Soviet Comments on CIA Energy Projections
Central InuaigrartNational *orrtf* Aurumrof Center
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Introduction
Since il was issued bsl year ihc CIA analysis of Soviet oil production prospects' has been the subject of comment by Soviet officials. At hand arc reports on the statements of overfficials who have spoken either directly about the CIA study or about tbe broad questions il raises In several cases, most notably that of Premier Kosygin. more than one discussion of the subject by an official is on record. The limited sample of opinion available and its generally inconclusive nature provide no precise guide lo future Soviet energy policy, but il shows that Soviet authorities are not ignoring the difficulty of maintaining their present oil position and sec the need to gou.vincss-as-usual approach to the problem.
The opinions voiced by Soviet officials may bo roughly divided into ihreecautious, and pessimistic. The cautious group tends to be made up of officials responsible for energy policy and the oil industry. On balance these officials arc less optimistic about the future than those who are not so closely involved or knowledgeable. In contrast, this latler. broader group ol officials lends lo extremes of opinion, with optimists outnumbering pessimists two to one.
Optimistic Views
The optimistic point of view is expressed by those who summarily dismiss (be CIA analysis and assert strongly their conviction that Soviet oil needs will be fully, met. Certain problems arise, however, in interpreting such statements Although the CIA analysis has prompted Soviets lo discuss their oil and energy
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situation in broader terms than has bcciVcustomary, the origin of the analysis has also probably colored their remarks. Some officials may have spoken more positively lhan (hey would have otherwise becauseatural inclination tooreign, andfA. study of Soviet problems. Certainty, several of the optimistic responses were made in forums where concerns of national image and propagandaart.'
These discussions frequently dwell more on denigrating foreign analysis than on elucidating the Soviet situation. Assurances about the future are usually vague. For example, exports lo Fast European countries are commonly discussed not in terms of amounts, bul in lerms of meeting commitments.
Hosy prognoses have also been offered by informed scientists speakingwere lold thai the Soviet Union will be able to
maintain an exporl capacity well into the future when they talked. Styrikovich. an official of (he Academy of Sciences and an expert on power engineering, andekrasov, chief of the fuel energy balance section of the Central Economic and Mathematics Institute. Both focused on the promise of exploration in new regions and tertiary recovery methods, which will achieve yields up toercent, according lo Styrikovich. Styrikovich admitted, however, lhat the Soviet Union is running out of cheaply produced oil and lhat the price will have to rise. Nekrasov. on the other hand, seemed to implyramatic rise inarrel by tlie end of theoffset Ihe fact lhal Soviet oil exports are unlikely to grow any further '
An additional problem in evaluating optimistic slalcmcnts is their occasional inconsistency At times this mayonllict between the impulse to discount critical foreign analysis and familiarity with existing problems. Some members of foreign affairs institutes have scoffed at the CIA analysis while mentioning problems that would seem to belie such confidence
For example.hcrshnev, deputy director of the Institute of ihc USA and Canada, while claiming that the USSIl has enough resources to meet
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cor.-vm.nRd pnhcy and helled the ClA (or no- .mimm* lhat ihc Soviet enetgv indutt'v .odd biwiheaeie problems ai lit Wctiein counterpart, lu incervie-ithe Boston CfrnVtiiylslfun. chief ol ihe USA sectionthe Staledhe OA report osculated ihe probW ,ndheohne.tcim ol the Institute ol Ihc USA >nd Canada, ssid lhat the USSB had enough odh. lore-cablrthet nlhruk less espert. have aliocsllite line Alth Djnoii.iith Ctmlrienrr IeI Giooto* ol the Imiiiulc n( Wotld Economics andUiHm. deiwd that oilraline .nd will turnn the IMfe snd poinml lo mminoed doelopmeMewtev imouien in Siberia In ipeaking wah Srn.lm AdLl Slcwnwm. CmUinl Ctuununllhunnv iit>nfull> teReted At Ida ol twining nut o* oilort. althcwch heed^ed hlnitalKin* on ripuM, tn Eel Eoinpean counoic*o ssid use too rwit'i energy
future oil needs, admitted that It has been impossible to follow up drilling pces-bdities in the north because equipment is lacking and acknowledged that the high cost of domcstie development makes purchases of OPEC oil
attractive. N. N. Inozcmtsev. director of ihe Institute of World Economy and International Relations, criticized the CIA analysis for applying old production
efficients to new areas and for ignoring the potability of substitutes for oil.
He admitted, however, the difficulties in developing Arctic deposits and the
existence of differences between the USSR and its allies over ihe rate of
growth of Soviet oil exports to Eastern Europe.
Other officials may vary (heir tone and message to suit different audiences and different politica! purposes. For example. A. M. Laiayants. Caspian deputy chairman responsible for fuels, used the internationally circulated weekly New Times in December to reject the CIA's "statement asserting that the USSR will soon turnig importer of oil becauseecrease inmessage quite different from tlie pessimistiche and other Soviet officials have been conveying to East Europeans in recent years.
Beyond the question of motives, the optimistic comments, as well as many of the more cautious ones discussed in the next section, reflect some basic assumptions and attitudes that are probably characteristic of Soviet society in general.
Most generally, officials pin their hopes on the assumption that Siberia holds huge stores of yet undiscovered or unexpired energy resources. Thus, when discussing how the flow of oil will be maintained in. Soviet oHicials often mention increased exploration, the discovery of new large deposits, and offshore drilling in the Barents Sea Clearly, this sense that enormous resources exist in the vaslness of the eastern regions makes the idea ol an oil crunch in tlie near future hard for many individuals to accept.
One official voiced an altitude that is common to many whenion ofiheamotlor" (the country's largest oilfield) is likely to be lound. He replied grimly. "The geologists will find one. Those who are cautious more openly acknowledge not only that many ol these reserves are not proven, but that all phases of exploitation will be difficult and cosily. Some note lhat Western technology will be necessary, for example in offshore drilling, and they rest some of iheir hopes on its availability.
Soviet officials frequcnlly express the expectation that improved sccon-dary and tertiary methods of oil recovery will greatly increase the yields from the newer fields in Siberia in comparison to the yields of the older fields that ate now inommon criticism of the CIA study is lhat il allegedly assumes that ihe older pattern of exploitation will be repeated. Yet many of
thesefor example, for yieldsomo be unrealistic in light of Western experience.
A faith in the efficacylanned economy sustains the hopes of many The more sophisticated believe thai the Soviet Union will be spared the chaos they sec spawned by market forces in the West. Others appear simply to holdelief that everything is developing accordingaster scheme. Speaking more specifically, officials cite several measures that planners can take to maintain balance in the fuel sector, including substituting other energy sources for oil, developing nuclear power, and increasing tbe efficiency of energy use.
Cautious Cornmonlary
A second group of officials has expressed views best described as only cautiously hopeful. This group is more important than either the optimists or the pessimists because it is made up primarily of officials responsible for energy policy and the oil industry. While reciting many of the above themes, they refrain from arguing against the CIA reports directly and are less categorical in expressing their belief that the Soviet Union will escape serious oil deficiencies. Their remarks also touch less common topics that reflect their more circumspect thinking aboul the future.
These officials speak of the unknowables involved in forecasting, often nol to berate Ihe CIA projections, but to explain their own lack of precision and total assurance. They are more willing lo identify the Soviet situation with the worldwide energy problem and to recognize lhat similar solutions are required In the national and international contexts. They speak more directly about Ibe need for conservation and more efficient use of fuels and of ihe value of Western technology to Soviet development plans
The sober approach of officials accountable for energy policy and the performance of tbe oil industry is due not only to their better grasp of the situation, but also to ihe fact that they can expect to be called upon to produce what they project. The optimism of Styrikovich and Nekrasov noted above, for example, comes from scientists who arc knowledgeable about energy matters but bear no operational responsibilities. In contrast, the ministerelated fuel sector, the gas industry, has spoken pessimistically aboul ibe future
The difficulties encountered in making projections have probablyore sobering effect on the officials directly involved lhan on other officials who have been free to lei their opinions range more widely. Yet ihroughout. the views expressed by Soviet officials reflect their lackeliable data base concerning both oil production and consumption The lack of figures is often acknowledged and has been used to explain lo trading partners the USSR's
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inability lo make commitments for oil and natural gas exports0 Gosplan officials said last May that formulation of the long-termad encountered serious difficulties in. among other things, the calculation and allocation of energy resources.'
At the same time, responsible officials repeat that the Soviet Union is basing long-term plans on the assumption that it will remain self-sufficient in fuels. This clearly remains the bedrock of official policy.
Koiygin ond KWlUn
Premier Kosygin and his deputy V. A. Kirillin are the highest ranking officials to have commented directly in tho past year on foreign discussion of the Soviet Union's fuel prospects At times they have been equivocal in their remarks, but in general they have tried lo convey an assurance that oil supplies will be adequate in the future while admitting the difficulties and unknowns involved in securing them.
eeting with Finnish President Kekkonen in Helsinki last March. Kosygin contrasted the difficulties Western countries were having tesolving the energy crisis with the planning process that allegedly allows the Soviets to avoid such problems. He assured Kekkonen that Soviet resources of crude oil will not decrease00 and that the Soviet Union willeliable supplier of oil to Finland over tho5 years
Overall, however. Kosygin's comments indicate that he views the energy questionerious one. Even lo Kekkonen. he acknowledged that fuel problems cannot be solved easily, and the figures be gave on oil production70 were below the targets in the five-year plan. When Kosygin talked to British Secretary of State for Trade Edmund Dell in May. he said thai Ihe USSR must get going on developing ils own oil deposits al sea, and he was principally interested in the speed and methods used in developing North Sea oil.
Inuel and energy program for CEMA al tlie annual Council meeting in June. Kosyginelatively somber line. He identified the fuel situation in CEMA countries with the worldwide siluation, saying that the fuel and energy problem is one of tlie most acute problems of economic development throughout the world, and that all countries are seeking its solution through the more economic use of energy resources Kosvgin acknowledged thai, in projecting the consumption of energy resources in the future, the CEMA countries are taking into account the new situation in llir world, and he spoke of the complications involved in developing fuel sectors
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in July mentioned (he CIA Luipsuun un energy. Paralleling Kosygin*
interest in developing offshore deposits, Kirillin expressed moderate optimism about prospects in the Barents Sea. He stated, however, lhat no oil findings had yet been made there.
In discussing Soviet plans with British Secretary of State lorBenn last May. Kirillin said that he could not give exact figuresand gas production in the plan0 because the resources had yet toand much depended on Rcological discoveries yet to be madeabout the Sovietet oil position during. Kirillinthe country would be self sufficient and would export oil inis carefully phrased answer did not exclude the possibility lhatUnion mightet importer of oil at least temporarily during:
Oil Industry Offesnb
Petroleum Industry Minister Maltsev and First Deputy Minister Mishche-vuh have been defensive and tight-lipped in responding to questions aboul the CIA analysis. Maltsev asked llrilish Secretary Benn whethereais ago Secretary James Schlcsinger could have predicted Britain's cuirettl oil sima lion Regatding the CIA forecast. Mlslichcvich has said only. "Wait andnd heil figures loryear plan weie still being worked on in July.
At the same time, most oil ministry officials have doggedly asserted (ImI the Soviet Union, unlike all other industrially developed states, is basing its economic growth exclusively on its own energy resources and will continue lo be an ml exporter Deputy Minister Zhdanov, however,epartment nl Fiiergy official in December lhat consumption trends will determine whether the Soviet Union becomes an importer of oil in the next decade He believes that, il the country continues lo hum oiluck it willhe same situation as the US. *
Ministry officials have focused attention on recovery methods, and in doing so lave acknowledged some of the problems in oil production noted in ihe Westewspaper ailiclr in September. Maltsev wrote that "traditional melhods of ml extraction, including flooding, bring out only part ol the hid' and see are no longer satisfied with the situation in thishe article spokeong-term, comprehensive program lo introduce new methods til nil
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extraction. Mishchcvich ^that 'he Soviet Union is going
to try to raise the oil recovery rate fromoercent by using tertiary methods. He conceded, however, that increasing recovery even toercent would be difficult.
Reliance on Western technology was Implied in Mishchevich's comments on developing offshore deposits He said that the Soviets would be buying more US equipment and that offshore operations with the US would be welcome, noting hopefully, "You helped the British explore the North Sea."
An additional aspect of the reaction to the CIA analysts is the useit may be put in domestic bureaucratic battles over energy policiesallocations. There ts no direct evidence on this score, but
fearly lastproducers were engaged in the sort ot allocations dispute Tn which they would have found the analysis in the CIA reports welcome. In order to obtain larger allocations for developing new fields in eastern regions and for the distribution of oil. the producers reportedly had made projections of oil output lhat were clearly below the capabilities of the industry. Soviel foreign trade officials told Finnish officials that the ensuing allocations dispute with Gosplan partly explained the inability to provide projections of oil exports over the long term
Comments fromIIVioU
Cautious comments liave come also from of ficials outside thebedinskiy. deputy chairman of Cosplan was asked bylast July about energy prospects in light of thehe replied that the problem "might" be solved, that it isHe said thatyear plan is being held up not becauseabout oil. bul because of uncertainty about consumption andMembers of the Institute of Economics of ihe WorldtoldOctober that the CEMA countries' energy
problems ami ultimate solutions' are similar to those ol the West. They did nol deny lh.it the Soviet Union would not be able to meet Eastern Europe's future demands in ihe same proportion as al present.
Recently. Western reporti-is received rather inned responses from local officials in the Tyumenarty official Said lhat intensive development of Ihe Samotlor field would cause il to reach peak production earlier lhanil would be able to maintain this level of produclion lor seven or eight years.ialists disputed ihe CIA analysis, saying thatmallhe West Siberian field* lhat "we have inixtckel" is now producing. Outputic tease as additional fields are brought into production Prey, articles, htiwi-wr. liave expressed concernag in exploratory drilling in Western Siherui t; I' Ikignmyaknv. party chid
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of Tyumen oblast. recently wrote that there were conflicting opinions about the region's future and concluded that the mallet is "complicated, but not disastrous "
Pessim.il ic Views
A third, more pessimistic group of officials in essence agrees with (be CIA projections and foresees that the Soviet Union willet importer of oil and will experience energy problems similar to those of Western countries This type of commentary has not been extensive oi detailed enough to indicate what il is based on. Sometimes the speaker's position does not imply any special knowledge of the subject Nevertheless,ody these comments suggest that pessimism over the country's future oil and energy situation is not foreign to the thinking of the Soviet elite.
Minister of Cas Industry OruibJiev. in his comments lo an official ol the Department of Energy in Decemlset. criticized past decisions and continued pressures tn use oil and gas for lucl. He said thai gas production might wellnd dwelt on the technical difficulties in transporting gas Irom Tyumen. In sum. he said that energy conservationioblem lor both llic US and the USSR andolution is ui gently needed
Some comments by diplomats alsoessimistic outlool Mchief of ihc First Far Eastern Department ol thr Ministry oltold aJune. 'Tne US intelligence services estimate
we0 year (oil)eel il is clnsn idoviet diplomat has commented thai, according to technical experts at Ihe Foreign Ministry, the Soviet Government estimates it willet importer of oil in six or seven years, taking into account the commitments made to East European countries.
Clearly, in addressing Fast European* directly,olitical motive is jppiti.'iit in pessimistic presentations, because reassuring remarks by Soviet Spokesmen undermine efforts lo induce these countries to Contribute more to tin- solution uf their own energy needs
Conclusions
The Soviets have not reacted to thr CIA analysisorcefulThe few published commentaries lurdls <oiii|iaie. foi examplei-slnisise criticism the Soviet iicess directed al the Club ofouHh. following its publication2 Even
comments Iwsc been disparalr aud on lubiicr lacking in assurance,arguments, ot itsfatVtatfbSM This LiinI of res|mnsr is all ihe more
remarkable considering ihe CIA label on ihe analysis, ils Sovicl locus,he aggressive lone Soviet media and officials have ollen adopted on other US-relaled issues during the past year
Such reticence appears lotale of concern and uncertainly among responsible Soviet officials over their country's energy prospects Evidence suggests lhatrame of mind was developing before the CIA reports appeared. The uncertainly is fedack of reliable data or forecasts, which evidently are still in the process of formulation The policy and organizational disputes that are likely to arise inituation could account for some variations in attitudes and assessments. Moreovei. as noled in the case of Easterntandard, clearcut line would not necessarily serve all Soviet interests
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Original document.
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