USSR OIL PROBLEM: VIEWS OF THE SOVIET LEADERSHIP

Created: 6/1/1980

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USSR Oil Problem: Views of the Soviet Leadership

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paper was coordinated with the office of economic research and the national intelligence officer for ussr and eastern eur

USSR Oil Problem: Views of Ihe Soviet Leadership (u)

Whether the Soviet leadership accurately judges ihc USSR's oil productioi constraints inould have serious implications for Soviet bchavioi An overeslimation of these possibilities could lead domestically to the emergence of serious unanticipated bottlenecks, unplanned adjustments, and increased disruptions in theof which could still further reduce economic growth, depress living standards, and heighten political conflict within the leadership, quite possiblyuccession period. |

Internationally, misjudgmenl of the seriousness of the oil problem could lea. to abrupt cutbacks in oil deliveries to Eastern Europe, intensified economic and political tensions in this region, and possible adventurous actions directed toward acquiring new sources of oil. An accurate assessment of Soviet oil prospects (along the lines of our forecast) wouldreater sense of urgency than now exists to attempts to gain quick access torom OPEC countries M

US Predictions

Wc haveleak energy future for the USSR over the next decade Soviel oil production will peaknd then decline from0 million barrels per day)60 oil output probably will drop still further to. We anticipate thathe Soviets and their allies will jointly become sizable net importers of oil. The drop in oil production willevere impact on the rate of economic growth in the USSR and Eastern Europe: GNP growth rates could decline in the Soviet Unionercent or less5 and to levels low enough to jeopardize political stability in some East European count

What Do lhe Soviets Think?

Soviet spokesmen, naturally, have impugned our motives in making such projections and, in general terms, have denied their validity. Yet it is obviou that Soviet officials from Brezhnev down are seriously concerned about oil production. Thus, the question is: What do the Soviets really think about th USSR's oil problem, and how muchap is there between our forecast and the judgments that underpin Soviet

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iny specialists only have access to limited information

ana, in any case, may conceal their worst fears from the leaders, lest they jeopardize their own careers. Likewise, both foreign and domestic interests motivate Soviet leaders to understate the seriousness of the oil problem in Iheir public pronouncements. As oil production peaks or actually starts declining, important interests will be served by concealing suchas long as possible; it is fully conceivable that when this momentcould be thisSoviets may resort to falsification of oil production figures or may set targets that they know will be underfilled 4M

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Opinion

What the Soviet leadership collectively thinks about the oil problem depends substantially on what Soviet specialists have to say about it. Oil production matters arc technical and complex, and the leadership has no choiceurn in the first instance to experts for iheir assessment of the

In terms of assessing leadershipjudgmcnts, the single most important feature of specialist opinion, however, is lhat it is divided on important issues. Consequently, leadersultimatelyfor themselves howudge the oil situation. Leadership judgments are thus inevitably subject to influence by various interests at work in the political process and cannot simply be extrapolated from what specialists say. Leaders may well be tempted lo listen to the more optimistic advisers and opi for courses of aciionjhat do not force difficult economic choices or political confrontation^

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specialists,inority, apparently believe that il will be possiblencrease oil production5 orf those whom we know to have expressed this opinion, most are well removed from the actual production process and probably do not have good access to the data required to reach an informed judgment.

Other specialists believe lhat oil production will almost certainly peak some timehese specialists appear to be uncertain about how long peak production can be held, or how rapid the postpeak decline will beflH

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staicmcnls by specialists suggest that peak production can be maintained more or less indefinitelycries of conditions arc met. (Tb conditions, of course, may privately be consideredther statements seem to imply aa hazydeclining production. It is unlikely that any specialist has flatly predicted that Sov oil production will drop from about05avelthough it is possible that figures have been presented fr whichangecertaininferred by leader inclined to do so.H

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spccialisis lhatore pessimislic view of Soviet oil prospects line wiih the CIA estimate, emphasize:

The difficulties in offsetting depletion in the absence of any major new discoveries.

The excessive use of waterflooding and density of infill drilling in oldei regions.

The serious drilling and other constraints that limit the critical exploit lion of new small fields in West Siberia.

The problems that will arise inrom having to extract and process increasingly greater volumes of heavy oil.

The inadequacies of Soviet-manufactured equipment and technology.

Debate continues among specialists and between West Siberian and Sla Planning Committee officials over the amount of recoverable oil reserve; West Siberia and ihe desirable level of investment in the region.nthusiasts apparently believe that production can be increased in West Siberia. All those concerned with West Siberia, however, complain that firm policy on development of the region has not been formulated.^^

Among specialists, there appears toood deal of optimism that new oilfields will be discovered in East Siberia and in various offshore areas, (hat very substantial volumes of oil can be extracted in time through enhanced recovery techniques. It is likely lhat expectations from enharx recovery arc exaggerated. Exploitation of all these possibilities is seen b; specialists to depend, however,adical improvement in technolog Many spccialisis believe that large-scale acquisition of Wcslern technol-is critical in this

Statements

The USSR's gas. coal, and nuclear power resources have enabled Soviet leaders to make optimistic statements about the long-term energy prosp for the USSR. This optimistic assessment by the leadership of theicturc should not be obscured by Ihe existence of near-term energy difficulties. Nevertheless, signs of leadership anxiety over the immcdiat

energy problem have multiplied over the past year; Soviet leaders are extremely worried by increasingly severe fuel and power shortages. The failure to meet oil. coal, and electric power targets9 was probably one of the factors motivating ihe leadership to callerious reappraisal of Soviet energyundertaking currently assignedpecial

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commission created by the Politburo.

Uncertainty probably is the central feature of the leadership's outlook on future oil prospects. This uncertainty appears toange of possibilities, bounded on one side by hopes among some leaders for atlight increase in oil production, and on the other by fears (hat the CIA's projections might prove lo be not far off theoviet leaders are familiar with these projections, and probably do not dismiss Ihem lightly. It ca mm categorically be ruled out that some top specialists who do have access to comprehensive data on Soviet oil production have privately warned leaders that the CIA is right, or that the leadership has secretly concurred with such an assessment.I

ive-Year Plan will aim al stabilizing oil production at approximately0 level, although ihe leadership is well aware thai five-year targets are often not fulfilled. There is evidence lhat high officials in ihe Central Committee Secretariat link future Increases in the level of oil extraction with productivity gains that they probably realize are unlikely to be met. The leadership is almost certainly aware that even under the best of conditions unconstrained demand for oil would outstrip its availability and thai ihe share of oil in the energy balance will inexorably decline. It is also clear that the leadership understands that it will need to buy more oil inhan it now docs J

Soviet leaders seem tobifocal" image of the difficulties thai confront them. They tend io focus cither on immcdiale fuel and power shortages, or on distant changes in the energy balance. Apartoncern with energy conservation, however, they do not appear to be focusing very sharply on the kind of middle-distance contingencies that would be suggestedudgment that there willteep drop in oil productiong

'This judgment reflects the evidence available up io0 cutoff date for research on ihis pope'. Accumulating evidence since then suggests eroding pessimism among Soviel leaders, as they have been compelled by preparation ol*ive-Year Plan to confront unpleasant realities. By now the chances are high lhal Ihe very besl the leadership hopes fortabilization of production at ihe current

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leadership is keenly aware thai its options Tor dealing with the oil problem and oiher economic difficulties in the short-to-middle term arc increasingly restricted by invcsiment and manpower constraints. Finding themselves in this situation, they may be prepared to grasp at straws. Thcr appears toillingness to accept what probably are inflatedhe impact on oil production of enhanced recovery methods and other form of technological innovation, as well as of equipment modification.^

Regime Behavior

Regimemanifested in policy-implementing actions in the areas of oil and gas exports, conservation, oil production plans, investment technology imports, secondary refining, and substitution of other fuels fornot give an overall impression that Soviel decisionmaking has bee propelledudgmentharp drop-off in oil production is incvitabl ineriod. What the Soviets arc doing docs give the impressioi however, lhat they recognize that previous rates of increase in oil productic cannoi be sustained, and that they anticipate serious difficulties ahead in meeting their oil needs and those of their al

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the7 plenum of the Central Committee, Brezhnev proclaimed that Soviet energy policy for the nextears would beil and gas production in West Siberia. Then, amid signs of disarray in thi party line on energypecial commission was established by the Politburo in9 to "determine effective ways of solving the energyhis moveeadership judgment that7 policy line alone was notthough the leadership has recently decided lo accelerate capital construction in West Siberia in accordance with the earlier policy. The creation of the commission could represent tht first step in securing sufficient backing for drastic policy determinations desiencd to cope with the real situation. It could also mean, on the contrar lhat the energy problem is not judged lo be so urgent that immediate actic must be taken without gaining the political cover provided by whatever agreed recommendations eventually emerge from the collectiveof this commission.H

presence in Afghanistan now provides Ihc Soviets with crihanceTopportunities to seek Middle East oil through intimidation ortrike al the Iranian oilfields by recently repositionedtec!>

The leadership to date docs not appear to be sufficiently galvanized byof the oil future to make any radical or really innovativedeterminations. It is insisting with ever greater urgency onand is stepping up the rate of investment in oil productionenergy sectors. The leadership is apparently unwilling, however, tothe tried-and-irue "campaign" responses of exhortationpressure even to discuss, much less begin to introduce,of structural adjustments in the economy that might ease theera of far less oil. In the back of leaders' minds there may well bebased upon the experience of the early Five-Year Plans and the

wartime period, thai if they arc not able to keep oil production up through mobilizing all possible "reserves" (which is what they will surely attempt lohey have the option of rcimposing harsh labor controls and lower standards ofliving, and lhat such measures will simply be accepted by lhe population^

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Contents

Page

Implications

Judgments, Policies and Actions

and Leaders

of Evidence

Evidence

Exports

and Conservation

Imporu

and Fuel Substitution

Views

Oil Production

Siberian Prospects

Prospects

Transfer

Imports

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d gmc nts

Ambivalent Attitudes

Position

MaPtscv Statement

and Kirilcnko

Judgments Summarized

USSR Oil Problem: Views of ihe So*iel leadership (u)

We haveleak energy future for the USSR over Ihe next decade. Soviet oil production will peaknd then decline from about0 million barrels per day)0 oil output will probably drop still further lo. By the end or the decade, heavy oil willubstantial share ofrastic increase in secondary refining capacity simply to maintain the existing proportion of light fractions in the refinery mix, let alone lo meet the rising needs for more high-quality light products. We anticipate lhathe Soviets and their allies will jointly become sizable net importers of oil.H

The drop in oil produciion willevere impact on the rate of economic growth in the USSR and Eastern Europe. GNP growth rales could decline in the Soviet Unionercent or less5 and lo levels low enough to jeopardize political stability in some East European countries. There is little chance ofin the energy problem5 throughmeasures or substitution of gas or coal Fot oil. J

This paper accepts our projection of the Soviet energy future and examines how ihe Soviets themselves view their own oil problem. Although Soviet leaders and specialists are aware that the CIA thinks oilin the USSR will soon begin to decline, there is no reason lo assume that ihcy believe this prediction isihough we know that they take il more seriously than their propaganda suggests. Theirmay be either "accuraie" ors measured by the CIA. The judgments also may foreseeteady worsening of ihe energy problem, or some temporary difficulty inollowed by improvement. This paper explores what ihe Soviets arc thinking along boih these lines. Il also examines whether there has becij^hifl in Soviet thinking over the past several yenrs H

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Future Implications. The accuracy of judgments by ihe Soviet leadership about the USSR's oil produclio constraints inould hove seriousfor Soviet policy. An accurate assessment migh facilitate planned adjustments and minimizein the economy, although vested political inlcres and structural features of Ihe economy would surely hinderesponse. It would probably lead to intensification or internal political controls and mcas urcs lo strengthen labor discipline in ihe face of stagnating living standards.

Inter nationally,erception couldas for an energy policy toward Eastern Europe thai wou enable regimes there to adjust to future cutbacks in Soviet oil deliveries. It might also provide more time make appropriate changes in patterns of Soviet foreij trade. Most significantly, it couldreater sem of urgency to attempts to gain access light away to move oil from OPEC countries, and possibly to attempts lo involve Western countries in more rapi development of Sovielsourccs.M

An inaccurate judgment, on the contrary, could lead unanticipated bottlenecks, unplanned crashand greater dislocations in ihewhich could still further reduce economic growth, depress living standards, and heighten political con It within ihe leadership, quile possiblyucces sion period.isjudgment could le io abrupt cutbacks in oil deliveries io Eastern Europ which would accentuate economic and politicalin this region. Over the nearalse sense security might encourage ihe Soviets to maintain foreign irade ai current levels while continuing to negotiate energy-related deals without urgency.ealities began io strike home, this behavioray to more adventurous actions directed toward acquiring new supplies ofin the Midi East.^

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Judgments, Policies, aad Actions. What are ihe definitions of the oil situation lhat are sufficiently agreed upon within Ihe lop Sovietto drive policymaking and policy implementation? Such judgments of ihe oil problem grow out of bul are not necessarily identical with, the perceptions of individual leaders. These perceptions of ihe problem ate an importjin sinning point in the process that leads eventually to action H

More important to understanding what actions will be considered and taken, however, are ihe judgments of the oil problem lhat arise from intcraciion among some or all ihe members of the leadership opinions that have been verbalized and that are at least passively accepted by the dominant element in the leadership. Such judgments are based only partly upon the individual leaders' perccpiidns of the oil problem itself. They also incorporate estimates of ihe broad political and adminisiralive consequences of defining Iheone way rather than another, and of personal career interests. They necessarily email political as well as technical cognitions.H

Judgments, in turn, must be distinguished from policy determinations and implementing actions. Policy de-tenninaiions require some sort of consensus between the leadership and higher party and governmental circles; they require exploration of realistic options and some son of cost/benefit calculus. The ullimate choices integrate leadership judgments about the oil problem, the career interests of leaders and high administrative officials, Ihe institutional concerns of the major bureaucracies affected, and objectivebased on constraints that limit policy decisions^

Implementing actions involve not only ihe leadership and higher administrative echelons, bul the entire economic and political bureaucracy as well. Visible actions, which are initially set in motion by policy determinations, run the gauntlet of such distorting influences as malperformancc of the economic system, technological constraints, and resource shoriages.esult, they may only dimly reflect precedingand policy determinations.

Specialists aad Uaders. To grasp the leadership's judgments of the oil problem, we must first try to understand how Soviet specialists view it. The issues involved in oil production and energy in general arc so complex, and hinge so much upon technicalthat the leadership has no other recourse but to turn first to ihe specialists for their definition of the problem. The opinion of ihe experts plays annoldefining for the leadership what is possibleM

Specialists, including production ministers, are likely to share iheir perceptions of ihe oil problem with the political leadership only upoint. Bureaucratic self-interest compels them to point out how difficult it will be io meet high output targets in ihe future, but personal career interest probably motivates them not to bear the very worst

A specialist bold enough to declare flatly lhat the CIA was right and thai Soviet oil output will decline15 at the sleep rate we project mighl well be charged withrudence would diciate that he present his warning in the form: "Unless we undertake the following measures [which mighl be impossible to put intot will be difficult or impossible toecline in oilhis strategy could easily be rationalized in terms of the possible occurrence of any oneumber of unpredictable contingencies (suchig new oil discovery, or technologicaln addition, many specialists below ihe very lop realize that they do nol have access to all the information needed (for example, on reserves) iocfiniiivc forecast of futureotlprospects, even apart from these contingencies. I

Leaders, of course, tend to suspect that specialists exaggcraie the difficulties to attain lower production targets and higher resource allocations, or to establish alibis ahead of lime for poor performance. The leaders also have iheir own reasons to keep targets up. They might be unwilling for political or personal reasons to accept oil projections that would imply the need to cut

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on economic growth la reels inlh Five-Yearnd make inconvenient decisions on resource allocation. Pessimistic judgments might be avoided cither out of unwillingness to challenge vested institutional interests (by forcing cutbacks in military spending or agricultural investment, or direct foreign participation in oilr outense that goals should be kept high regardless of circumstances simply lo mobilize lhe maximum exertion by all concerned. Thus il is necessary to consider the evidence for both specialist and leadership appraisals of lhe energy problem.^PjVfl

Questions of Evidence. Wc have two types of evidence about Soviel views of the oil problems: indirect evidence presented by objective situations and the actions intended to deal with them; dircci evidence in statements of Soviet officials. Indirect evidence is open to misinterpretalions thai can arise from mentally "putting oneself in another'sr fromlo reconsiruct underlying leadershipoflhc oil problem through inferences from the visible end results of bureaucratic policyThe latter lype of evidence is flawed byas io whether il reflects the actual perception leaders and by ihc possibility that Ihe evidence it purports to presenl about iheir judgments is distorted: all available statements of leaders are potentially infected with extraneous poiilical intent and arc subject io deliberate manipulation.B

A number of interests are served by distortion and (he concealment of honest opinions about lhe seriousness of (he energy problem. These interests encourage underestimating the gravity of the problem. Some private interests have been suggested above: spccialisis may shrink from offering candid assessments in order to protect careers or defend their own bureaucratic needs, while leaders may tailor their statementshat they feel the traffic will bear within the leadership collective. Thereomestic interest in mobilizing the population lo save energy (which might call for some exaggeration of theut theretronger interest in avoiding giving the impression that the leadership does not have lhe problem under control H

Toward foreign audiences, the regime does not want give an impression of vulnerability or possible need I* take desperate action. Such an impression might crea problems in Eastern Europe. Il might also undercut II Soviet bargaining position in the negotiation of energ. related deals with Western partners, and raise the co of borrowing from the West nol only for lhe USSR bi for its East European clients as well. Finally, it migh intensify Western concerns about Soviet intentions toward oil-producing couniries. while strengthening ihc bargaining position oflhc latter

Thus, it is possible that there is an element of orchestrated prevarication, or even disinfoimaiion, it some Soviet statements!

As oil production peaks or actually starts declining, important interests will be served by concealing such developments as long as possible.s conceivable ih when this momeni occurs lhe Soviets may resort lo falsification of oil production figures or may set targe lhat ihcy know will be badly undctfulfilled. J

Indirect Evidence

Our indirect evidence suggests lhat Soviet economic policymakers do notharp dropoff in oil production ineriod is inevitable. Whai ihey are doing docs give the impression, however, th they think previous rates of increase in oil productio cannot be sustained, and that they anticipate seriour difficulties ahead in meeting the USSR's oil nccdsfl

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eiporit. Perhaps lhe clearest sign of their lack of confidenceuture increase in oilruvidcd by Soviet behavior in the area of oil exports.

inning in lyiyoii exports by Ihc USSRsharply cut back, except to Communist states,

bctaiiN of declining production.hat the Soviets were indeed reducing

hard currency cxporl volumes, and this trend

aexporting organization,observed that the USSR wouldor oilercent belowstimate thai Soviet exports of crude odproducts to all non-Communist couniries fell

rs byercenthile exports to hardpartners declined by 23

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The Soviet leadership has apparently felt sufficiently comfortable about its future oil supplies to grant at least one non-Communist aincrease in promised oil deliveries overeriod. Nevertheless, the strong interest of high Soviet officials in Ihe constructioniant new natural gas pipeline from Wcsl Siberia to Western Europealculation that even with Ihc higher income thai can now be derived from lower volumes of hard currency oil sales, there willeed within lhe next five years to develop nn alternative source of hard currency earnings to compensate for falling oil sales.

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Within the Council of Mutual Economic Assistancehe Soviets so far have firmly insisted that Eastern Europehole cannot expect any major increase in oil deliveries over0 level1he Soviets have given the impression to olher Communis! stales lhai deliveries would not fall below0 level, although on occasion they have indicatedecline was notespecially if Easi European stales were unwilling lo accept Soviet terms. This posture could of course be adopted for bargaining purposes, as the detail* ofilateral trade agreements between the USSR and each of its Communist clients arc negotiated

There has been some evidence over the pasl year lhat lhe Soviets might be flexible on deliveries, cspccally if these were paid forurrent world maikei-pricc, hard currency basts. H

ians have beenured" annual increases of abotil

in Soviet oil shipments

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.hirmer.iv to Poland over 1'ie same period b> about

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the Soviets have agreed that annual oil deliveries to Rumania will riseillion tons0illion tonsn each of these instances the hard currency com to the Easi Europeans has not been

il they do suggest lhat. al present, Soviets may believe it possible to ease slightly rather than tighten up on suppliesastern Europe. The apparent Soviet intention not to reduce oil deliveries to Eastern Europehile cutting back gradually on hard currency exports wouldoviet leadership percept: not ticn or,radual decline in oil produciion.J

Production uni Comtrration.eries of measures token9rowing sense of rgy problcm.|

arty official gave

impression mat tne energy problem was "really tough" and 'Very'lthough il was not expected lo get any worse ^gWfmISI

Inhe parly Central Commitce and ihe Council of Ministersesolution "Onthe National Economy and the Populalion wiih Fuel. Flcctricity and Heal in lhe Fall-Winter Periodomhem adopted by the Council of Ministersear before, this document not only called for conservation but also admitted lhat fuel production was lagging behind the plan und criticized some of lhe responsible ugencies. Anditorial ofune declared that "both energy and fuel are continuing to limit the national6 June Socialist Induitry editorial admitted that "the situation in the oil industry is

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early9 ihe Council of Ministers issued Mill anoihei decree "On Measuiesut Heat Losses in Residential and Public Buildings. Production Premisescaiingoviet Russia article ofeptember castigated drilling shortfalls and under fulfillment of oil production plans in Tyumen, rhetorically asking: "Why has such an alarming situation arisen4 October Centralconference on fuel and energy, addressed by Central Committee secretary for heavy industryDolgikh. heard complaints that energy production plansnot being fulfilled, and it called on the oil and coal ministries to eliminate "grave shortcomings' in their worl

Aovember Pravda editorial accused the oil and coal industries of "serious errors in planning,management, and utilization of capital" and censured the coal miners of the Kuzbass and Karaganda and the oil workers of Tyumen for not fulfilling their production plans. The cdilorial also criticized the railroad ministry for delays in fuel deliveries "which disturb ihe rhythm of work and cause considerablel criticized otherfor failing to deliver equipment needed in the energy industry and for allowing large construction projects to fall behind schedule. To cope wiih the resulting shortages, the cdilorial called for ihe "strictest possible economy in the use of fuel and energyhen, after ihe Central Commiitee plenary meeting al ihe end of November, the unusual step was taken of publishing the text of Brezhnev's speech at the plenum (which contained highly critical remarks about energy) with the actual names of ministers hedeparture from ihe past practice of removing ihe names of such officials from Brezhnev's published plenum speeches.^

Other indirect evidence also suggests very serious leadership concern with the energy problem.the leaders have not taken the kind ofsharp scaling back ofencrgy requirements or an all-out mobilization of resources- thai would seem called for by the prospectrop in oil production of5 as forccasl by the CIA. Indeed, the plan for oil production0 providesise in outputercent (which is down from the original

hat all lop

five-year goalercentt wouldurprisingarget were published forFive-Year Plan that alsoodest incrct ail production, although this would not neccssaril: mean that all top leaders believed this goal to be achievat

Imeitment. In recent years the annual rate of grc in loial energy investment has increased rapidly, bringing withore gradual increase in energ: share of industrial and tola) investment. More sir ingly. energy's share of incrementalromo S8 percent of industrial investment an fromoercent of total incremental inveslr7

Drilling targets for oil exploration have been step up (an implicit acknowledgment of weakness in tl reservend additional productionave been shifted from older oil regions to West Siberia on an emergency basis. Yet at ihehe number of new small fields scheduled for dev mcnt in West Siberia has apparently beenhere is good evidence of contention over energyospian department ct

0 thai the question of energy was delaying completion of the drafthi^

Technology Imports. After several years of procr nalion and haggling over terms, the Soviets signe deal with the French and arc pushing fairly hard the installation1as lift system of enhanced recovery In ihe Samollor andf West Siberia. Despite iheir snong verbal comi men! to enhanced recovery, however, Soviet aulh itics have decided nol to contract abroad for som the workarbon dioxide project at ihe large: Volga-Urals field. Romashkino. and have dclaye pulling into operation Weslcrn-boughi steam gci ators intended to increase recovery from fields in Caucasus.H

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interest in offshore produclion has increased over the past year or so This interest probably lay behind the transfer of rcspimsibiiiiy for offshore oil operations and for negotiations with Western firms over offshore exploration and development assistance (especially in the Barents Sea) from the Ministry of Oil to tbe Ministry of Gas inhe

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clearest sign of interest in stepping upoffshoreonsh'>,cactivities as well) was thewhich Ihe Soviets werethe

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invasion of Afghanistan ery large dealcciivcl^pfcarincr for both offshore and onshore assistance irnrnnsolved payment in crude oilisk-sharing basisoncession that heretofore the Soviets have not been willing to make. After several years of negotiations, the Soviet* finally0 million contract in0rench firm for constructionabrication yard to produce offshore drilling rigs for use on the Caspianoffshore region with (he greatest potential for additional near-

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Htfininn und fuel Substitution. In other critical areas, such as the expansion of secondary oil refining capacity, there has been much talk bul no sign of rapid action. There is good evidence lhal the USSR is planning lo build much of its refinery capacity through multilateral cooperalson wilhin CEMA rather than through deals with ihemustlower and lets effective approach.for all the talk about the need for substituting coal or gas for oil under boilers,ew oil to gas convcrsiorss base been made and none to coal as farnown.H

Naturally, these examples and the others citedindicate more about tbe capacity of theand economic systems to respond tothan about the judgments of leaders ortogiaspal straws. One test offrom this type of data is whether they jibe orinferences drawn from what specialistshave lo say in articles, speeches,

Specialist Views

future Oil 1'iuduciion.9 some specialists expressed optimisiic views about future Soviel oil production, although most specialist were moreInest Siberian specialist, L. P. Guzhnovskii. referred publicly to 'optimists" who believed lhatufficiently high level al* extraction of oil in the country waslthough "only under strictly definedn May Pasha Arushanov, head of the Foreign Relations Depart nienwifihe USSR Ministry of Oil Industry,i.'|

oil produclion would coniinue to11th Five-Year Plan, although alin in

"somewhat" slower rate than in ihe past. One of iheUnion's leading energy specialists.Mikhail Styiikovich. stated publicly in Junepossibilities of West Siberian oil deposits werea stable growth in oil extraction for theensured. In Easl Siberia, he said, oil was notextracted on an industrial scale, butthat significant reserves were alsoStyrikovich also discussed publicly inneed to substitute gas for oil in power plantsto free oil for export purposes, and he referredabsolute growth of world oil productionC75Yrs

In September Deputy Minister of Oil Industry D. A. Takuyev (responsible for ihe ministry's foreign oper-

aB'1"studiesecline in Soviet oil 5 were journalistic speculationshe said, Soviet oil production was increasingcontinue to do so "at least" HeSoviet specialism unanimously agreed thatof untapped reserves in East andaccelerated offshore production, andof deep drilling and enhanced recoverythe basis for continued expansion of oilwould be facilitated by increased usedata. Soviel authorities did nol doubt thaiwould reach Ihe lower limit of the lOihPlan taTgct. (The official targetillion tons, well below thelower limit projected inhakoycv observed, had beenfeaturing record cold and heavyby record spring heat, resulting inconditions- all of which had had aon

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was nol anlicipated umil at, New proven ureas, such as those at the Fcdotoso Held in West Siberia, could be drilled to get more oil. and East Siberia was believed to have significant oil deposits. CIA estimates of future Soviet oil production, he felt, -ere loo "pessimistic.

Other statements by specialists, however, have been far leu optimistic about overall Soviel oil

0 all the major oil deposits in the USSR will have reached peak produclion. and an intensive decline will beginajority of them (it has already begun ai some).

In order siraply to stabiliic oil extraction inhh Five-Year Plansevelillion tons (lo *hkh presumably would be added the small volume of oil produced by the Ministry of Gas, now running atoillion tons perl would be necessary to more than doubleillion meters0 loillion meters

The extraction of oil from most deposits would be accompanied in the futureignificant increase (On ihe average,actor) in the number of operating wells to cope withise in water content fromercent8 loercent in tbe case of developed deposits)ise in the volume of liquid citracledillion cubic meters8illioneduction in ibc proportion of oil extracted by natural flow (fromercent8 toercent; andorresponding increase in the proportion extracted by artificial lift.

Operating conditions of wells will become more complicated with development of deposits of oil wit higher formation lempcralures and increased corro sion activity, incrustation of salts and paraffin, deeper wells and an increased number of slant hole aging wells, and harsher natural and climatic conditions.

In particular, problems will be created by the risini vbcosily of oil extracted.ll oil being extractediscosity of less thancntipoise;0 the produclion of such oil would be cut in half, and more (han half of all oil produce wouldiscositycnlipoise or more.

Employment of enhanced recovery methods will account for modcsl volumes of oil produclion

The inadequate lechnical level of most types of bas oil industry equipment, logelhcr with ihe pcrsisieni tendency of equipment manufacture lo lag behind demand, has made it necessary to use antiquated equipment andpend unjustifiable amounts of materials and labor on repairs Because of ssownesr in developing the petroleum machinebuilding bate, tbe oiloweriod in which technological processes must be intensified before ihe industry has been suitably rccquipped.

Theof US equipment

[the demur

or implicitly on new small field development, drillinj fluid extraction, heavy oil extraction, expansion of ll secondary refining industry (tocope with more hcavnd technological modernization of the oil machinebuilding industry are unlikely lo be met ewe the next decade, meaning that oil produclion willonspccialist mighl or might nol draw si. conclusions, depending on his inclinations-

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(he past. Soviet officials had consistentlyihe USSR's total proven oil reserves byercent.8 Swedish Pelrostudics report

rs that called attentionil discoveries inUSSR failedndicate that these deposits

were too small or the formations too light to be worth developing before ihe world price of oil reached atarrel.!

Less specific statements by other Soviel officials also suggest pessimism.9 meeting of the US/USSR Trade and Economic Council, high Soviet foreign (tade officials openly acknowledged lhat the USSR was running out of oil at about the same rate as the United States. In November. Yuriy Pekshev, an official responsible for CEMA affairs, publicly sialed lhat duringhe USSR would be obliged lo make enormous capital investments in the oil industry merelyaintain the existing level of oil extraction, and in this context he urged CEMA member slateStO expand oil purchases from developing countries.^

rominent scientist. Academician A. P. Krylov. who is chairman of lhe Academy of Sciences' Scientific Council on Problems of Producing Oil Deposits, publicly declared:

Preliminary calculations show lhat if the present lempo of yearly increase in the number of new exploitation welts and the present tempo of increase in lhe coefficienl of decline are maintained, then ihe extraction of oil in the country will reach Us maximumomparatively short period of lime, after which it will begin to fall. To alter this course of events and achieve the planned volume of cxtraclion one can either increase the tempo of growih of new wells (which is connected with increased capital investments and expenditure ofr shift io technologically and economically justified systems of production, which will leadessening ofthc density of the network of wellseduction In ihe coefficienl of decline (this will not be connected with supplementary capital(Emphasis added.)

Krylov, of course, was using the dangereclineproduction lo promote his own position indebate over the proper density of"successnd organizationalin oil

' Krylov'i emphaus on the existing density ol Infill drilling IUI undermine* the Swedivh Petrcslutliea analysis,bales its projection of huge untapped oil reserve* preeiiely on the argument that Soviet field managnnrDi priggsfes hmlcd toan ocessively broadly-spaced rotten, of uclU.H

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Siberian Prospeeis. Wiih ouipul declining now in all major producing regions outside West Siberia, prospeeis for increasing or at least stabilizing Soviel oil production over the next five toears depend heavily on the West Siberian fields, especiallynow produces about one Quarter of total Soviet output!

;ry iccl]nic<ues i

tcccnt investigations shown that Samotlor. in particular, had much smaller reserves lhan had been predicted, so that higher priority had to be given to developing enhanced recovery techniques in order lo increase production in older fi

In lhe summeround table on development problems in West Siberia sponsored by the Central Committee's Propaganda Dcpartmenl and the Tyumen regional party committee provided anfor candid discussion *omc of which was later published. Al one of the sessions an oil produci ion official in Tyumen, N. M. Nikolacvskiy, made the following gloomy observations:

Inurbranch disproportions do notigh level of extraction. First, oil extraction has pulled ahead, bul Ihc preparation of reserves and the processing of crude oil lag behind.he volume of exploitalion drilling must rise loillion meters. But this means lhat ferrous metallurgy (taking account of the yearly constructionhousand kilometers of pipelines) will have to inctease sharply the supply of pipe, andsupply of

On the other hand. West Siberia todayomparatively small locally distributed number of known depositsintensivebe exhausted quite rapidly Andhe water cui will begin to risewhile the extraction of oil will steadily

decline. At present, extraction is growing, basical thanks to Samotlor. But lhe hjghci the tempo of output, Ihe earlier also will begin ihc decline of extraction, and this will occur al Samotlorears.

[Snnotlorwas expected to peakheneaksH lit would remain at lhat level Iand then decline.'

ere is still no second0 most promising deposits for which systems of production have recently been confirmed, are sea tered over an enormous territory, ihe mastery of which is exceedingly laborious Bul the demands the plan here arc severe: if the first billion tons of in Wesi Siberia was obtained inears, then th second must be obtained twice as quickly.|

us ncia nao virtually luction would reachillion ions per year9 and ihensiay al ti level2hen output would beginfall offate ofoillion ions annually. However, production al lhe other fields in tbe Nizhnevartovsk area wan scheduled lo rise rapidly fromillion tons8 to doubleig future lay witb thesei|

i ions of oil wei

ing extracted annually from Samotlor. and lhat il was hoped that through more drilling and ihc introdi ticn of gas lift this level of production could be maintained for three to five years. Future devetoprm effort* would be concentrated gradually wot and north from (he deposits currently being exploited, rather than attempting logo immediatelyive Arctic offshore areas!

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lhe history of Weil Siberian oiland development there have been arguments over the size of recoverable reserves in the region, and technical controversies have been directly linked with disputes over the volume of investment that ought to be directed to West Siberia Tlusc disputes, in which some Cosplan officials have tried to hold the line against demands by local officials to acceleratesurfaced sharply

Al the Tyumen roundtabk meeting mentioned above, the conflict was clearly visible. Academician Abel Aganbcgyan implied that there could be no trade-off between investment in new coal basins and investment in West Siberian oil production:

The entire growth, including offsetting thedecline of oil extraction in the old legions, is taking place and will continueong time yet to take place from Tyumen soil.

time.t is difficult lo tcfule Ihc statements of some specialists fo the effect that there is no reliable resource base in Wcsl Siberia; il ii difficult because we have no such concept as Strategic reserves in extractive industry. Without these one cannot confidently develop the extraction of oil. Wcystem ofnailure of extraction in one, or even in several regions, docs not hinder fulfillment of the planhole.

One of the leading West Siberian optimists. Iheeslcrov. pointedly complained:

It is necessary to increase the scale of exploratory drilling sharply, butGosplan goes about this unwillingly. For years Ihe Tyumen geologists have tried to convince the community lhat the Siberian depths have noi been exhausted. andthaLe^oia-tor, work must be stepped

One rcpersenlnlive of Gosplan's Scientificon Complex Fuel-Energygreed that exploratory drilling shouldin Tyumen and that the Tyumenshould be "turned into asuppliedhe reasonaction, however, was thai "otherwise thenot be able confidently io make the next step-Siberia, what the new oil

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one musi elaborate the tactics and strategy of the Tyumen complex proceeding from changes projected in the fuel-energy balance of the country. However, so far the future goals of the complex are unclear. The strategy of oil extraction in West Siberia has evoked sharp arguments. There is no single opinion on this score even among Tyumen

L. P. Guzhnovskii of Ihe Siberian Division of lhe Academy of Sciences slated thai mathematicaldemonstrated

the expediency of orienting actionigh level of extraction of oil in West Siberia; ihis level, in the opinion of scientists, can besiableong

Nonetheless, the deputy chief of the TyumenAdministration. A. A. Geniush, observed in his speech that planners had consistently underestimated possible oil production levels in West Siberia and the corresponding requirements for discovering newwhich explained the "unheard-of situation" thai for two consecutive years Tyumen geologists had not fulfilled theirplan. AsAganbcgyan had warned:

A reduction in lhe extraction of oil in West. coulderious impact on the fuel-energy balance of the country. In order that this not happen, an accelerated preparation of reserves is necessary. It is planned even now io extract halfe oil ati- in si jet been iipcncd up

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up Ihe discussion, the editor commented:

The figure for future extraction is the subject of differences of opinion, discussions and evenamong professional people. Who is right in the argument? We lack the boldness andtoudgment on this. But one must emphasize that in the desire torecise figure50 istriving toopcrateon the basis of firmly formulated goals for the long-term development of the entire complex. Clear goals, detailed programs and elaborated means of realizingis what, judging by Ihe round table discussion, many participantsin mastering the riches of West Siberia lack loddyl

This argument over West Siberian0 issue of the Central Committee's organ Ekonomlcheskaya.orresponding member of the Academy of Sciences and Director of Ihe West Siberian Scientific Research Institute for Oil Exploration, implied that "evaluation conductedow scientific level will lead to wrong notions about the polcntial of the earth, and in the final analysis to an incorrect determination of the volume of exploratory operations, toa lowering of tempos of exlraction of oil and gas" in West Siberia.eries of historical and technical justifications for believing that more oilfields will be discovered. Ncsterov reaches the "bottom line" for policymakers: "The second oil-gas Tyumen will ben Tyumen, and West Siberia will retain its role as the main base of the country in the extraction of oil and gas,"^

tie was known about tertiary bul that experiments were

Other Prospects. Onshore, the Soviets might hope lo expand oil production through both enhanced recovery efforts and discovery of new oilfields. Some Soviet officials have admitted that they lack experience in enhanced recovery techniques other than water-flooding.,

these methods arc unlikely lo raise recovery rales by more thanercent under the very best conditions (for example,ercent of recover ableor instance, the leading West Siberii. Ncsterov, has publicly speculated that "in laboratory conditions we arc already successful now in extractingaercent of oil reserves. On may hope that inoears the laboraiory pcrce will become ihe regular

A critical recovery task is posed by the rapidly increasing proportion of heavy oil in Soviet reserves. The deputy minister of the Oil Ministry responsible f> enhanced recovery. E. Khalimov, has publiclythat "in recentajority of explored and developed large fields contain viscous, highly viscous and entirely nonflowing'ercent of this oil, he states, can be extracted by relying on formation pressure, and watcrflooding is useless. Nevertheless, far more of this oil can be extracted: "Today it has been proven bolh in theory and practice that through the artificial crcaiion of ihcrmohydrodynamic processes in the formation one can raise the output of flowing oil tooerccn and of nonflowing viscous oil toercent/

Gospian hadajor recoverylo boost oil productionofrom onshore fields in the Caspian area, andlong-term national objective was to increaseoil output by twosingsystems. Progress toward Ihetargets projecicd by Khalimov andslower than

Comment by Soviet specialists about the possibilitie of discovering new giant or supcrgiant oil regions outside West Siberia is optimistic but vague. Thus,eputy minister of Geology, Valcry Igrevskiy, was publicly quoicd9 as saying thi there were "great prospects" for East Siberia:a new oil- and gas-producing center of the USSR is to created in eastern Siberia, which willig role play in the future, especially" In9 Igrevskiy expressed optimism about finding ol

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of Writ Siberia in East Siberia, Ihc prc-Caspian depression, and Turkmcnia. Implicit in his discussion of technical problems encountered in these areas. however. *as the sense that without Western technology the potential of the regions could not quickly be realized. He noted lhat the Soviets needed Western seismic and logging equipment, drilling equipment, well testing equipment, blowout prevent-Chrislmus Irces, mud materials, and computers.

Similarly, Soviet aulhorilies have expressed great hope of finding large offshoreeputy minister of Foreign Trndc, Vladimir Sashkov, told| jin

It should be noted lhat the Soviets have also been discussing plans for offshore oil exploration and dcvclopmenl with iheir East European clients within

We now know that the offshore oil reserves are two and one-half times those on our territory. But they are hard to get at. It takes heavy capital investment and equipment. On land, we also now know that we can getercent mare production from existing wells by drilling deeper and using the four methods of enhanced recovery: chemical flooding, thermal treatment, misciblc flooding and waierflouding. The United Slates, especially in offshore exploration, is the world's leader. Again, we have cut deposits under lar sands near the Caspian Sea. Elsewhere, salt covers Ihe oil. Of course.could produce the oil without help. But wc do not intend any more to invenl the bicycle when it already exists elsewhere in the world.

TechnologyFor many years there has been profound dissatisfaction among Soviet oil industry specialists wiih equipment produced by the Soviet machinebuilding industry, and it is clear thatthink the chances of meeting ambitious oil production goals inre slight unless the oil industry receives more end better equipment The director of the Tyumen Oil Institute and one of the best informed specialists in the industry. Yakov Kagan. has said publicly lhatevolution is needed in our domestic oil machinebuilding.

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Oil Imports. Over Ihe past decade ihe USSR has annually "imported"illion ions ofood pari of il from Iraq. Most of (his oil has either been resold for hard currency or transferred through clearing arrangements io developing countries, and none has physically been brought inlo the USSR. We anticipate that in the fulurc, however, there willeed to raise the volume steeply and deliver substantial amounts directly to ihe Soviet Bloc market. In the past the Soviets have publicly referred only in the most general way to this contingency, but0 Soviet officials have begun to broach ihe issue more dirccily.B

In commentary designed toedge between the United Slates and its West European allies and to assert Soviet interests in the Middleell-connected journalist. Nikolay Portugalov, implied rising Soviet imports when he stared in February that the USSR "is itself interested in ihe security of oil routes in the Persian Gulf region. Chancellortated that ihe USSR,otential purchaser of Near East oil,egitimate right of access to its sources.'!

Leadership Judgments

As noted above, Soviet leaders do have an interest in giving an impression to domestic and foreign observers of measured but nol alarmed concern over the energy and oil problem.!

I Wc know, of course, that Soviet leaders

are familiar with the CIA oil forecast, and probably they lake il seriously even if they do not accept it. At the very least, it may reinforce suspicions lhat the

situation is more precarious than Sonet officialdom is prepared to

Ambivalent Attitudes.oviet Minister of Foreign Trade Nikolay Paiolichevull Central Commitiee membernd former party secretary and candidate member of thenowhas high political status and enjoys easy access to the current Politburoconveyed an ambiv aleni|

Hi hat might well reflect aof his generation reared

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Some circles in ihe United States have been arguin thai the US should not sell oilfield technology and equipment to the USSR. Some hase slated, 'Let us make it difficult for the USSR to extractisinterpretation'.istake! Thereime when the USSR produced onlyillion ton; of oil per year. Then Sialin said, 'Raise ihe oil production toillion tons peroday the Soviet Unionillion tons per year. II wc want to extract more oil. wc will. But wc may nc want to extract more oil. On the oiher hand, wc ma enter the market to buy some oil, perhapsittle. So will Poland, so will Czechoslovakia, so wil East Germany, so will Hungary; and then wc will spoil ihe market for the Unitedf the Soviet Union, and Poland, and Hungary, etc. went into the market, even totile oil. it would hui the United States.

You know, during the war steel output wasmillion tons per year. How was it possible toGermans? This is where our system works.where our system is flexible. During thein this country was allowed to use evenof steel for anything but warorked in the Urals region during thehow easy it isonform the methods wcthe war lo today to really economize. Weour energy requirements and even havesurpluses of oil; and besides that, wea vast network of nuclear powerpower plants. As far as our coal reservesthey arenow ourPlans can doknow, when

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BrezhnevTighten ihc bells by oneveryone will da il. and lhe effect will be tremendous. Such negative comments merely en-courage us. Wc will do il faster and latter! |

If lhe Soviet leadership is wonl to judge the seriousness of today's problems by comparing them with those of Ihe early Five-Year Plans and the Second World War.airly substantial short Tall in oil production might not seem thaiailer, especially taking into account the huge proven gas and coal reserves perceived to be there in Siberia

Baybakot'imong top economic officials, none has had more experience in dealing with energy issues, and none probablyigher reputation as an energy adviser, than the longtime Minister of Oil and current chairman of Gosplan. Nikolay Baybakov. Since at least theaybakov has closely followed general energy issues and evidently been seriously concerned with both the quantitative and cost dimensions of lhe energy problem. His inlercst in holding the line on investment in West Siberia has led him into repealed conflict with proponents of faster West Siberian development, and has probably also stimulated his strong support for enhanced recovery methods capable of gelling more oil out of already-developed fields (he hus even lent his name as coauthor toabook on enhanced recovery published.

I

lhat wnen ne was ilnisler of Oil be was recovering approximatelyercent of lhe oil in place. Now. as chairman of Gosplan. he was interested inercent recovery, although be realized that this was extremely(The seriousness of Bay bakov's commitment to enhanced recovery is suggested by the reportedofnlvanccdprojects in lheive-Year plnn-l

9 interview published in the Bulgarian press. Bay bakov's deputy for energy affairs,layanu. was invited io refule "unfounded hypotheses regarding alleged reductions in oil prospecting and lhe oil output level lhal have recently been widely spread in the West, sometimes even in the form of tepOTls issued by officiala In ya nts replied:

0 and up0 oil output will also increase, although ai lower tempos. As/or ihe discovery of oil deposits in the USSR, generally speaking for the whole country, ihey not only are nol diminishing, but are even increasing, thanks Io Ihe new oil deposits discovered by Soviet geologists in West Siberia, the Komi ASSR, and in oiher areas. Reserves offshore and in East Siberia and Kazahksianreat, still unutilizedwhich will allow us to keep up the level

attained in uil production and even io increase it.

We arc guided by our policy of reducing the share of oil in lhe fuel and energy balance of lhe country in favor of an increase in ihc output of gas. coal, hydro-power nnd nuclear energy. We are also facing the task of increasing the intensified processing of oil. so that the same amount of oil can produce more oil

In the oil trade area, Lalayants conlinued. Ihe USSR had "always fulfilled and always will fulfill our obligations" to supply oil to CEMA member couniries. Leaving unclear what these "obligations" would be in the future, he raised the issue of escalating capital investment COSIS of oil exploration and development and pointedly informed his Bulgarian audience lhal "all this demands that we search for new forms of effective cooperation, permitting us lo cover the economically justified needs of the CEMA member countries for oil and oil products 'fl

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also mentioned thai

oviel Union is interested in purchasing oil gas aserever it is advantageous for us, letting oursrlscs be guided by geographical and other conditions Wc are importing oil fromraq. Recently the oil deliveries from Iran have reduced in connection with events in that country; but we hope that in the future, along with the increase of oil output, the planned quantitiesbtained from that country

The relatively optimistic outlook suggested by the Lalayanu interview appears to be reflected also in Baybakov's comments on energy in hut report on the annual plan to the Supreme Soviet inespite Brezhnev's biting attack on energyat the Central Committee meeting several days before, Baybnkov limited himself to observing thai the oil and coal ministries were to "blame" for plan nonfulfillmentnd he assured the leadership thai Gospian had already responded in0 plan to party decisions adopted on Brezhnev's initiative:

The need to insare stable growth in ihe fuel and energyas been acknowledged. The main increase in oil estraction will be obtained in the regions of West Siberia, which compensates for the natural fall-off in extraction al old deposits andertain increase in its cxtrnclion.will alio increase in the regions of the Komi and Udmurt ASSRs. the Georgian SSR and Sakhalin Oblast.

More recently, inosp

Growth targets in oil production, Basbakovcould only be metconsiderable" increase in capital investments and an accelerated com miss ion ingofnew produclion capacities and infrastructure,^^

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evelinglonauring this period. It was unclear, however, whclher the actual draft of the five-year foreign trade plan would be based upon such an assumption]

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and Kirilenko, In several interviewsremier Kosygin. who has been the top leader directly responsible for energy policy, downplayed lhe seriousness of ihe energy problem. Kosygin told P

and gas

prodtictKin was growing bvillion tons per year, lhat the USSR had large gas and coal reserves, and that it was exporting oil to Eastern Europe and to West Germany. France. Austria, and Italy.

Kosygin's implied warning to the East Europeans at the9 CEMA session that they could expect little increase in oil deliveries15 suggests, however, lhat he was deliberately shading the image he presented to his American interlocutors. Simply on the basis of his travels to oil-producing regions wc can guess that Kosygin has been very concerned about coping with fuel deliveries and shortages in the USSR. |

We know thai steps were undertaken by the pany leadership during the summer and fallerhaps in anlicipaiion of the poor ycarend results in oil. coal, and electric power, to improve performance in the energy sector. Government and parly resolutions on energy were adopted in June. At the9 summit meeting with President Carter, when asked what the grcalest internal Soviet problem was.responded:najoron fuel and energy was convened by the Central Committee and both before and after this gathering major press editorials were published that manifested heightened anxiety about energy and probablyunpublished leadership decisions.

In his report in November on the anniversary of lhe Revolution. Andrey Kirilenko revealed something of the leadership's judgments and intentions:

In order to achieve further successful economic development and the creation oflhc material and technical base of Communism, the party Central Committee, on the initiative of Leonid H'ichhas adopted major new measures. This refers primarily to the building of the capacities of the fuel and power complex and the improvement of its structure. Emphasis is laid on increasing fuel extraction and developing atomic and hydroelectric power generation. The scientific search for new. non traditional sources and methods of obtaining electricity is being conducted intensively. Work is being stepped up to save fuel, electricity and thermal energy and reduce consumption for Ihe output ofcientifically and economically based all-slate energy program is now being developed. Its aim is to provide for ihe accelerated development of power generation and to improve ihc entire technical base ofthc national economy. (Emphasis added.)

These comments by Kirilenko indicated leadership

displeasure with progress in the energy sector, a

recognition oflhc need to press ahead in shifting lhe

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Brezhnev. All three ihemes were articulated at much greater length in Brezhnev's speech to the Central Committee Plenum al the end of November. Brezhnev began by declaring lhal the growing energy needs of the economy were "being saiisfied only withand thai for this reason Ihc entire range of energy problems had to be reassessed. The immediate task, Brezhnev stressed, was to mobilize "not only economic organizations, but all party andorgans from lop lo bottom" to "create sufficient reserves of fuel for thenhe strategic task was "primarily to reduce the share of oiluel for power stations.*

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igu menial ivcly, Brezhnev duelled lhal "calcula-lions show lhal ihis is perfectlyhe key lay inmore resolute approach io increasing rates of esiraclion of gas. particularly in Westpeeding up nuclear power generation, and accelerating ihe commissioning of new capacity in the Rkibastur. Kansk-Achinsk, and Kuznetsk coal basins. For the longer term, he argued, power-savingshould be introduced and "long-term plans should envisage the broad construction of nuclear power stations with fast neutron reactors, doeloprrseat of work on omii.il led thermonuclear synthesis,of synthetic liquid fuel and use of solar andolutions to the energy problem. To facilitate mailers,pecial commission has been set up to determine effective ways of solving the energy

Two years cailicr.ai the7 plenum of the Central Committee, Brezhnev hod proclaimed lhat Soviet energy policy would be based for the neatears on oil and gas produclion in West Siberia. Tbe establishment of the special commission by theand Brezhnev's stress on natural gas. nuclear power, and coal, appeared tooreappraisal of the prospects for oilartial return to the official energy policy line approved byh Party Congress6 which- with Kosygin'scalled for greater emphasis on coal and nuclear power. Vcl the revelation in0 that the Politburo and (he Council of Ministers had "recently" approved an acceleration of capitalin West Siberia suggested possible further shifts in energy policy.!

The creation of Ihe commission could represent the first step in securing sufficient backing for drastic policy determinations designed to cope with the real impending difficulties Bul il could also reflect cither leadership conflict, or drift over energy policy and tbe subordination of resolute action to the personal interest of leaders seeking ihe political cover of whatever recommendations emerge from ihe collectiveof this commission.

Dotgikk. Brezhnev's speech was followed in0 by an ankle on the fucl-cncigy complex signed by Vladimir Dolgikh. the Central Committee secretan for heavy industry. Dolgikh acknowledged ihe direct link between "high tempos of economic growth" (which he seemed io imply would be maintained) and the "siill faster development of the fuel- raw material base, the raising of ihe mechanical and energy-intensity of iheJconomic growth, in turn, was Ihe decisive factor in mililary preparedness and consumer welfare. Unfortunately, fuel shortages and ir cutoffs were already affecting economic growth

The solution lo these difficulties lay in implemeniatioi of Brezhnev's "propositions and conclusions"at the laic9 Central Committee plenum. Theseprogrammaiichey entailed "perfecting the fuel-energy balance,scientific-technical progress, reliably providing for ihe growing needs of the economy for fuel and power, and raising the level of all work io cconomizin onasks for the future included broader utilization of alomic, solar, and geothermal energy, and produclion ofrojection of the Soviet economy to the end of the century showed lhalharp growth in the extraction and production of fuel-energy resources, the share of oil and gas In the genera balance, evidently, wilthus, "the task confronts us ofrecise program for the further development of the fuel energy complex."H

In the old oil regions of ihe USSR, Dolgikh argumen-laiivcly stated, enhanced recovery methods would permit the extraction of large addilional quaniilics of oil and "give theultimillion rubleor Wesi Siberia:

The growth of extraction of oil in West Siberia nov is occurring basically through the exploitation of earlier-opened large deposits. In order to replace them in the future, it will be necessary to bring inl< production dozens of small fields. Calculations she that5 to meet the needs of the country it wi|

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necessary lo more Ihan double ihe volumeIfwere done with currentat present tempos, il would requirenumber of workers engaged in drillingof thousands. But this is hardlymeans ihcrc is only oneper feet ionoftechnology, ihe raising of

In Ihis passage Dolgikh explicitly recognizes at least several of the basic constraints that lead CIA analystsecline in Soviet oil production (thai is. the need lo begin developing many remote small fields in Tyumen Oblasl. ihe associated steep rise in drilling required, and manpower shortages) He acknowledges that there is no solution to the dilemma of West Siberia other ihan increased productivity, but he thensincerely orproductivity does siillay outfl

Both Dolgikh and his professional audience are fully aware that in past Five-Year Plans productivity gains of the sort he is talking about have never been altaincd, and lhalariety of reasons productivity indicators in West Siberia arc Currently falling raiher than rising. In the last four Five-Year Plans the oil drilling target has not been fulfilled; and the chances that it can be fulfilled15 with the kind of manpower shortage he indicates are dim J

Not surprisingly. Dolgikh docs not address theof how, concretely, such gains in productivity can be achieved. Rather, he shifts the discussion in the remainder of the article to quite conventionaland personnel measures aimed at "improving leadership" and "raising tbe responsibiliiy ofophisticated Soviet reader of Dolgikh't article might well conclude lhat some decline in oil production is inevitable (how much and how fast would remainnd thai Dolgikh himself must perceiveor not he is prepared loudmitjlor make jhe^coircsponding policy recommcndaiiont^J

Leadership Judgments Summarized

The picture one can draw from Ihe evidence presented above is cloudy, and conclusions could be altered by dearer insights into what the specialists have been telling ihe leaders privately, and how much of this is being accepted and really acted upon pj

There is undoubtedly optimism within the leadership about the Soviet long-term energy future, based upon the enormous proven reserves of coal and gas, (he likelihood of future oil discoveries, and the potential for expanding nuclear power and bringing on fast breeder reaciors. Compared with the prospects of most Western count rics, those of the USSR look rosy IB

Current fuel and power shortages, however, arc obviously becoming extremely worrisome to the Soviet leadership. The failure of the oil, coal, and electric power in,lusities to meet their targets9 has apparently provoked an "agonizing reappraisal" by Soviet officialdom of the USSR's energy policy. Il is clear to the Soviet leadership thai economic growth, and everything that goes with It. isicopardizcd by poor performance in the energy sec tor H

Uncertainty about future oil prospects is probably the dominant feature of the outlook of the leadershiphole. This uncertainty appears ioange of possibilities, bounded on the high side perhaps by hopes for at least some increase In oil production, and on the low side by fears that the CIA's projections might prove to be not far off the mark J

Soviet leaders are familiar with these projections, and probably do not dismiss them lightly. One cannot rule out the possibility that some top specialists who do have access to comprehensive data on Soviet oil production have privately warned leaders that the CIA is right, or the possibility that the leadership has secretly concurred with such as assessment.

There is evidence, however, that high officials in the Central Committee Secretariat link future increases in the level of oil extraction with productivity gains lhat they probably realize are unlikely to be met. The leadership is almost certainly aware that even under ihe best of conditions unconstrained demand for oil will outstrip lis availability, and that the share of oil in the energy balance will inexorably decline. It is also

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of the situation. If pasl practice is any guide, lhe commission in all likelihood is composed of the same individuals who are already responsible for adminisier ing energy policy or advising the government and central party apparatus on energy issues. Whetherommission will recommend the strongindicated, and whether (he leadership willup the poiilical courage io swallow it. remains to be:

I iheir presence in Afghanistan now provides ic acme's wiih enhanced opportunities to seek Middl East oil through intimidation or positioning miliiary_ forcestrike at the Iranian oilfields,!

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Nor does the leadership to date appear to begalvanized by its judgment of the oil future lo make any radical or really innovative domestic policy determinations. It is insisting with ever greater urgency on energy conservation, and is stepping up lb rate of invesiment in oil production and other energy sectors. But il is apparently unwilling to go beyond th (rsed-and-true responses of exhortation and ads-Iraitve pressures even to discuss, much less tontroduce, the sort of structural adjustments in the economy that might case ihe irsnsitton io on era of ft less oil. In Ihc back of leaders' minds there mayonviction, based upon the experience of the early Five-Year Plans and the wartime period, that if they are not able to keep oil production up through mobilizing all possible "reserves" (which is what the will surely attempt lohey have (he option of rcimposing harsh labor controls and lower standards living. They probably expect lhat such meajures-ou simply be acceptedassive population H

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