CIA HISTORICAL REVIEW RELEASE AS8
OER Contribution to
Economic Implications of US Participation in Siberian Development
4
A^roi^ticfJtrraccL-jjii-'JL; us
A. The Soviet Stake in Siberian Development
Siberia occupies over half of the USSR's land mass and by Soviet estimatesr more of the country's
m
reserves of coal, natural gas, major nonferrous metals, mature timber/ and hydroelectric resources. Most of this wealth has not been exploited because abundant reserves have been avciilable near existing population centers in the European USSR, The depletion of these resources is now forcing the Soviet leaders to look toward Siberia for future needs and to ponder ways to supply the area with the necessary capital, labor and technology.
Soviet leaders have dreamed of Siberian development for strategic and ideologic as well as economic reasons. Diversified development east of the Urals at one time was deemed desirablerotection against invading European armies- More recently/ it promised toore difficult target in case of nuclear attack and to give logistical support to the armies facing China. Also, Siberian development would promote the official policy of equalizingconomic levels among regions and republics. Post-War Development
Accelerated development of Siberia as an economic goal began in theith the Utopian ideal of making the larger uninhabited eastern regions into mirror
of the developed European areas of the USSR. Ambitious agricultural and industrial programs were introduced thatarge incre :se in investment funds and the mass movement of people eastward:
,illion acres of 'virgin lands' were plowed in Siberia and Kazakhstan to relieve the pressure on the traditional farm areas for food grains. More0 people were drafted for this effort.
apital investment in Siberia was
to rise% comparedor the whole country.
lan projected higher growth rates than
in the European USSR for almost evary Siberian.industrial sector.
Although these programs brought unprecedented development to Siberia, the rates of growth of investment and thus industrial output were not as large us planned. During the Seven-Yearnvestment in all of
pcrcenta
the RSFSR grewhile that of Siberia waspoint
of,
higher. During the wholendustrial output of the eastern regions grew somewhat faster than the national average but their share in the RSFSR's industrial output grew very little. onsequence, the share of national output contributed by the East and West Siberian and the Far East economic regions has increased slowly over the years
Table 1
Siberian Share of Production of Selected Commodities 1/
The realization that Siberian development would becostly process that would pay fewledeemphasis ol" development induring the late*
projects elsewhere that would bring an immediate boost to the sagging economic growth rates were favored.
to attract andufficiently skilled labor force was the biggest deterrent to development. Duringore persons left Siberia than arrived. The Soviets had estimated that an eastward movementillion workers was. Total population increase during that
time wasillion; the labor migration goal was met byt best.
Selective Development in
The mixed results of the ambitious programs of
and changing requirementshift in Siberian
development strategy.
Development will be focused on those rawcan be developed most cheaplyand gas, and ferrous metals in West
Siberia; olectric power and energy-intensive industries
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in East Siberia; wood and fish products, nonferrous metals, and some machinery in the Far East.
areas of Siberia generally will be developed first since they are Closer to markets and transport networks-
All-around development will be concentrated in specific areas, especially in territorial-production complexes, which include interrelated enterprises of different branches of industry.
will focus on capital-intensive projects. Oil and gas projects will require feweralf million workers. Siberia's population, according
to Soviet estimates, willillion by thetill constituting onlyf the total population.
Soviets decided to seekthe West for machinery, technology, and
financing for Siberian projects.
Reasons for Lagging Development
Siberian development has fallen short of plan for several good economic reasons. First of all the Siberian projects must compete with other resource claimants. For example, the leadership has already heavily committed itself to developing the non-black soil zone of the RSFSR,f all investment fundsre earmarked for the agricultural sector.
In addition, each ruble invested in eastern development
produces less output thanomparable project in the*
Western USSR. Large social overhead outlays are required for
education, housing, and the like. An Academy of Sciences
Institute in the Far East has estimated that the cost of
Soviet
creating one jobew industrial site in the/Far East is four tlaces that at an existing site. Transportation and communications networks must also be developed since major markets and processing facilities are still in the Western USSR.
But the major obstacle to Siberian development has boon the shortage of labor in the East. For- forty years, special material incentives have been extended to workers settling in Siberia, including higher wages, longer annual leave, increased pension rights and certain privileges in education and housing. These incentives, however, have not been sufficient to compensate for the hardships of Siberian life. The high cost of living eats up much of the wage differential. According to estimates of the Siberian Research Institute on Labor, pay in the eastern regions has toigher to provide normal living standards than in the southore than in the central areas.
Moreover, the housing, education, medical care, and other services do not measure up to the standards in tha European SSSR despite Brezhnev's recognition6 that "To develop the economies of Siberia and the Far East faster. It is essential toumber of social, economic measures.which will help strengthen the labor forces there." Investment allocations in East Siberiauggest the neglect of consumer-oriented sectors. ncrease in so-called non-productive investment was planned; actual growth was. within this total, investment in housing construction was scheduled to increaseut grew by only
The Outlook for the Nextoears
Although long an objective of Soviet planners, Siberian development hasatter ofuture needs of the USSR and of its client states in Eastern Europe are to be met*
Energy
Continued economic growth must be supported by an
adequate energy and raw materials base. At present some
f the energy produced in the Soviet Union is consumed
in the more heavily populated and industrialized European
four-fifths
part of the country, although more than A of tne energy resources are located east of the Urals.
(Al
f tho increase in Soviet production of energy is scheduled to come from Siberia. Thepower potential of European ri-'ers has been almost fully developed. Extraction of coal in the older producing regions is becoming more difficult and expensive as work must be conducted at greater depths. Rates of increase in production of oil and gas from older producing fields are slowing down as reserves are depleted. The percentage of water contained in total fluid pumped from oil fields in the Urals-Volga region has been increasing rapidly, and production costs have risen with the need for employing secondary recovery methods and for drilling to greater depths in search of now reserves.
Development of the enormous hydroelectric power potential of the Siberian rivers is already under way. The world's largest hydroelectric powerplants have been built at Krasnoyarsk
megawatts)
(capacity: Athe Yenisey River and at0 MW) on the Angara River. The capacity ofpowerplants in the Angara-Yenisey region, which at present0 MW, is expected to be0 MW by 0 MW may be reached by the end of theomplex ofarge thermal electric powerplants,ombined capacity0W, is to be built in the Kansk-Achinsk brown coal basin, which extends for several hundred miles along both sides of the Trans-Siberian
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railroad in the general vicinity of Krasnoyarsk. This basin, which contains anrillion tons of coal, is tentatively scheduled to beillion tons annually The availability of low-cost electric power brings with it other development
Large, modern aluminum plants have been built at itr.it sk, Irkutsk, and Krasnoyarsk to take advantage of thu electric power made available by the hydroelectric plants in those locations. Bratsk, which beganonstruction camp for workers building the powerplant, hasity. itys planned around the large hydroelectric plant soon to begin operation at Ust Ilimsk.
The oil and gas fieldsOblast in
Western Siberia are contributing almost all of the present increases in petroleum production. West Siberian production of crude oil will account forf total Soviet outputnd approximately one-half echnical problems may cause production from West Siberian fields to slow down somewhat, and additional increases in output will have to come from new reserves as yet undiscovered. Soviet geologists have been instructed to increase their efforts in exploring East Siberia, an area where geological conditions, climate, and logistic problems will be even more troublesome than in West Siberia.
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To maintain its positionet exporter of oil during theears, the USSR will have to reduce drastically the rate of increase in oil consumption-Apparently some of this reduction is"to be accomplished by substituting natural gas, which is more readily available. No matter what course the USSR takes, its role in world oil trade will remain small during theears. On the other hand, Soviet exports of natural gasprimarily from new fields in Siberiacould contributef the Western Europe's total gas supply duringnd would earn sizable amounts ot: hard currency.
Chemicals
The availability of cheap energy resources, abundant sources of hydrocarbons, large salt deposits, and improved means of pipeline and rail transport will lead to extensive development of Siberia's chemical industry over the nextears. Although the potential for large-scale production of chemicals in Siberia has always existed, progress in this area has been hampered by the slow pace of development of the raw material base, the low level of Soviet chemical technology, and the lack of infrastructure in the eastern areas. Now, however, conditions are more
favorable. Natural gas, produced in association with oil, is beingotentially rich source of
-
chemical raw aaterial. Shortages and high prices in tho West have encouraged the exchange of Soviet chemical intermediates and end-products for Western chemical equipment and technology.
Minerals and Metals
The USSR is also counting heavily on Siberia to help meet domestic needs for mineralsetals during the nextears and tourplus for export. Siberia's role will be especially important in the aluminum industry. Existing plants in Siberia are to'be expanded/ and the USSR is seeking western help in building four additional large Siberian plants with combined capacity roughly equal to that of the present Soviet aluminum industry. ajor share of the increase in Soviet copper production over the nextears will also cone from Siberia. Western participation is being sought in development of the large Udokan copper deposit oast of Lake Baikal. Expansion of facilities for production of copper, nickel, and platinum group metals is already under way, with Finnish assistance, at Norilsk. All of these metals will contribute to foreign exchange earnings, as will increased output of Siberian diamonds.
GOilffltffflSL
The Role of Western Assistance
The USSR undoubtedly can and will carry out its plans for developing the hydroelectric power potential of Siberia without outside assistance. It has built the largest hydroelectric powerplants and generating units in the world. Construction of large thermal electric powerplants and high-voltage long distance transmission lines probably would be facilitated by some western technical cooperation and assistance, with or without such assistance, however, an impressive numberf large plants will be built to use Siberian coal in generating electric power. Initially the power probably will be used in Siberia, but withia the next decade transmission facilities should be able to deliver power to the European part of the country.
The brown coal deposits of the Kansk-Achinsk basin
probably will be developedprimarily for domestic use
But
entirely with Soviet resources.in exploiting the Chulman coking coal deposits of Eastern Siberialargely for export to Japanthe USSR is counting on Japanese financial and technical support.
The USSR undoubtedly could develop Siberia's oil and gas without Western assistance. The pace of development of onshore resources would be slowerperhapsears longer. Without extensive Western help the Soviet Union will be unable to develop Siberian offshore resources during the
ears. Proposed cooperative ventures with US
mm
and Japanese firms to develop Siberian natural gas deposits and offshore Sakhalin oil and/or gas deposits offer the USSR opportunity to obtain Western technology and equipment and to earn large amounts of hard currency through sale Of liquefied natural gas (LNG) and oil.
escern assistance development of the Siberian chemical industry would be delayed by several years. If only US chemical technology is denied to the USSR, the penalties would be far less as other Western countries can provide almost equivalent technology for the most part. Nevertheless, US chemical technology is valued highly by the Soviets. The availability of credits will be an important factor in Soviet selection of Western contractors. If, for example, US credits are not competitive with those offered by Japan or Western Europe, US firms probably would provide mainly chemical technology, and other Western firms would provide the chemical equipment At the present time US technology is to be used in atiberian chemical projects: inyl chlorideolystyrene plant,mmonia plants.
Western assistance would also speed up thefor development of Siberian minerals and metals industries somewhat, but not decisively. The USSR has demonstrated strong capabilities in'aluminum, copper, steal, and diamonds and should bo able to achieve substantial gains on its own.
Nevertheless, the role of the West in Siberian development will not be settled in the next few years. Much will depend on Soviet experience with cooperative ventures and on Soviet success in going it alone. Judging by past history, growing frustration over the delays and difficulties of developing the eastern regions will' incline the leadership to look for help in areas and on terms that would not be considered now.
GOaflwcrfiiAL
E. Impact of Siberian Dovelopxcnt on Soviet Energy Needsorld Energy Markets
Soviet Plans
If the USSR is to remainicient in energy, development of Siberian resources is an absolute necessity. Soviet sources expect total demand for energy to double,evel ofillion tons of hare coal equivalent {see* Minister of Power and. Neperozhny,aper presented at the recent world Energy Conference in Detroit, statedf the increase in Soviet production of energy from primary sources0 will be obtained from Siberia. He also noted that enormous technical and economic problems would have to be solved to accomplish this task.
The potential impact of Siberian energy development on world markets lies overwhelmingly in oil and gas. Production of crude oil in West Siberia5 is tond account forf total Soviet output. plans0 call for West Siberian output to, about half of total production. Although no plans for oil production0 are available, Soviet energy forecasts imply an output off crude
* The% average annual rate of growth is slightly below% rate attained during. Doth consumption and exports are expected to increaselower pace.
Soviet Energy Supply andMillion Metric Tons of Hard coal Equivalent!^
3 4
Unofficial
n
Supolv
production
821
gas
Peat, shale, and wo:d
.S3
51
67J
powur
1
power production
energy sources
j
Demand
to stocks
ilocalories per metric ton.
Derived from various Soviet Sources.
Estimated.
Derivedesidual.
oil0 f the increase in crude oil output were to cone from Siberia, as Neperozhny states, Siberian production0 wouldnd represent moref Soviet output. In recent months, however, high-level oil officials have expressed concern that technical problems will cause oil production in West Siberian fields to slow downears,ime when consumption of liquid fuels will be rising steadily. If the increase in West Siberian oil production slows appreciably, total Soviet production of0 is unlikely. An effort will be made to discover new oil resources in East Siberia, an area where logistic problems ore worse than in West Siberia and where the geology is more complex. Given the length of time required for exploration, drilling, and pipeline construction, it is unlikely that any sizable output of oil could be obtained in this remote area
Analysis of Soviet long-range energy forecastshanging pattern of oil and gas production. According to these forecasts, oil production is expected to increase at an average annual rate of only%0 compared wither year during the past decade. Oil's share in total fuel production is scheduled to decline from5 tohile the share of
Table 2
rorocAVtt of Soviet Oild Dcnvind,
of Crudo Oil equivalent
iili 0
Crodo oil pro-
dltCtlOA II.1 0
(fro* llt-trlal i.*) i-OJ
-mrjorU). ft. T
Total XJtf Ytt
COr."
for
export
TO Other
nuAitt t
M
TO
Supply
Crude oil 1 Siberia, 1 IG75
9 2
Available for
13 )
To other Con-
nunist
To tha 0
C More likely est mates
Supply
Crude oil 6 0 ton
a
7 nrnr ittt
OOfheStiC COA-
2 for
3r0
To other . ,
to tho r *
Dascd on inforrntiWiuncro+is Soviet source*.
tato
ThO voluli- Of Oil Jil.iLi.ci vatildftit crii Curopa
f> increase oil consumption at an aver+Kjc rate% per
S- suning Soviet deliveries of Sakhalin aii
j atjO annual rateverage annualo( iiwrcoso: St; 41
; uring
"CO JapAn<
natural gas rises from less than one-fourtho as much as one-thirdutlook for Exports
According to long-range Soviet.forecasts, the USSR will
a sizable net exporter of oil.
the USSR will
importsn5et exports are to rise from5 to This volume of exports would provide the bulk of the oil needed by Eastern Europe tooate of growth in oil consumptionnd would at the same time maintain exports to the West fit or near current levels (see This position probably represents the best that the USSR could achieve with maximum western assistance.
Indeed, the USSR probably will have to reduce the rate of oil consumption by substituting more readily available natural gas where possible in order toet oil export position ate of growth in domestic consumption of oil (which is less than% that prevailed over the past decade) when combined with the reduced rate of increase in production indicated by Soviet forecasts would require the USSR toet importer of oiln The USSR undoubtedly
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will strive to avoid this situation and should be able to curb domestic consumption. ore likely estimate of the Soviet supply-demand situation for the period0n Tablessumes an even lower rate of growth in production than is indicated by the Soviet forecast and declining ratss of increase in consumption. The USSR would
equal to Soviet deliveries to Eastern Europe
without western assistance, either in the form of cooperative ventures or in the sale of equipment and technology, the USSR will be hard pressed to produce and deliver the increased amojnts of gas required for an expanding domestic economy and for export. Forecasts for production of gasppear too high as they are based on plans for production5 that subsequently have been reduced. Although some of the largest gas reserves in the world are located in the northern regions of Tyumen Oblast in West Siberia, development of these reserves is proceeding slowly because of the difficult permafrost conditions and the lag in construction of gas pipelines. Soviet long range forecasts of natural gas production% average annual rate of increase)ore likely estimate of outputassuming an increase ofoer year) are presented in Table 3.
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Table 3
Forecasts Of Soviet Supply and Demand for Natural Gas,
(Trillion cubic feet)
D.
Soviet Forecast
Natural gas production (from Siberia)
Imports
TOTAL
Demand
Domestic
conExports: To Eastern
Europe To Western
Europe To the US To Japan
Kore Likely Estimate
Supply
Natural gas production (from Siberia)
imports TOTAL
Dona .id
Domestic
o Eastern
Europe To Western
Europe To the US To Japan
7
B
4
5
4
3
5
H
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Iniplications for the Soviet Hard Currency Position
The USSR has every reason to push oil and gas production
beyond the margin of Soviet and East European requirements
since the sale of energy productsey factor in its
hard currency exports. Soaring oil prices have made the
difference between surplus and deficiL in the USSR's hard
currency trade account. Earningshe sale of oil in
ay reachillion, moref total projected
Soviet hard currency earnings. Hard currency revenues from
the sale of oil should continue to risehile perhaps
reachingillion. As suggested above, however, the
amount of oil available for sale to the Wast will level off
as increased production from existing
sources is matched by increased domestic demand and commit-After
ments to Eastern Europe. A urther price increases would be needed to keep annual dollar earnings around the
illion raerk.
The increasing natural gas deliveries to Western Europe under current contracts during the balance of the decade will help fill the breach. 0 annual hard currency earnings from gas exports could reachillion. Earnings from coal exports will also rise, largelyesult of the Soviet-Japanese agreement to develop the Chul'raan deposits. Earnings from coal and coke, forecast0 millionould0 million
If new sources of oil and gas are not developed by the end of, the growth in Soviet hard currency earnings could fall off drastically, limiting the growth of Soviet imports from the West. In the absence of new,5 earnings from the sale of oil, natural gas, coal and coke should reach roughlyillion,ess than But if the Soviets are successful in
obtaining Western assistance in the development of the West Siberia East Siberian
renqoy) andA(Yakutsk) natural gas deposits and the offshore natural gas and oil deposits surrounding Sakhalin, earnings from these new sources would more than cover the expected decline in exports from traditional areas. In any event, coal exports from the Chultaan basin will probably approach SI billionushioning the effect of any decrease in oil and gas exports to the West, combined annual earnings from the above three projects alone could exceedillion
, additional development of the Sakhalin area and/or the development of other offshore deposits could provide additional sources of hard currency earnings. as noted in Tablen increase in natural gas exports to Western Europe duringistinct possibility; Italy and Austria have already voiced their interest in receiving additional supplies.
implication? for US and World Energy Supplies
Regardless of the effort undertaken by the Soviets to develop Siberian oil and gas resources during the nextoears, with or without western assistance, the USSR will nocajor factor in world energy trade
If the proposed cooperative ventures for exploration of Soviet natural gas deposits by the US and Japanese firms materialize, the liquefied natural gas (LNG) delivered to the US and Japan will represent at best onlyof the total energy supply in either country-
Even if the Sakhalin offshore venture is successful, oil exports from this area throughre likely to representery small share of world oil trade or of supplies to Japan.
While Soviet exports of natural gas to Western Europe may constitute as muchf the importing countries' total gas supply during, they will account forery small share of their total energy supply.
P. US Trade and Investment Opportunities in Siberia
The Range of Opportunities
US-Soviet trade negotiations have already dealt with many large projects in Siberia,umber of other proposals are likely to turn up in the nextears. Most of those proposed or expected would involve large, long-term US credits, would result in large-scale US exports of machinery and equipment, and would eventually be repaid by Soviet exports of the products of these development projects. The opportunitiesange of industriesenergy related, metallurgical, .auto-: otive, chemical, and infrastructure. At this point, the largest and most promising projects seem to be in the energy and metallurgical fields.
Energy-Related Projects
The US has been negotiating two gas projects with the USSR. oint effort with Japan to develop natural gas deposits in the Yakutsk region in Eastern Siberia, has been pendingeneral agreement was signed Firms in Japan and the US have agreed to0 million each in exploratory drilling to verify the reserves claimed by the USSR. Additional
financing wculd be requiredile pipeline from vilyuysk to Nakhodka on the Pacific coast and for liquefaction and port facilities. Western plant and equipment from the US and Japan would cost an estimated S3 billion with investment. In return, the USSR wouldilliono tho US and to Japan. Anis siqned onovembermong all participants to undertake the exploration phase of the venture. However, Ui> participation is contingent upon Eximbank financing.
North Star, an LNG project involving only the US, wouldooperative venture between the USSR and three US firms. The US firms would supply gas well equipment for development of the large Urengoy deposits in Western Siberia, large diameter pipe and other pipeline equipment, liquefaction and port facilities at Murmansk, and technical know-how. US investment would5 billion, and the consortium is seeking Eximbank participation in the amount ofillion. In return, the USSR wouldillionf LNGyear period. Difficulties over financing, pricing, and last minute Soviet demands for additional plants and oilfield equipment have stalled negotiations
A Soviet oil development project under negotiation also involves joint US-Japanese participation. Gulf Oilapanese consortium have agreed to explore one area off the northeast coast of Sakhalin and will
illion in long-term financing. Tiielong-term option tof all oil
recovered. Total Western investment to explore and develop one or two major offshore oil fields might exceed Si billion. Gulf Oil is participating in return for sole rights to explore other offshore areasSakhalinore lucrativehich could result in'anillion investment. -'
A long-range development possibility late in this period could be US participation in offshore exploration and development in the Kara Sea. us investment could amount to S2 billion, presumably with some sort of product payback arrangement. Metallurgical Projects
Kaiser Corporation hasreliminary agreement with the USSR to provideillion in Western equipment on long-term creditsillion ton-per-year aluminaon-per-year aluminum reduction plant,
arge rollinge reduction plant presumably would
be located near the Krasnoyarsk hydroelectric olant.might help to develop
also A bauxite deposits, but the location of these decosits has specified.
not been ontract is signed, Kaiser would form an international consortium to help manage the project as well as to market the aluminum supplied by the Soviets in repayment of the Western credits. The USSR has also told Kaiser of its interest in building one or
two additional large aluminum complexes, which could
orillion inan additional SIbut
plans are unclear and seem gearedime period "An'othar billion dollar aluminum'* negotiationrench firm. Infrastructure Development
The USSR in pushing ahead on construction of the Baykal-Amur Magistral (bam) railroad across Siberia. Soviet purchases of Western equipment for this line are expected to totalillion, of0 million in contracts have already been signed. The US has0 million in contracts so far and is expected to receive additional iarge contracts.
om^vht- ^cokcd copy
participation are difficult to determine because plans for the development of infrastructure are far from settled and
because the extent of raw materials deposits is uncertain. Much of the seemingly heavy investment in the early period may spill over into the later periods, both because contract negotiations may be protracted and because construction probably will fall behind schedule.
In the nextears, US contributions to Siberian or Far Eastern projects are most likely in the Sakhalin off3hora oil and gas deposits, the Yakutsk LNG project, the aluminum complex with Kaiser, the BAM railroad line, the truck plant at Krasnoyarsk, and petrochemical combines at Tomsk and Tobolsk. Projects less likely, but possible, in this period include the North Star LNGecond Sakhalin offshore oil project, additional aluminum complexes, and somein mining projects. For example, US firms may help in developing the Udokan copper deposits east of Lake Baikal. Costs for this mammoth project may exceedillion and would entail large orders for Western equipment. In addition, the United States will be selling equipment for use in other projects involving other Western countries.
uuitnucmnL
Investment0 for the most probable projects with Western help could beillion, of which the US share might be about half. Anotherillion in projects are possible for this same period, and the US share could5 billion (the North Star project) .
Although projects forre especially hard to evaluate, further development and large Western investment can be expected. Completion of the new rail line and its associated facilities will open formerly inaccessible areas to development. ower sources will attract large power-consufting-se'eal industriesboria. Development of the Siberian gas fields will encourage development of chemical plants, and tho need for oil will undoubtedly spur development of offshore fields. Nonetheless, we do not know enough about Soviet plans to identify more than illion worth of projects in the period These projects have been mentioned by Soviet officials in talks with Western nations and cover further development of energy resources, power consuming metallurgical plants, mining, and pulp and chemical plants.
f
Western Investment in Soviet Siberia
0
Project
Yakutsk LNG DcvslopTsnt
Sakhalin Offshore Oil Exploration and
Baykal-Amur-Magistral Railroad
Chul 'r.an Coal
Forestry Development
Alu-inun Production Complexes
North Star LNG Development
TOTAL
Value of Potential Western Involvement
S30 million-Sl billion
illion
0billionbillion
illion
illion
US Participation
US firmsartici pation
Gulf Oil involved in negotiations
To date US firm has0 million contract fc tractors
Minor equipment sales
xpected
Xaiser now negotiating fcillion contract
Probable US-Soviet deal
S3illion
Western Investment.in Soviet Siberia (Continue^)
to
areas for additional Western
involvement
Chemical Plants ffshore Oil Aluminum Refining Copper Development Coal Development Forestry Development Truck Plant Steel Plants
Participation Probable Probable Probable Possible Minor Minor Probable Possible
Resource Development
-
i
v
Implications for US-Soviet Trade, Credits, and Technology Transfer
US investment in Siberian projects could produce large
US export surplusesesult of machinery and
equipment deliveries. In addition, the US will secure large
contracts associated with Siberian projects involving other
Western nations. For example, US technology and know-how
are essential to the Siberian mainland and offshore oil and
gas projects. US equipment and know-how are also sought for metallurgical
most of the A projects in Siberia. In the later stages of the period, Soviet deliveries of the oil and gas from these projects would greatly increase Soviet exports tona ted"oviet'trade with the. United Statescould urplus innless US exports for other projects offset US imports of energy and raw materials.
The magnitude of the probable US investment in Siberian development projects5 billionraises the question of how it is to be financed. Adding the5 billion investment for the North Star project in this period accentuates the problem. If the USSR follows its usual practice of demanding maximum credits at low rates of interest, US firms would not participate in some of the projects. Under new regulations proposed by Congress, Eximbank participation will be more limited and less competitive than the government-sponsored credits of certain
Western European countries and Japan- The large LNG projects, which entail maximum Eximbank participation at the lowest, interest rates available, would be most affected. The other projects would not seem to be endangered by the new Eximbank regulations. US credits might be important to the timing of these projects, but the USSR can find alternative sources or go it alone.
In energy and mining the USSRenefit from superior US technology and equipment and from US managerial, planning, and engineering skills, although as in turnkey plants and piecemeal acquisition, Soviet ability to master the technology and blend it with domestic machinery ha^.been limited. The gas, oil, and mining projects in Siberia would provide opportunities for the Soviets to observe and improve their managerial, planning, and engineering skillsareas they now recognize as needing an infusion of Western know-how.
In fact, in several of these projects the United States clearly possesses the best technology in the world or is indeed the sole supplier. In the petroleum industry, the United States is acknowledged to be the best supplier of complete systems for onshore, offshore, and permafrost exploration, production, and pipelining, in the automotive field, the United States has the best specialized machine tools ransfer machines) for high volume output and
computerized warehousing systems, and it is probably the only source for the design of very largo automated foundries. .With the pressing construction needs in Siberia, the United states is the sole supplier of heavy duty industrial tractors and the largest sizes of earth-moving equipment, such as front-end loaders and dump trucks.
One new advantage that the Siberian projects offer the Soviet is the long period of exposure to advanced Western technology, know-how, and operational skills because of the extended period of development in this area. Energy projects using Western, particularly US, technology and operations could extend for as.oears .if all projects discussed above are started. The same time-frame probably applies to mining. Long exposure to Western know-how and management techniques should facilitate the technology transfer embodied in these projects.
Original document.
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