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ielli eeocs Assessment
il Problem: Views of the Soviet Leadership
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paper was coordinated with the National Intelligence Officer for the USSR and Eastern Europe, the National Intelligence Officer for Political-Economy, and the Office of Economic Reset
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USSR Oil Problem: Views of ihe Sotietu)
Judgments
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accuracy of ihc Soviet leadership's appraisal of the USSR's oil production constraints inould have serious implications for Soviet behavior, both domestically and internationally. But pinpointing what the leadership thinks is difficult, in part because its judgments may differ somewhat from lite opinions il is celling from Soviet specialists
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of Soviet specialists that reach the leadership are divided. Someabelieve that it will be possibl. to increase oil production5thers believe thai oil production will almost certainly peak some lime0u are uncertain over how long peak production can be sustained or how rapid the posipeak decline will be.
Uncertainty is also probably the central feature of Soviet leadership judgments about future oil prospects. This uncertainty probably is bounder, on ihe high side by hopes among some leaders for atlight increase ii oil production and on the low side by fears that public CIA projections migh prove to be not far off the mark.
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leadership is extremely worried about the current oil situation, and individual leaders are almost certainly aware thai the productivity gains upon which fulurc increases in the oil extraction level depend arc unlikelybe met.r
It is not unlikely that declared policy lor thevc-rcar lan wnfaim at stabilizing oil production at approximately0 level, although the leadership is well aware that five-year targets arc often not fulfilled.
the leadership is urging energy conservation and stepping up the rat
of investment in oil production and other energy sectors, it apparently is unwilling to introduce or even discuss structural adjustments that might case ihc transition to an era of far less oil.
his assessment is an overviewiudy of ihe same title that will be published in the nea
The leadership may well be convinced thais not able to keep oil production up through mobilizing all possible "reserves" (which is what will surely attempt tot has the option of reimposing harsh labor controls and lower standards of living, and thai such measures will be accepted by the population.
The above information is-Cr-nfUlmual.-
USSR Oil Problem: Views of Ihe Soviet Leadership (u)
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Ihe Soviel leadership accurately judge* the USSR's oil production constraints inould have serious implications for Soviet behavior. Al overon of these possibilities could lead domes-lically to the emergence of serious unanticipated bottlenecks, unplanned adjustments, and increased disruptions in Iheof which could still further teduce economic growth, depress livingand heighten political conflict within thequite possiblyuccession period |
Internationally, misjudgment of the seriousness of the oil problem could lead to abrupt cutbacks in oil deliveries lo Eastern Europe, intensified economic and poiilical tensions in this region, and possibleactions 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 attemptsuick access to mote oil from OPEC countries.
US Predictions
We haveleak energy future for the USSR over ibe nest decade. Soviet nl production will peaknd then decline from about0 million barrels per day)0 oil output probably will drop still further to. We anticipate thathc Soviets and ihcir allies will jointly become sizable net importers of oil. The drop in oil production willevere impacthe rale of economic growth in Ihc USSR and Eastern Europe: GNP growth rates could decline in the Soviet Unionercent or leu5 and to levels low enough to jeopardize political stability in some East European countries.
he Soviets Think?
Soviet spokesmen, naturally, have impugned ourin making such projections and, in general terms, have denied their validity. Yet it is obvious thai Soviet officials from Brezhnev down arc seriously concerned
about oil production. Thus, ihe question is: What do the Soviets really ihink about ihe USSR's oil problem, and how muchap is there between our forecast and ihc judgments ihat underpin Soviet policy
my specialists only have access to lot mmion and. in any case, may conceal their worst rears from the leaders, lest they jeopardize their own careers Iboth foreign and domestic interests motivate Soviet leaders to understate the seriousness of the oil problem in their publicAs oil production peaks or actually starts, declining, important interests will be served by concealing such developments as long at possible: it is futl> conceivable that when this momentwhich could be thisSoviets may resort to falsification of oil production figures or ma> set target! that they know will be underfilled|
Expert Opinion
What ihc Soviel leadership collectively thinks about the oil problem depends substantially on whai Soviet specialists have lo say about it. Oil production matter-arc technical and complex, and the leadership has no choice but to (urn in the first instance to ei perls for their assessment of the problem J
In terms of assessing leadership judgments, the single most important feature of specialist opinion, however, is thai it is divided on important issues. Consequently.
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uliimaicly must(or themselves how io judge 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 templed to listen lo the more optimistic advisers and opt for courses of action thai do nol force difficult economic choices or political
Some spccialisis.inorily. apparently believe that it will be possible to increase oil production5 orf those whom wc know to have expressed this opinion, most are well removed from the actual production process and probably do not have good access to Ihe data required to reach an informed judgment. |
Other specialists believe that oil production will almost certainly peak some time0hese specialists appear to be unceriain about how long peak production can be held, or how rapid the postpcak decline will
Some statements by specialists suggest (hat peak production can be maintained more or less indefinitelycries of conditions are met. (These conditions, of course, may privately be consideredther statements seem loerception- azydeclining production. It is unlikely that any specialist has flatly predicted thai Soviet oil production will drop from about05 (as we havelthough it is possible that figures have been presented from whicheader inclined to do so.|
Those specialists lhalore pessimistic view of Soviet oil prospects, in line with the CIA estimate, emphasize:
difficulties in offsetting depletion in Ihc absence of any major new oil discoveries.
The excessive use of waierflooding and density of infill drilling in older oil regions.
serious drilling and other constraints lhat limit the critical exploitation of new small fields in West Siberia.
The problems that will arise inrom having to cxttact and process increasingly greater volumes of heavy oil.
The inadequacies of Soviet-msnufacluredand leehnology|
Debate continues among spccialisis und between West Siberian and Slate Planning Committee officials over the amount of recoverable oil reserves in West Siberia and the desirable level of investment in Ihc region. Seme local enthusiasts apparently believe thatcan be increased in West Siberia. All those concerned with West Siberia, however, complainirm 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, and that very substantial volumes of oil can be extracted in time through enhanced recovery techniques. Il is likely thst expectations from enhanced recovery arc exaggerated. Exploitation of all Ihese possibilities is seen by specialists to depend, however,adicalin technology. Many specialists believe lhat brgc^a'^
critical in this
Leaders' Statements
The USSR's gas, coal, and nuclear power resources have enabled Soviet leaders io make optimisticabout the long-term energy prat reels for the USSR. This optimistic assessment by Ihe leadershipof the energy picture should not be obscured b> the existence of near-term energy difficulties.signs of leadership amicty over Ihe immediate energy problem have multiplied over the past year; Soviel leaders arc extremely worried by increasingly severe fuel and power shortages. The failure to meet oil, coal, and electric power targets9 was probably one of Ihe factors motivating the leadership to callerious reappraisal of Soviet energyundertaking currently assignedpecial commission created by Ihe Politburo H
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probably is Ihe ccnUal feature of the leadership's outlook on future oil prospects. This uncertainty appears toanee of possibilities, bounded on one side by hopes among some leaders for atlight increase in oil production, and on the other by fears that the CIA's projections might prove to be not far off the mark. Soviet leaders are familiar with these projections, and probably do not dismiss them lightly. It cannot categorically be ruled out that some top specialists v. ho do have access todata on Soviet oil production have privately warned leaders that the CIA is right, or lhat the leadership has secretly concurred with such an ment.l
rive-Year Plan will aim hi stabilizing oil production at approximately0 level, although ihe leadership is well aware thai five-year largcls are often nol fulfilled,officials in the Central SecrcTanaTTink future increases in Ihe level of oil extraction wilh productivity gains thai ihcy probably realize arc unlikely lo be mcl. The leadership is almost certainly aware that even under the best of conditions unconstrained demand for oil would outstrip its availability and that the share of oil in the energy balance will inexorably decline. Il is also clear lhat the leadership understands thatll need to buy more oil inhan il now does
Soviet leaders seem tobifocal" image of tbe difficulties that confront them. They lend io focus cither on immediate fuel nrd power shortages, or on distant changes in the energy balance. Apartoncern with energy conservation, however, they do nol appear to be focusing very sharply on ihe kind of middle-distance conlingcncics lhal would be suggestedudgment lhal ihcie willleep drop in oil production by -
The leadership is keenly awatc Ihut its options for dealing with ihe oil problem and other economic difficulties in ihe short-to-middle term are increasingly
restricted by investment and manpower constraints. Finding themselves in Ihis siiualion. they may be prepared to grasp at straws There appears loillingness to accept whal probably arc inflated estimates of Ihe impact on oil production of enhanced iecovcry melhods and other forms of technological innovation, as well as of equipment modification. |
Regime Behador
Regimemanifested inactions in the areas of oil andports, conservation, oil production plant, investment,imports, secondary refining, and substitution ot other fuels fornot give an overall impressior that Soviet decisionmaking has been propelledudgmentharp drop-off in oil production is inevitable ineriod. What Ihe Soviets arc doing does give the impression, however, lhat (hey recognize (hat previous rules of increase in oil produc-Uon cannot be sustained, and that they anticipate serious difficulties ahcud in mcclingthciroil needs ant those of their allic
At the7 plenum of the Central Commit tee, Brezhnev proclaimed lhal Soviet energy policy fo ihe nexlears would be based on oil and gas production in West Siberia. Then, amid signs of disarray in ihe party line on energypecial commission was established by ihe Politburo in9 to "determine effective ways of solving the energyhis moveeadership judgmeni lhat7 policy line alone was notthough the leadership hat recently decided to accelerate capital construction in West Siberia in accordance wilh the earlier policy. The creation of the commission could represent the first slcp in securing sufficient backing for drastic policy determinations designed to cope with the realIt could also mean, on the contrary, lhat the energy problem is not judged to be so urgent that immediale aclkin must be taken without gaining Ihe political cover provided by whatever agreedevenlually emerge from Ihe collective deliberations of this commission.)
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The leadership to dale does not appear to begalvanized by iti judgment of the oil future to make any radical or really innovative domestic policy determinationsnsisting with ever greateron energy conservation and is stepping up the rate of investment in oil production and other energy sectors. The leadership is apparently unwilling,to go beyond the tricd-and-true "campaign" responses of exhortation and administrative pressure even to discuss, much less begin to introduce, the son of structural adjustments in the economy lhat might case the transition lo an era of far less oil In Ihe back of leaders' minds there may wellonviction, based upon the experience of ihe early Five-Year Plans and the wartime period, that if they are not able to keep oil production up through mobilizing allhat they will surely attempt tohey have the option of rcimposing harsh labor controls and lower ttandards of living, and lhat such measures will simply be accepted by the population.
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Original document.
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