SELECTED INFORMATION BEARING ON OPEC COUNTRIES' EXTERNAL ECONOMIC RELATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001900030140-0
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 28
• Document Creation Date: December 19, 2016
• Document Release Date: August 18, 2005
• Sequence Number: 140
• Publication Date: October 10, 1974
• Content Type: MF

STAT
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V
CENTRAL INTELLIGENCE AGENCY
WASHINGTON, D.C. 2O:iO,''i
10 October 1974
MEMORANDUM FOIZ: Mr. Basil Petrou
Financial Resources Coordination
Office of the Secretary of the Treasury
Department of the Treasury
SUBJECT Selected Information Bearing on OPEC
Countries' External Economic Relations
1. The attached -tables .d memorandum contain data
and comment you requested for Secretary Simon's briefing
of Senator Jackson. The trade shares for 1972 closely
approximate those for 1971 and 1973
Distribution: S-6537
Original + 2 - Addressee (handcarried)
1 - D/OER
25X1
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C iR16E.2/S -piss 3 -7 _, 7 9
STATUS AND OUTLOOK FOR OPEC-COUNTRY OIL BARTER
AND SOFT CURRENCY DEALS
WITH LESS-DEVELOPED COUNTRIES
in general the oil-producing countries have adhered
to OPEC policies and have avoided price discounts to consumers.
Based on available information, they have not yet gone beyond
the negotiation stage for soft currency or oil barter deals
with the less--developed countries. There are indications
that some price concessions have been made, but any such
concessions fail to reduce the LDC oil burden significantly.
It appears that the oil producers would prefer to provide
relief to selected countries through aid arrangements rather
than by selling oil on soft currency or barter terms.
The more than 70 oil importing LDC's certainly will
continue to press for relief, but the oil producers are most
likely to respond to those LDCs which -- in relative terms --
can offer the best return. Brazil, accounting for 16% of
oil acquisitions by the net oil importers among the LDC's,
has been most active in attempting to work out deals
with the producers. Brazil can offer agricultural goods,
industrial raw materials, and some technology, as well as
a good investment climate and the possibility of participation
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in joint ventures. LDC's with less to offer -- such as
India -- are likely to remain more dependent on credits
to compensate for higher oil bills.
COUNTRY-BY-COUNTRY COMMENTS
Algeria. -- As a general policy, Algeria does not
sell oil for barter, soft currencies, or concessional prices.
Most of Alc,eria's oil revenues are required to finance the
country's ambitious, capital-intensive development program.
Consequently, the government is reluctant to take steps that
would lower oil receipts. An exception might be made if
a barter arrangement would serve to further some Algerian
interest.
Ecuador. -- Thus far, the military government has not
extended aid, either in reduced-price crude oil sales or
direct grants, to any country. Authorities have expressed
their intention to invest in bonds issued by international
development banks, mainly the IBRD and the IBD. No actual
purchases have been made, however, and no indication has
been given of what the magnitude of such purchases would be.
Ecuador has expressed support for an OPEC lending facility,
but its contribution to such a facility would be small.
Indonesia. -- Indonesia is unlikely to accept soft
currency or barter goods for oil in the near future. The
bulk of its oil exports (90%) currently is purchased by
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Japan and the US with dollars and yen. Jakarta perceives
its own development needs as paramount and hence attempts
to maximize foreign exchange earnings from petroleum. This
priority is reflected in a continuing search for foreign
aid -- despite Indonesia's high oil earnings -- as present
donors begin to talk of smaller loans and stiffer terms.
Earlier this year when its Southeast Asian neighbors
were suffering from the Arab oil embargo, Indonesia agreed
in pr.:_nci.ple to supply oil to non-oil producers -- if it
should produce more oil than it had contracted to sell.
But with oil now increasingly available on the world mar,:et
for those willing to pay the price, there has been no sign
of Indonesia coming to the aid of non-oil producing LDC's.
Iran. -- The Shah has shied away from deals that
would weaken the price structure for Iranian oil. Although
some barter proposals undoubtedly have been surfaced by
LDC's, Iran has not been receptive; nor has Iran agreed to
any soft-currency payments for oil. The probability of
such deals in the future is slim. In any event, the volume
would be small, since the government (NIOC) will remain a
small. oil exporter -- handling only 300,000 - 500,000 b/d.
Iraq. -- There is no indication Iraq has contracted
oil of soft or barter terms with the LDC's. In the past
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roughly three-quarters of Iraq's imports have conic from
industrial or Communist states. Iraq would probably
hesitate to conclude any future oil deals with the LDC's
on soft terms because of the need to pay fur imports from
the industrial and Communist countries for the large
development program underway.
Kuwait, Qatar, and the United Arab Emirates. -- The
Gulf states have avoided soft currency or barter sales to
the LDC's. In the past they have not had large quantities
of their own oil to sell, preferring to let the major
companies market their royalty oil. Although the hos'c
governments' share of oil output has incraased from
12-1/2% to 600, they probably will continue to market their
oil through the foreign companies. Ef:'orts to sell oil
independently in early 1974 were generally unsuccessful.
Libya. -- There is little indications that Libya has
favored (or intends to favor) less-developed nations by
selling them oil for barter, soft currencies or lower prices.
Although Qadhafi originated the three-tier proposal
which called for selling crude to LDC's at preferential
prices, third world nations seeking concessionary terms
on oil sales reportedly have been turned down by the Libyans.
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Y A a
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No barter or soft-currency sales are known to have been
made to LDC's. In the past, Libya has supplied oil gratis
as part of a broader aid program, for example, giving oil
to thn Arab belligerents during the October 1973 war with
Israel. Some oil may have been shipped under similar
circumstances in 1974 and such shipments may be expected
to recur if it serves Libya's political interests.
Nigeria. ??- Nigeria's large population and extensive
development needs keep it among the poorest of the oil
producing countries. Although is aspires to leadership
in Black Africa, it is not likely to sacrifice domestic
development by diverting large quantities of either funds
or low-priced oil to its neighbors. Philip Asicdu,
Permanent Secretary of :Sines and Power, announced in July
1974 that Nigeria would consider selling oil at conces-
sionary prices to a few neighboring African countries.
To date, however, there is no evidence that this has
ever been done.
Saudi Arabia. -- An early 1974 stand against barter
or soft currency payments for oil by LDC's apparently
continues to be Saudi policy. In any case, the government
accounts for only a small percentage of Saudi 011 sales
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abroad (2-1/2% in 1973). Even with 100% ownership of
Aramco, the Saudis would continue to market their oil
primarily through the major companies involved. As good
Arab traders, the Saudis do not consider barter or soft
currency payments advantageous. The one item they might
barter for is Western technological expertise, something
the LDC's could not supply. Concessions to the LDC's for
political reasons probably would take the form of financial
grants or loans.
Venezuela. -- Venezuela's approach to assisting
developing countries has been to make money available
through loans, primarily throuc,n multilateral institutions,
providing Venezuela a relatively safe investment and a
reasonable rate of return. Venezuela has made such
commitments totaling more than $1.3 billion for 1974.
WITH COMMUNIST COUNTRIES
Since early 1973, OPEC countries have been generally
dissatisfied with their oil barter arrangements with the
Communist countries and have indicated a preference for
hard currency sales. They have, however, met obligations
under existing agreements -- albeit with some delays --
and have contracted a small number of new oil barter
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agrcem.^.nts. Libya, for example, entered into such accords
with nearly all East European countries earlier this year.
Three OPEC countries (Iran, Iraq, and Algeria) have
received over $300 million in aid from the USSR and Eastern
Europe for oil and gas industry development. Iraq received
the largest share of this total. Egypt and Syria have
received similar aid. Since 1969, the Communist countries
have increasingly stipulated that repayment for such aid
be in oil. In addition, they were also purchasing oil
under commercial barter arrangements. In 1974 such
arrangements tapered off as OPEC countries increased their
oil prices and increasingly demanded cash payments. Moscow
still gets sizeable shipments of natural gas from Iran and
Afghanistan in repayment of Soviet military and economic
aid.
Moscow has been selling oil to at least 13 LDC's
but available information generally does not disclose
which of these entail hard currency payments and which are
barter. It is clear, for example, that Bangladesh will have
to pay in hard currency for Soviet petroleum products. But
despite much fanfare, payment terms have not been announced
in Brazil's recently concluded $42 million agreement for the
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purchase of Soviet crude oil during 1974 -- probably the
largest Soviet export deal ever concluded with Brazil.
CIA/OER
10 October 1974
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TABLE 1
VALUE AHD DISTRIBUTION OF OPEC COUNTRIES' TOTAL Ii11PORTS
By SITC CATEGORY
1972
1.01 OPEC Countries, TDTAT,
1.02 Algeria
1.03 Ecuador
1.04 Indonesia
1.05 Iran
1.06 Iraq
1.07 Kuwait
1.08 Libya
1.09 Nigeria
1.10 Qatar
1.11 Saudi Arabia
1.12 Uni Lea. Arab Emirates
1.13 Venezuela
NOTE: For sore countries, the total value of imports
in the Table is an estimate that takes account
of developed-country exports to the OPEC countries
as shown in OECD statistics, as well as the OPEC
countries' official import statistics.
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TABLE 1,01
MI-NEkAL
FUELS
LUFsSl- ANIMAL
FOOD CRUDE CANTS, A&%D
1 ? BEVERAGES MATERIAL AND VEGETABLE
LIVE ANU (EXCEPT RELATEU FATS AND
TOTAL ANIMALS TOBACCO FJELS) MATFkIALS OILS CHEMICALS
MI SCEL-
TRANS- LA\EOJS
RAr u- PORTATION M:.YU- CC? CD-
FACTURED EQuIP- FACTU iED ITIES
GOODS MACHINERY MENT GCODS N.E.S.
DISTRIBUTIO"N........ 100 12 1 3 1 1 8 22
uriIT_U STATES..... 20 3
CA.%40A............ 2 -
JAP.:r; ............. 13
Ut:I T EJ K INGDO'41.... 10
wFST G= RYGr.Y... 10
F1:'~CE............ 8
ITALY.... .... 7
OT-1=? K=STF4N?
Eu JP_.......... 11 2 - - - - 1 2 3 1
OTHE2 ............. 19 5 1 1 - - 1 4 3 1
- - ------ - ------- - --------
1. A DASH (-) I.vDICATES A NEGLIGI3LE AMOUNT OF IMPORTS.
2. 7TH:-'R dESTERN EJRJFE EXCLUDES DATA FOR GREECE, ICELAND, IF'-!'LAND, PORTUGAL, AND TURKEY.
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TABLE 1.02
VALUE AND DISTRIBUTION lF TOTAL IMPCRTS, BY SITC CATEGORY, 1972.
FOOD .
:.".D BtVEKAGES
LIVE AND
TOTAL ANIMALS TOBACCO
MINERAL
Ft!ELS
LU I- ANIMAL
CRUDE CLNTS, AND
MATERI^.L rhD VEGFTA LE
(EXCEPT FELATED FATS AND
FUELS)?MATEKIALS OILS CHEMICALS
MISCEL-
TRANS- LANEOUS
MAr4U- PORTATICN MA.%,U- CCY.'.C -
FACTORED EQUIP- FACTURED ITIES
GOODS MACHINERY MELT GOODS N.E.S.
VALUE ............... 1,399 210 1 37 25 14 119 327 461 137 63 5
D IST= I!jUTIOr4........ 100 15 - 3 2 1 9 23 '33
UN'TED STATES..... 7 2
CA'- DA............ 2 2
JAPAN.. 2 -
UNITED K INGCO'1.... 6
In:`T GEPPANY...... 16
F; A':CE............ 34
ITDLY............. 11
OTHER W=STERN
_:1~ P=.......... 18 3
OTk_R ............. 4 4
2
1
3
8
12
4
1. A 04SH (-) INDIZATES A NEGLIGIBLE AMOUNT OF IMPORTS.
2. 7THER %ESTERN EJFOPt EXCLUDES DATA FOR GREECE, ICELAND, IRELAND, PORTUGAL, AND TURKEY.
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TAKE 1.03
:CU:uJ~: VALU: AND DISI~I3UTIC^: OF TOTAL IMPORTS, JY SITC LitTEGCPY, 1972.
MI ItL
FUELS
LU3FI-
ANIMAL
!'IS:EL-
F OCD
C