INTERNATIONAL OIL DEVELOPMENT - - - SOVIET OIL TARGET FOR 1974 (CIA 8042/74)

Created: 4/18/1974

OCR scan of the original document, errors are possible

FALSE REPORTS OF HIGHER SOVIET OIL TARGET4

Western press reportsighei goal (or Soviel crude oil produciion4 arc not true.

V.D. Shashin. Minister of Ihe Oil Industry, recently referred lo an oil output targetillion Ionshich would be aboutillion tons mure thanhe officially announced goal for crude oil production4illion tons, aboutillion ions3 ouipul.

Shashin is up to his old tucks of announcing non-comparable planning and production figures in an effort toore optimislic picture of Ihe Soviet oil industry. The goalillion tons is inflated by inclusion ofillion tons of fas condensate (natural gasll of ihe original plani for production of crude oilave excluded gas condensate.3 figure for output comparable with that announced by Shashin wasillion tons of crude oil and condensate. In either case, the target4 is aboutillion tons above actual output

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THE EAST EUROPEAN OIL BILL: SOME KEY JUDGMENTS

Increased oil prices should not hurt Eastern Europe seriously5 But the outlooks much gloomier.

Soviet oil deliveries ire expected to level off aflerrade agreement expires, prices paid for Soviet oil probably will ihen be raised in lire with world prices.

If prices stabilize atarrel for crude, the East Europeans0 would have lo payillion more for0 billion lo lhe USSK andillion lo the West.

The0 oil bill would addo projected imports from the USSRo hard currency imports.

Bulgaria will be by fur Ihc hardest nil, followed by Hungary. East Germany,choslovjkm; Poland still relics heavily on coal.

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To pay for Soviet oil, Eastern Europe will have to greatly boost exports of consumer goods and machinery and pour more investment into the Soviel resource base. Moscow probably will haveffer new credits or deferred payments for oil in return tor East European investment.

To pay for Western oil. Kasicm Europe will need more barter agreements with Ihc Middle East or long-Ieim credits like those the oil producing countries are likely to provide to the LDCs.

Even with Soviel and Western assistance, most East European countries will not be able to avoid severe strains on their balances of payments and

on their domestic economies

* * * #

NORTH STAR PROJECT: METHANOL INSTEAD Of LNG?

US and Soviet government officials are discussing the possibility of delivering methanol instead of liquefied natural gas from Siberian gasfields to the United States. Methanol (wood alcohol)lean-burning product that can be used directly as fuel in powerplants or industrial furnaces, can be blended with motor gasoline to increase gasoline supply, or can be reconverted to gas. Cunent studies indicate that,omparable BTU basis, methanol can be delivered to the US east coastheaper lhan can LNG, if the delivery distanceiles.

Trie North Star Project originally calledonsortium of three US firms toinch-diamcler pipeline from the Urengoy gasflcld in West Siberia loiquefaction plant at Murmansk,0 LNG tankers toillion cubic feet per day of LNG to the US cast coastubic feet (equivalent toS0 per barrel ofegotiationsinal agreement have bogged down, especially since4 when Soviet negotiatorsubic feel of. the Soviet port, insteadubic feet as discussed in earlier talks.

A methanol project would entail constructionarge methanol plant in the Urengoy field, movement of liquefied methanolhort pipeline to ports in the Ob Gulf, and delivery of methanol to the US east coast in conventional oil tankers. The project would obviate the needong-distance, high-pressure gas pipeline acrossiquefaction plant, and expensive LNG tankers. The hitch in the scheme isethanol plant of Ihe size required to make the deal economical has never been built anywhere in the world. Moreover, the proposed transport of

methanolI from ports in (he Ob Gulff Urengoy) using ice

eC"tn

an yearrovide supplies to the area.

Whether Ihe same US consortium would be involvedroieci

Wh"Care stalled, the USSR %

proceedmg withwn plans lo develop .he Urengoy gas deposi

COMMUNIST AID BOOSTS IRAQ'S PETROLEUM SECTOR

pril. Baghdad celebrated the completion of both the second stage development of .he North Rumaylah oilfield and the Basra oil refine.yaidin Iraq. Plans cal. for fur.her expansion of these projects, probably with large new Communis, credits.

North Rumaylah, in sou.hcrn Iraq,of rhe country's total proved odcapacity at this largely Soviet-developed field has.f Iraq's current capacity In

RumS CCClera'e US,hc ,hi'd ^or Rumaylah, which would raise capacity toy

in.iH-'IL

refinery at Mosul, in nor.hcrnwhich it has

illion of ciedils. These two rcfi

operalional. will double2 refining capacity.

7m Czechoslovakia,o Iraq's refining capacity. Prague recently held talks wiih

bC6ln con^O"

hc ruslProducing country fo have accepted large rT ?* Petroleum sector. These commitments

t^"hthe 0 and projected refinery

?i,e

between Baghdad and he Basraoviet pipeline extension from Jfashdad to northerno is in thege.<

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