nd temperatures of upegrees centigrade.

III. The Astrakhan project Is important to the USSRource not only ofk-fdel but also of sulfur -and other raw materials needed for expanding phosphate fertilizer and petrochemical production. *"

A. Moscow vants to use Astrakhan natural gas to compensate for depleted gas-producing capacity at the vastfield and for replacement of output from North Caucasus gas reserves and output, which are nearing exhaustion.

C.

Intended primarily to meet domestic gas requirements, the Astrakhan fields could help to maintain Soviet gas exports to both Eastern and Western Europe via the Orenburg pipeline.

The Astrakhan projectncludes ambitious plans for sulfur plantsotal capacity ofillionear.

the USSR produces xcess ofillionyear, second only to the United States, sulfur 1ssupply in the USSR.

at one time providedercentsulfurno longer be countedsizeable deliveries; thus, the USSR has had toWestern countries to help meet Its domestic needs.

addition, the carbon dioxide removed from thebe transportedoraeter pipelineinto the Gur'yev oil fields to enhance

Soviets will require Western equipment anddrill and equip the wells, construct gatheringbuild gas-processing and refining plants.

hard currency cost is expected to be aboutof which as much0 million may bespecial corrosion-resistant seamless tubularlarge diameter pipe.

maintenance of the large gas complex alsothe procurement of Western equipment

for Western equipment which beganroceededesultory fashion, have greatlysince the summer

HMD Flbl(3)

contenders for Astrakhan contracts are the

the French

firms Cruesot Lo

Soviets have stipulated that US equipment is toonly If Itnavailable elsewhere.

Soviets say they want to sign some contractsend2 and wrap up the remainder by the end ace would beis moving rapidly. Deliveriesthe Astrakhan project reportedly have

VI. The Soviets are pressing hard to obtain concessionary

Western loans to finance imports of machinery and equipment for the project.

8 .

surprisingly, Moscow is insisting on below market rates--specfffcally, they want to pay no more thanercent rate obtained on Western government-guaranteed credits for the Yamal pipeline.

This rate is far below the OECD consensus rate4 percent and is even below the lowest recent non-subsidized rate on Western contracts with the USSR--a

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Original document.

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