WESTERN MARKETS FOR SOVIET ENERGY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89B00423R000200120016-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 36
• Document Creation Date: December 22, 2016
• Document Release Date: July 21, 2011
• Sequence Number: 16
• Publication Date: December 6, 1984
• Content Type: MEMO

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Cent9i1fiteIIigence Agency
Washington. D. C. 20505
DIRECTOR OF INTELLIGENCE
6 December 1984
Western Markets for Soviet Energy
Summary
The Soviet Union has emphasized increased energy exports to
the West as a means of earning hard currency. Although oil and
coal will continue to earn Moscow hard currency, neither has the
growth potential of natural gas. Despite the availability of
adequate indigenous resources in Western Europe, the current gas
surplus, together with Soviet marketing efforts, could prevent or
delay development of new projects needed to meet West European
demand requirements in the 1990s. Japanese interest in Soviet
energy projects is based principally on a desire to sell
equipment. Tokyo may, however, purchase competitively priced
Soviet energy as part of its strategy to reduce energy costs.
Concerns over undue dependence on Soviet imports should help
limit the size of additional purchases. Nevertheless, if
substantial progress on the development of indigenous Western gas
resources is not achieved over the next few years because of weak
demand, the high price of new gas, and stringent tax structures,
Soviet gas may account for half of Western Europe's gas supply,
and earn Moscow close to $25 billion a year, by 2000. Until West
European governments view gas supply availability in a regional
strategic perspective, the coordination necessary to use
effectively Europe's gas system during a disruption is highly
unlikely.

This memorandum was prepared by
Branch, Office of Global Issues;
Division, Office of European Analysis; and
Branch, Office of East Asian Analysis.
herein is updated to 29 November 1984.
to Chief Strategic Resources
GI M 84-10223
Energy Markets
Western Europe
Japan
The information contained
Comments may be directed
Division,
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Western Markets for Soviet Energy
Table of Contents
Page
Current Gas Market
1
Natural Gas Demand Outlook
3
Meeting Demand Requirements in Europe
4
Indigenous Production
4
Case I -- Maximum Indigenous Production
6
Case II -- Minimum Indigenous Production
6
Case III -- Moderate Indigenous Production
7
Meeting Japanese Requirements
7
Soviet Marketing Strategy and Successes
9
Further Soviet Efforts
11
Alternatives to Soviet Gas
11
Contingency Planning
12
Energy Security Implications
14
Western Perspective on Soviet Trade
14
West European Attitudes
15
Attitude Toward Soviet Trade in General
16
Export Controls
17
Japanese Attitudes
18
Trade
19
Export Controls
_20
Implications
20
In-Text Tables:
Forecasting Gas Demand and Supply 2
A Soviet Perspective on Natural Gas Sales to 9
Western Europe
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Western Markets for Soviet Energy
Over the last two decades Moscow has emphasized increased
energy exports to the West to earn the hard currency necessary to
purchase Western grain, technology, and equipment. At best we
believe Soviet oil revenues will remain flat and increases in the
much smaller volume of coal exports will depend almost entirely
on Japanese purchases from a joint development project in
Yakutsk. In view of Moscow's need for hard currency earnings,
increased natural gas exports will be central to Soviet energy
export policy in the 1980s and into the 1990s.
Reduced natural gas demand and a surplus of available
supplies in Western Europe, however, have sharply reduced its
willingness to buy Soviet gas in this decade. In response,
Moscow has undertaken a concerted gas-marketing effort, cutting
some prices and attempting to penetrate new markets--an effort
that has the potential to limit sales by other gas suppliers to
the West European market. Given its abundant gas reserves,
pricing flexibility, and the ability to deliver gas with
relatively short lead times, Moscow is well placed to capture an
arowth in West European gas demand in the 1990s and beyond
For Western Europe to avoid increasing dependence on Soviet
gas imports in the 1990s, decisions to develop new indigenous gas
supplies must be made within the next year or so. The known but
as yet undeveloped gas fields in the North Sea, particularly the
Norwegian Troll field, are expected to be very costly and to have
leadtimes as lona as 10 years. Furthermore,
negotiations for the sale of Troll gas may not
proceed unless the sale of gas from Norway's Sleipner field is
successfully concluded. Under the existing tax structure,
however, it is doubtful whether new Norwegian gas can compete
favorably against low-cost Soviet supplies, especially in view of
Moscow's aggressive gas marketing tactics. In our judgment, if
new sources of gas are not available in the mid 1990s, Western
Europe could find itself dependent on Soviet gas for as much as
half of gas consumption. Moreover, such purchases could generate
close to $25 billion a year for Moscow in hard currency earnings
by 2000.
Current Gas Market
According to the trade press, the main concern in
international gas markets over the past year or so has shifted
from lining up new supplies to absorbing contracted gas
deliveries because of depressed demand. After steadily
increasing during the 1960s and 1970s, gas consumption declined
sharply in Western Europe and the growth in consumption slowed
considerably in Japan during 1980-82. The world economic
recession that began in 1980, combined with the sharp escalation
in international gas prices in recent years, was responsible for
the large but temporary reduction in gas use.
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Published data indicate that natural gas accounts for
approximately 15 percent of total West European energy use, and
expect it to maintain that share of the overall 25X1
energy mix through the end of the century. In response to the
price shocks of 1979-1980 and the subsequent economic recession,
total West European natural gas demand declined by over 5 percent
between 1979 and 1982, but in 1983 rose about 4 percent.
Preliminary estimates for the first half of 1984 show that gas
demand continued its strong growth, rising 9 percent above year-
earlier levels.
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About one-fifth of all gas consumed in Western Europe in
1983 came from Algeria and the Soviet Union, although some
countries were more dependent on Soviet imports than others. All
of the gas consumed in Finland, for example, is purchased from
the Soviet Union. Soviet gas sales to Austria cover 70 percent
of Vienna's gas needs. Italy already depends on Soviet gas for
nearly half its imports, or 28 percent of its gas consumption.
West Germany and France also rely heavily on Soviet gas. Soviet
gas, however, represents only about 3-9 percent of total energy
needs in most West European countries.
Natural gas currently provides only 7 percent of total
Japanese energy use. The Japanese government expects this share
to expand to about 10-12 percent by 1990. With only a small -
amount of domestic gas production, Tokyo relies heavily on
imports in the form of liquefied natural gas (LNG). In 1983, for
example, LNG imports accounted for 94 percent of Japan's
consumption of 28 bcm. Imports of LNG for the first half of 1984
were running at an annual rate of about 34 bcm, pointing to a
possible 30 percent increase over last year's volume. Nearly
half of LNG imports come from Indonesia, with Brunei, Abu Dhabi,
Malaysia and Alaska providing the remainder. By 1990,
will probably provide about 17 percent of LNG imports.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Forecasting Gas Demand and Supply
Great uncertainty surrounds long-term energy demand and
supply forecasts. The success of past long-term forecasts has
been minimal, and recent projections remain vulnerable to the
shortcomings of past projections. The threat of unexpected
supply disruptions and uncertainties regarding economic growth,
price trends, and the responsiveness of supply and demand to
price changes all hinder forecasting. Moreover, small changes in
economic growth and price can cause substantial modifications in
projected energy requirements. In addition
sharp declines in energy and gas requirements in recent years
have caused forecasters to become overly pessimistic about future
demand.
To assess gas market conditions through the remainder of the
century, we examined several long-term forecasts completed
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West European Gas: 1983 Production, Consumption, and Imports1
(billions of cubic meters)
Country
Production
Consumption
Gross
Imports
Percent Total
Percent Total
Total
Consumption
Source
Imports
Austria
1.1
4.3
3.0
70
USSR
100
Belgium
--
9.1
9.2
100
Netherlands
61
Norway
22
Algeria
17
Finland
--
0.7
0.7
100
USSR
100
France
6.8
27.6
22.4
81
Netherlands
33
Norway
9
USSR
18
Algeria
40
Ireland
2.1
2.1
--
Italy
12.3
25.1
14.5
58
Netherlands
37
USSR
48
Algeria
15
Netherlands2
68.3
35.9
3.0
8
Norway
100
Norway2
21.7
--
--
--
Spain
Negl
2.6
2.4
92
Algeria
62
Libya
38-
Switzerland
--
1.0
0.5
50
Netherlands
100
Turkey
Negl
Negl
UK
34.0
48.1
12.9
27
Norway
100
West Germany
14.7
43.1
31.6
73
Netherlands
52
Norway
16
USSR
32
Yugoslavia
1.9
4.3
2.0
46
USSR
100
Total
162.9
203.9
102.2
Netherlands
35
Norway
24
USSR
26
Algeria
14
Libya
1
'Consumption minus production may not equal imports, becaue of lesses in production and transmission,
exports and reexports, and/or storage programs.
2Net exporter
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recently.
We examined the forecasts for reasonableness of
assumptions concerning economic growth and energy prices. In
deriving our summary demand case we attempted to represent the
consensus opinion, tempered by our own judgments. These
supply/demand projections assume real oil prices decline through
1990, remain constant in real terms to 1995, and rise thereafter
at 2 percent per year through the year 2000. In general, the
price of other fuels, including gas, is expected to move in line
with oil prices. West European and Japanese economic growth are
projected at average annual rates of 2.0 to 2.5 percent, and
slightly over 4 percent, respectively, through the end of the
century.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Natural Gas Demand Outlook
Natural gas demand is projected to increase only
durinci the remainder of this century
slowly
o West European gas use will grow by about 1-2 percent per
year, rising to 250 bcm in 1990 and about 285 bcm in the
year 2000. This compares with about a 10 percent annual
growth rate during the 1970s.
o Japanese gas demand is expected to increase to about 52
bcm by 1990, an 85 percent increase compared to current
levels. During the 1990s, however, growth is expected to
slow significantly and demand is projected to increase
only an additional 10 bcm by the year 2000.
This forecast in effect constitutes our demand projection for the
purposes of this paper. Most of the future growth in gas
consumption is expected to occur in the residential/commercial
and industrial sectors, rather than in electricity generation.
This demand estimate might turn out to be too low. Over the
last decade, projections of gas demand have gone through a cycle
of optimism and pessimism. In the early 1980s, official gas
demand forecasts projected fairly rapid increases, reflecting the
trend of the 1970s when gas had been priced significantly below
alternative fuels and consequently was being substituted in a
number of uses. These high demand projections and concern over
dwindling domestic supplies were a major reason for the sense of
urgency in West European negotiations with the USSR for the
purchase of gas,from Siberia. In the course of the negotiations,
however, West European gas demand began to fall.
o Economic recession triggered a reduction in energy use.
o As a result of price indexation and attempts to achieve
parity with competing fuels, gas prices rose following the
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Changing Projections of West European Gas Demand, 1990 and 2000
(billions of cubic meters)
400
300
200
100
1983
ACTUAL
4/
1990
1980 1982 1983 1984
2000
1984
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Legend
c7-7: 1933 Actual
ES EA
fl Firm A
Firm 13
Firm C
EZ Firm D
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substantial oil price increases of the 1970s and early
1980s.
It took almost two years for official forecasts to catch up
with market realities. By 1984, however, projections for West
European gas demand in 1990 had been reduced by as much as 30
percent compared to forecasts made just 4 years ago and official
Japanese government projections have been reduced by 20
percent.
Despite an apparent return to the stronger growth levels of
the past, recent forecasts continue to be influenced by the
earlier downward trend in gas demand and pessimistic views of the
prospects for economic recovery in Western Europe. Just as
earlier projections overstated requirements, we believe current
forecasts may be understating future growth, especially if the
energy price projections built into these estimates prove to be
unrealistically high. Oil prices have fallen recently, and
continued weakness will restrain increases in gas prices or even
cause a further decline. As a result, gas suppliers recently
have already demonstrated considerable price flexibility in an
attempt to increase market penetration and remain competitive
with oil and other fuels.
Meeting Demand Requirements?-in Europe
We believe surplus natural gas supplies worldwide will
probably persist for some time. Although gas demand is expected
to grow, the increase in gas use in Western Europe and Japan
during the remainder of this decade can be met through existing
supply commitments. Beyond 1990, however, new sources of supply
will be needed to cover demand requirements. We believe import
requirements are likely to grow in Western Europe. Under these
circumstances, as much as 48-57 bcm per year of additional
imports would need to be contracted for in order to meet European
demand requirements.
Indigenous production is expected to increase slightly
between now and 1990, but will probably decline significantly
between 1990-2000. Developments in three countries will play a
key role in determining the amount of indigenous West Euro ean
gas production available to help meet demand requirements
o Dutch gas production and export policy has been in a state
of flux in recent years. As late as 1983, The Hague
intended to completely phase out gas exports by the year
2000 in order to conserve gas resources for domestic
use. According to Embassy and press reporting, however,
the Dutch have recently authorized additional export
commitments and have been flexible on price in an attempt
to maintain market share. Although negotiations are
continuing, The Hague may be willing to make available 20-
30 bcm per year for export in the 1990s.
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Major Pipelines Supplying Western Europe
NT;
Uneed Steles Government hike not reCeenoted
the mcorpo:alten el Felon... Calve. and 1..e?res
11.? So.,. Union Olher boundary rrrrrr eni?non
is nal n.c rrrrr eullieelebre,
Barents
Sea
? North
Atlantic
Ocean
Feroe
.Istands
r' (Den.)
Norwegian
Sea
Soviet Union
Gast ield
Oilfield
Gas pipeline
? -- Gas pipeline planned or
under construction
______ Oil pipeline
Onshore points
Note; Pipelme ?ligornents are ei,Pro.,mot.
0 250 no 770 Kilometers
Nptherlands
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o Norwegian production and exports will depend in large part
on whether Oslo can sell gas from the Sleipner and Troll
fields. Statoil, the Norwegian state oil company, and the
British Gas Corporation have been negotiating a contract
for the purchase of Sleipner gas for the last two years,
but revisions required by London, according to Embassy
reporting, have so far prevented a final agreement. Most
press reports suggest that negotiations to sell Troll gas
may not begin until after the Sleipner sale is completed,
although Oslo may begin to 25X1
test the European market as early as next year.
o Estimates of indigenous production in the United Kingdom
vary considerably and are contributing to the delay in
signing a contract for the purchase of Sleipner gas.
Several energy companies believe that the UK has
sufficient domestic gas supplies to meet demand to at
least 2000, while British Gas Corporation and the UK
Offshore Operators' Association are uraina the UK to line
up additional future gas supplies.
Because of the potential wide variation in future domestic
West European natural gas production and the different possible
approaches for covering a supply shortfall, we have developed
three illustrative scenarios that delineate the range of options
available to Western Europe. All three scenarios utilize the
consensus gas demand forecast developed from our review of
government and industry demand projections. The scenarios
differ, however, in the amount of anticipated indigenous
production, and consequently, in the level of projected
imports. The first scenario projects high levels of indigenous
production with the result that no further purchases of Soviet
gas are required to meet Western European gas demand in either
1990 or 2000. The second scenario is much more pessimistic on
estimated indigenous production, and projects a substantial
supply gap in the late 1990s, all of which is filled by
additional imports of Soviet gas. The third scenario offers a
moderate level of indigenous production, and suggests that some,
but not all, of future gas requirements in Western Europe will be
met by increased Soviet gas purchases.
While we have not varied demand estimates across scenarios,
it should be noted that the size of future potential gas surplus
or deficits could also vary substantially as a result of changes
in demand. Given the historic relationship between economic
activity and energy consumption, we estimate that a one-
percentage point increase in OECD economic growth will raise
energy demand by a comparable amount. If improved economic
growth were maintained--one-percentage point higher economic
growth in every year for the remainder of the decade--1990 energy
demand could be increased by more than 6 percent. If demand for
natural gas increased at the same rate as total energy, 1
European pas requirements could increase by about 15 bcm.
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Case I -- Maximum Indigenous Development
In this scenario no further market develops for additional
Soviet gas sales. Indeed, Western Europe would have surplus
indigenous gas throughout the period. A number of optimistic
assumptions underlie this scenario.
? UK domestic gas production capacity reaches a high level
of about 60 bcm.
o UK contracts for Norwegian Sleipner gas, which makes the
UK a potential net exporter after 1990.
o Continued high levels of Dutch exports of 35 bcm in 1990
and about 20 bcm in 2000.
o Contracted output of 30 bcm from Norway's Troll field by
the year 2000.
Due to these favorable assumptions and the resulting gas surplus,
a UK-to-Continent pipeline might be considered for the purpose of
reexporting competitively priced gas from Europe to displace
alternative Soviet supplies, in the event of a supply disruption
or increased continental gas demand.
We consider this scenario overly optimistic because of the
large number of favorable developments required to achieve
maximum development of indigenous resources. For Sleipner gas to
be delivered to the UK as assumed in this case, contract terms
would have to be determined soon in order for construction to
proceed. Similarly, given a minimum 10-year lead time for
contract negotiations and development of Troll, negotiations for
this gas must begin within the next year or so. Furthermore,
successful conclusion of Troll negotiations will, in large part,
depend on the price competitiveness of the gas which may require
tax concessions from Oslo. For this case to be realized,
moreover, the Netherlands must decide to maintain substantial gas
exports..
Case II --Minimum Indigenous Development
In this scenario, a West European supply surplus in 1990 is
replaced by a supply shortfall of about 48 to 57 bcm by the year
2000. This volume is assumed to be covered fully by additional
Soviet deliveries giving Moscow about 40 percent of West European
gas sales in the year 2000. Assumptions underlying this case
include:
? A domestic production profile for the UK of about 40-44
bcm, at the lower end of the range projected by industry
sources.
o Norway continues to sell only previously contracted gas,
with neither Sleipner nor Troll developed.
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Western Europe: Natural Gas Supply and Demand, 1983-2000
Case I: Maximum Indigenous Development
300
250
Gas Surplus
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New Other Europe
Demand
New Norway
USSR Maximum
USSR Minimum
Algeria/Libya
Indigenous Production
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Western Europe: Natural Gas Supply and Demand, 1983-2000
Case II: Minimum Indigenous Development
billions of cubic meters
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Dernanz
Supply 3 op Met
by Ad:onal Soyiet
Gas
USSR 1.1,:x:rnum
USSR Wm:mum
Algerlat-itlict
Indlgenc..3 Production
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? The Dutch completely phase out exports by 2000.
While we consider this case overly pessimistic, it cannot be
ruled out. Protracted discussions with little progress could
postpone the development of Sleipner and Troll. Moreover,
declining energy prices and uncompetitive gas price demands could
further delay the development of Troll if expected earnings are
insufficient to justify the large capital outlays required. A
Continent-to-UK pipeline might also be considered under these
conditions primarily for the purpose of bringing Dutch or other
gas to the UK. This connection in turn would open the UK market
to Soviet penetration.
Case III -Moderate Indigenous Development
In this scenario, Western Europe again faces a gas surplus
in 1990, but will need to contract for an additional 8 to 15 bcm
of gas by 2000. Our assumptions include the following:
o Moderate UK domestic gas production from 40 to 50 bcm.
o As in the first scenario, the UK contracts for Norwegian
Sleipner gas, which satisfies UK demand requirements.
? Norway supplies 15 bcm of Troll gas by 2000, or half the
volume assumed in the first scenario.
o The Netherlands continues to export 20-30 bcm in the
1990s.
? The UK and European gas markets remain separate, with no
pipeline link under consideration.
The Soviets could cover the shortfall in this scenario at low
marginal cost, at first by using surplus capacity in existing
pipelines.
Meeting Japanese Requtrements
Although Japan does produce some domestic gas, the lack of
significant reserves will cause Tokyo to remain almost completely
dependent on imports. Even increased offshore drilling is
expected to boost domestic production to only 5-10 percent of
domestic requirements by the end of the century.
Japanese import requirements through the early 1990s will be
more than satisfied if all projects now agreed to or under
construction are completed as scheduled. Despite the low growth
in LNG requirements from 1990 to 2000, Japan will need to
contract for additional supplies. In addition to a 9 bcm growth
in demand, existing agreements with Brunei and Abu Dhabi will
expire in 1993 and 1997, respectively. Even so, published
Japanese documents indicate Tokyo has already contracted for over
half of its estimated demand in 2000, if Australian LNG is
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Western Europe: Natural Gas Supply and Demand, 1983-2000
Case III: Moderate Indigenous Development
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a
Demand
New Other Europe
New Norway
USSR Maximum
USSR Minimum
Algeria/Libya
Indigenous Production
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included. If the Abu Dhabi and Brunei contracts are renewed in
similar volumes, as seems likely, Japan will have provided for
nearly 70 percent of anticipated needs.
Given the many LNG projects under consideration, Japan has
great flexibility in choosing its future gas suppliers and does
not now seem to be concerned with possible delays in development
projects.
o The proposed Sakhalin LNG export project continues to
experience delays and consumers have so far been reluctant
to guarantee purchases. Japanese construction firms,
however, remain eager to win contracts associated with the
development of this Soviet gas.
o Japan signed a letter of intent in 1981 to participate in
Australia's LNG project. Plans have moved forward rapidly
in the past year with purchase contracts likely to be
signed in the near future. Shipments are targeted to
begin in late 1989.
o In Canada, the Western LNG project is stalled by Dome
Petroleum's financial problems-- largely caused by Japan's
Chubu power company's refusal to make a commitment to the
project. The project could be cancelled if attempts tb
reorganize equity participation in the venture are
unsuccessful.
. In addition to these three projects, several other LNG
projects are currently under study.
o In Thailand, a Thai-Japanese LNG venture recently won
Bangkok's approval, and work will soon begin on a two-year
feasibility study. According to public reports, the
project is believed to face many obstacles, the most
serious of which is the possibility of an LNG supply glut
in Japan.
o Already the world's largest exporter of LNG, Indonesia has
granted Japan an option to purchase an additional 8.5 bcm.
o The project to develop 8.5 bcm of LNG in Qatar has been
repeatedly shelved and revived. TO date no Japanese or
other foreign buyers have contracted for future supplies.
o A prefeasibility study on a proposal to develop about 20
bcm per year of Alaskan North Slope gas for export to
Japan is currently underway. A smaller Alaskan export
project of about 2.1 bcm is also under consideration,
according to the trade press.
Given the large number of potential suppliers, Tokyo can easily
meet its future LNG requirements without Sakhalin gas. We
believe the Japanese may nevertheless decide to purchase Soviet
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gas to diversify away from its traditional suppliers if it can
obtain a relatively low price, or to obtain equipment orders
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
A Soviet Perspective on Natural Gas Sales to Western Europe
A recent article in a Soviet foreign trade journal contains
Moscow's perceptions of West European gas demand, supply, and
imports in the year 2000. West European demand for gas imports,
according to the Soviet article, will be met in part by increased
capacity and throughput on the Trans-Mediterranean pipeline from
Algeria to Italy and possible deliveries through an as yet
unconstructed gas pipeline from Algeria to Spain. Even with
these somewhat speculative additions to capacity and supply, the
article sees a shortfall in European supplies of from 70 to 80
bcm in 2000. While the author does not indicate what fraction of
this shortfall will be met by the combined deliveries of Dutch
and Norwegian gas, he points out that appreciable quantities of
Soviet aas could find a ready market in Western Europe.
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Soviet Marketing Strategy and Successes
Soviet marketing strategy is designed to capture new or
incremental Western demand for natural gas in order to help meet
hard currency revenue needs. Moscow's pricing policies have been
pragmatic and flexible, allowing it to adapt to market
fluctuations to achieve its goals. In our view, recent Soviet
marketing efforts could also undermine the development of
alternative gas projects, leaving Moscow well placed to meet
additional West European import requirements in the 1990s.
25X1 We expect the Soviets to continue to market their gas
aggressively in the West, undercutting competitors' prices when
necessary. Because of low production costs for Siberian gas and
the Soviet's capability to expand their pipeline system, Moscow
will be able to offer additional gas at low prices if it chooses
to do so. Moscow has already been offering spot sales and
discounts on as deliveries above 80 ?ercent f
volumes
S.
witn spare capacity in existing
lines, Moscow could use these pricing tactics to capture
incremental growth in West European import demand and limit
access of potential suppliers to the European market. Additional
Soviet sales, for example, could undercut sufficiently the volume
of new gas supplies needed from the Norwegian Troll field and
make its development uneconomic in the next decade.
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Moscow also has proven to be quite adept at tying sales to
goods and equipment purchases to put further pressure on the West
Europeans and Japanese to import Soviet gas. The possibility for
large-scale, Soviet coal-slurry pipelines in the 1990s--each of
which would reportedly involve an investment comparable to that
required for the Siberia-to-Western Europe natural gas pipeline--
could lure the West Europeans to purchase Soviet gas in exchange
for lucrative Soviet equipment contracts. In our judgment,
Japanese interest in Soviet energy proiects is based principally
on a desire to sell equipment.
So far this year Moscow has concluded three new gas export
agreements with Finland, Italy, and Austria, and an agreement in
principle with Turkey. In each instance, Moscow has shown
willingness to market natural gas at prices competitive with
other fuels, and has been receptive to bilateral trade proposals
or to proposed purchases of goods from the gas consuming
countries.
o Finland agreed early in 1984 to increase its purchases of
Soviet gas from the current level of about 0.7 bcm to over
2.5 bcm by the end of the century. Helsinki has been
under pressure from Moscow to buy more gas to help reduce
Finland's growing surplus on the bilateral trade
account.
Italy agreed in May of this year to purchase an additional
4.4 - 4.5 soviet gas amounting in 1990 and from 4.8 - 6.0
bcm in 2000, at a price of about $3.60 per million Btu.
This price is the lowest yet granted to any purchaser of
Soviet gas since the 1979-1980 oil price hikes. At the
same time the gas sales agreement was concluded, another
agreement was signed obligating the Soviets in principle
to increase imports of Italian machinery, including
compressor station equipment, and consumer goods.
o This past summer Austria also signed a new gas supply
contract with the USSR. At the same time, Austria also
announced a new agreement with the Soviets on the delivery
of oil field pipe to the USSR. Such deliveries, begun in
1969, are linked to Soviet counter-deliveries of natural
gas. According to published reports, Austria has flatly
rejected the possibility of diversifying gas imports,
arguing that Soviet gas holds a 30 percent price advantage
25X1 over North Sea gas.
? The USSR also concluded in September 1984 a 25-year
agreement in principle with Turkey. This agreement calls
for the export of up to 1.5 bcm of Soviet gas in 1987,
rising to 6.0 bcm in 1990. Moscow has agreed to deliver
the gas at less than the price of fuel oil, with payment
in as-yet unspecified Turkish goods.
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Further Soviet Efforts
Moscow has also stepped up gas marketing efforts in other
countries as well. Currently, Greece is conducting a feasibility
study to decide whether to import up to 2 bcm of Soviet gas. The
decision could be influenced by the Turkish-Soviet agreement,
since the same pipeline through Romania and Bulgaria could be
used to supply both Greece and Turkey. Should Greece decide in
favor of Soviet gas imports, these might begin before 1990.
According to Embassy reporting, Greek firms hope to win some of
the construction contracts associated with the new gas pipeline
system, and Greece may pay for the gas with aluminum products
from a new plant. An extension of the Soviet pipeline network
into Turkey or Greece could effectively block access to the West
European market by suppliers in the Middle East. Markets in
Turkey and Greece are key stepping stones for Middle Eastern
suppliers because they will need to sell gas in transit to
minimize the cost of delivery. Moreover, the cost of shipping
LNG to Western Europe from the Middle East would be more than 30
percent more expensive than pipeline shipments, according to
industry, sources.
Another West European country where the USSR has tried to
develop a new market is Sweden. To date, Sweden has not been
persuaded to import Soviet gas. In October, Swedegas, Sweden's
state natural gas supplier, concluded that the proposed project
to deliver 1 bcm of Soviet gas via Finland by 1988 was not
economically feasible. Swedegas also noted the reluctance of
Swedish industrial customers to become dependent on the Soviet
Union as sole supplier, according to Embassy reporting.
The flexibility in gas pricing and trading terms shown so
far is indicative of the Soviet determination to meet incremental
gas demand and increase gas sales to the West. Recent price
competition from the Soviets is forcing the Dutch to reevaluate
their price terms with their European customers.
Soviet gas could be delivered
Europe at about $2.37 per million Btu.
Alternatives to Soviet Gas
to Western
We believe that competitive Soviet pricing policies could
forestall development of more secure alternatives as West
European demand recovers. Alternative gas sources are available,
but unless decisions to proceed with development are made soon,
these gas supplies will not be forthcoming when existing supply
contracts begin to expire after 1992. Moreover, the cost of
these new gas supplies will be high.
o With more than one-third of Western Europe's total proved
gas reserves, Norway could supply an additional 40 bcm in
the 1990s. Development of West Troll has been declared
commercial by Norske Shell based on a $6 billion
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development plan that would make the project about 1.5
times more expensive per unit of capacity than any other
offshore development project. Total development costs
could a roximate $30 billion
Because of the Troll Field's long development
ime--at least 10 years--a contract would have to be
signed soon if the field is to start production by the
mid-1990s. Compared with a current price of about $3.60
to S4.00 per million Btu for imported gas supplies in
Western Europe, the cost of delivering Norwegian gas from
the Troll Field is placed at $5.50 to $8.50 per million
Btu by Norwegian Government sources.
o Additional gas fields have been discovered off Northern
Norway, including Troms, Askeladden, and the Haltenbanken
fields. All of these ou d
volumes of gas.
the costs associated with deepwater offshore
eve opment, difficult pipeline routes to shore, and
liquefaction facilities may make these projects uneconomic
until after the turn of the century, given the existing
tax structure and expectations of future gas prices.
The cost of new gas supplies from the Middle East or
Africa could be even higher. Capital costs for a large--
scale, 15- to 20-bcm LNG project could approximate $15-20
billion. Long-distance gas pipelines from the Middle East
or Africa, moreover, could pose security problems and
leadtimps fnr these projects could be up to 10 years.
Given the likelihood of continued softness in world energy
markets, we believe new gas export projects will be difficult to
justify on near-term commercial or even regional economic
grounds.
Contingency Planning
Because of concerns about the level of dependence on Soviet
gas supplies, increased storage facilities probably need to be
constructed. As a result, the cost of building and operating gas
storage facilities can serve to narrow the price difference
between relatively inexpensive Soviet gas and new non-Soviet
supplies. While there is little evidence to date on historical
or proposed costs, the expense of developing storage facilities
can vary quite significantly. A West German estimate from 1981
gives the capital cost of storage in an abandoned gas field at
$0.27 per cubic meter in 1981 prices. In the absence of a
suitable gas field, cost can increase to almost prohibitive
levels. A West German estimate of 1977 places the capital cost
alone of gas storage in non-gas field areas at about $33 per
cubic meter in 1977 prices. The high cost estimate reflects the
preparation of new underground gas storage caverns. In the
future, new storage facilities ,involving high capital costs are
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likely to be needed, because
abandoned gas fields are not
needed capacity.
in our view, sufficient old or
likely to be available to provide
In addition to raising capital costs, the increased use of
gas storage also raises operating costs. A 1983 Dutch estimate
suggests that the operating cost per million Btu to remove gas
from storage ranges between $0.08 and $0.25. In addition, the
transport of this gas to end-users leads to an increase of about
$0.02 per million Btu in distribution costs. None of these
calculations includes the cost of gas used as fill for the
storage facility or the fact that not all gas stored may be
ultimately recoverable when needed. Additional contingency
planning for potential natural gas supply disruptions, beyond
planned gas storage, is required in all West European gas
consuming countries. These plans should provide for
interruptible gas contracts, local surge production capacity, and
flexibility in supply contracts, to be used separately or
together in the event of an interruption in gas flows.
Currently, there are large variations in planning between
countries, and in many cases plans are designed to deal with
accidental, technical or seasonal swings in demand, rather than
deliberate interruptions in supply.
Detailed simulations of the West European gas distributiOn
system that we conducted suggest that the integrated gas network
can meet most of the demand arising from a gas disruption under
existing supply arrangements. Effective use of the physical
distribution system during a disruption, however, will require a
degree of regional planning and cooperation that will be
difficult to achieve. The problems would obviously be compounded
if the level of dependence on Soviet gas were higher than current
contracts indicate.
Under present gas distribution policies, any Soviet gas
embargo during the peak winter months could cause minor gas
shortages in certain areas even though the physical distribution
system would otherwise be adequate. Even under favorable
circumstances, including extensive regional planning and
cooperation, a simultaneous Soviet and Algerian embargo lasting
six months--in which Algeria might seek economic leverage from
Soviet action--would severely strain the West European gas
network by the end of the decade. Such an embargo would require
peak production from all domestic sources, including the
Netherlands. At the end of a joint Soviet-Algerian embargo
lasting 12 months, storage would be severely depleted, leaving
Europe extremely vulnerable to any additional supply problems.
Comprehensive regional planning and cooperation could alleviate
some of the effects of such major supply disruptions. Moreover,
we believe awareness of such planning might discourage gas
exporters from even attempting an embargo. Until West European
governments view gas supply availability in a regional strategic
perspective, the coordination necessary to use effectively
Europe's gas system during a disruption is highly unlikely.
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Implementations of current national West European gas supply
emergency plans--which vary widely in scope and depth--could even
aggravate shortages in other countries during a major
disruption.
Energy Security Implications
According to our analysis, surplus gas supplies and gas
distribution flexibility in Western Europe and Japan probably
will be sufficient to handle even a major gas supply disruption
during the remainder of the decade. The surplus of gas during
the 1980s, together with Soviet marketing efforts, however, could
prevent or delay development of new projects needed to meet West
European demand requirements in the 1990s. Failure to develop
new gas supplies could leave the major industrialized countries
more heavily dependent upon Middle East oil or allow the Soviet .
Union to capture a greater share of West European gas markets in
the 1990s. Moreover, delays in developing alternative LNG
projects for the Japanese market could bode well for Soviet
efforts to sell gas from the Sakhalin LNG export project.
Western Europe must decide within the next few years how it
will meet its natural gas requirements in the 1990s. Although
there are a number of new indigenous gas fields which could h-elp
satisfy European demand to the end of the century, it is
uncertain whether gas produced from these structures could be
competitive with Soviet supplies under current tax structures.
Tax reform or reduction of the tax burden for high-cost projects
would narrow the potential price differential, and serve as an
incentive for firms to proceed with development. Alternatively,
a price acceptable to buyers could be agreed upon and an
individual tax structure for the project set up to allow
production at the agreed price. Even if the Norwegians changed
their position against government tax concessions or subsidies,
however, we believe the West Europeans probably would have to
make a political commitment to ensure development of Troll by
paying a premium for security of gas supplies.
At the same time, the estimated price differential between
new indigenous gas supplies and future Soviet gas sales will be
overstated if it fails to incorporate the cost of increased
storage capacity required for security reasons. Even with both a
reduced tax take and Soviet gas prices escalated to include
required storage costs, Soviet gas may still appear less costly
than alternative sources. The size of this differential will be
the premium required for new and secure indigenous gas
25X1 supplies.
Western Perspective on Soviet Trade
Whether the West decides to maximize development of its
indigenous resource base or to purchase increasing amounts of
Soviet energy will, in large part, depend on how vulnerable they
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perceive themselves to be. This perception will be shaped not
only by the degree of energy dependence and the cost of
alternative supplies, but also by general trade issues and
expected benefits from increased East-West cooperation.
West European Attitudes
The West Europeans do not regard their present or projected
energy dependence on the USSR as a serious problem. On the
contrary, they believe that their overall energy security
actually is enhanced by this diversification of energy sources
away from OPEC. They argue that the Soviets have proven to be
reliable and businesslike trade partners who would be extremely
reluctant to disrupt a relationship from which they derive great
benefit. In our view, this assessment is basically valid -- so
far at least. The USSR has in fact established a good record of
honoring contracts and thre have been very few instances of it
using economic. leverage in an effort to get political concessions
from Western Europe -- th most notable exception occurring in
1958 when Moscow cut purchases from Finland in a successful bid
to force the exclusion of Conservatives from the Finnish
cabinet. A recent report that Moscow had threatened Austria with
economic reprisals if it tightened controls on technology
transfer apparently was unfounded, and a Soviet official
apparently was speaking out of turn when he said that energy -
deliveries to the United in.dom would be cut off in support of
the miners' strike
To be sure, West European policymakers are not totally
sanguine about the growing dependence on Soviet energy. Both
France and West Germany decided several years ago that Soviet gas
should not supply more than about 30 percent of their total gas
needs' -- a level that they, along with Italy, will reach by the
end of the decade when the new Soviet pipeline is in full
operation. At this level of dependence a Soviet gas embargo
would create difficulties, but the West Europeans are confident
that they could cope reasonably well by means of conservation,
fuel-switching, and increased imports of Dutch gas.
With the West Europeans now seeking additional gas supplies
to cover their needs in the 1990s, the key question is how they
would feel about still greater dependence on the USSR. Another
major deal with Moscow would push the Soviet share of the gas
market close to 50 percent in the major recipient countries,
obviously increasing the vulnerability to a cutoff. To avoid
this situation we believe the West European gas buyers will first
try to negotiate a deal for Norwegian gas and will even be
willing to pay a small premium for gas from such a secure
source. If Oslo is too demanding on price, however, we think the
1Paris recently restated this policy in somewhat different
form: that no single gas supplier should provide more than 5
percent of France's total energy needs.
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gas-buying countries would have relatively few qualms about
turning to the USSR and would have little difficulty in
reconciling this step with their IEA commitment to avoid undue
dependency on a single supplier.
The United States probably does not have much leverage to
influence the West Europeans on this issue, which they regard as
primarily an internal matter. In our view the single most
important element in forestalling another Soviet gas deal will be
Oslo's willingness to lower its gas revenue demands enough to
make gas from the Troll field competitive in Western Europe. As
a third party to the negotiations, the US might have some
capacity to influence Norwegian thinking on this. Additional US
arguments about the dangers of dependency on the USSR probably
will not get far with the gas buyers, who will stress that this
is something for them to decide. Arguments about the benefits to
the Soviet military of additional hard currency earnings would
make only slightly more headway. The West Europeans would
counter by stressing their opposition to "economic warfare" and
by arguing that, if more generalized economic pressure is to be
used against the USSR, then grain sales restrictions should also
be part of the arsenal.
Attitude Toward Soviet Trade in General. In probably every
West European country the prevailing view on trade with the --
Soviet Union is that it is desirable on both political and
economic grounds. To be sure, estimates of the political
benefits have been scaled back sharply compared with a decade
ago, when many West Europeans believed that expanding trade would
lay the foundation for a lasting improvement in East-West
relations. These hopes were dashed when the rapid growth of
Soviet-West European trade during the 1970s was followed by new
Soviet missile deployments, the invasion of Afghanistan, and
repression in Poland. Nonetheless, West European attitudes have
only been modified, not fundamentally altered; the standard
argument, in effect, is that Soviet behavior is better than it
would have been in the absence of trade. A French official
probably captured the prevailing view on the continent when he
said that without trade, Moscow would look on Western Europe
purely in military terms.
The economic benefits of trade with the USSR are more
tangible but are still modest -- and, in our view, tend to be
exaggerated by the West Europeans. The basic reality is that a
market that accounts for only about 2 percent of Western Europe's
exports cannot have a major economic impact on the region as a
whole. In terms of employment, a West German economics institute
has estimated that 122,000 West German jobs were directly or
indirectly dependent on exports to the USSR in 1982. Since West
Germany accounts for more than 40 percent of total West European
sales to the Soviet Union, the jobs figure for the whole
continent probably is on the order of 300,000--roughly 0.3
percent of the labor force.
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The exaggerated importance attached to the Soviet market
probably is a reflection of the nature of the trade. Deals with
the Soviet Union typically are large-scale affairs, as opposed to
a series of small contracts, and thus garner a disproportionate
share of publicity. Perhaps even more important, most Soviet
orders go to industries that have been depressed in recent years
and that have powerful labor unions to help argue their cause.
The struggling West European steel industry is the most obvious
example: about 8 percent of its exports last year went to the
USSR.
The West Europeans also see one major benefit on the import
side of their trade with the Soviet Union: reduced dependence on
OPEC. Four-fifths of their purchases from the USSR now consist
of energy products and these covered about 8 percent of Western
Europe's total energy needs in 1983. Without the Soviet oil and
gas Western Europe would have to depend much more heavily on
OPEC, which currently supplies about 23 percent of its energy
needs.
25X1 Export Controls. Over the years there has been little
change in the West European belief that export controls are
justified only for products that contribute directly to Soviet
military capabilities--and they tend to take a narrower view in
defining such products than does the United States. The
underlying attitude is that more generalized economic sanctions
have no significant impact because the Soviet military always
gets what it needs anyway. According to this strongly held view
the entire burden of generalized sanctions is borne by the Soviet
civilian economy--and by the Western suppliers who have lost the
sales opportunity.
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We thus believe it is highly unlikely that the West
Europeans will agree to any significant COCOM restrictions on the
sale of oil and gas equipment to the USSR. In addition to making
the points outlined above, they are likely to argue that
additional Soviet oil and gas production would benefit the world
economy by reducing its dependence on OPEC. The West Europeans
will also be aware, of course, that a large part of any Soviet
hard currency earnings resulting from additional energy
production is likely to be spent in Western Europe.
On the other hand, the West Europeans have significantly
tightened the terms on export credits to the USSR. Throughout
the 1970s and into the early part of this decade--when large
contracts for gas pipeline equipment were being negotiated--they
competed with each other in a counter-productive effort to boost
exports by offering favorable credit terms. As the Soviets
became adept at playing one country off against another, the West
Europeans gradually realized that they were net losers in this
game. As a result they joined in a new OECD consensus agreement
that significantly boosted interest rates on export credits to
the USSR. Moreover, they appear to be adhering closely to the
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agreement, with even the French and the Italians holding out
aaainst on-aoing Soviet efforts to get them to break ranks.
Japanese Attitudes
While the Soviet Union could become increasingly important
as a natural gas supplier to Western Europe in the future, and
will continue to aggressively market the Sakhalin project, Moscow
is and will remain only a marginal energy supplier for Japan.
Japanese interest in Soviet energy projects is based principally
on a desire to sell equipment rather than to purchase coal, oil
or natural gas.
o The Sakhalin project is stalled because the Japanese
have not yet made a commitment to buy the LNG.
o The Japanese were to receive 100 million tons of coal
over 16 years from South Yakutsk, but the Soviets
missed the first deadline in 1983. Tokyo wants to cut
deliveries because of the slow recovery of the steel
industry. The relatively slow growth and
restructuring of the Japanese economy toward less
energy-intensive industries will also help keep a lid
on demand for Soviet energy.
Since the oil crises of the 1970s, Japan's energy policy has
been based on conservation and diversification to ensure stable
supplies. Given traditional Japanese mistrust and dislike of the
Soviet Union, we believe Tokyo would go to great lengths to avoid
any semblance of dependence on Moscow. The Japanese may,
however, purchase competitively priced Soviet LNG, coal and oil
as part of their strategy to reduce energy costs and increase
their sources of supply. We believe one reason Tokyo has
supported energy projects worldwide--in addition to promoting
equipment sales--is to increase competition among suppliers to
allow Japanese firms to extract better contract terms.
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primary suppliers more than the United States. The United States
is only a marginal supplier of coal and LNG--goods for which
other major producers generally offer lower prices. US
metallurgical coal, for example, although of high quality, is
priced $10-15 per ton higher than that of Japan's other
suppliers. Most steam coal from the United States is also
relatively expensive. Japanese users will probably not
significantly increase their purchases until prices fall, in
spite of Washington's pressure on Tokyo.
The Japanese will buy Soviet
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Yakutsk coal that is competitively priced, but the higher quality
of US metallurgical coal will help US producers maintain market
share.
The Sakhalin LNG project is only one of many the Japanese
are involved in which will compete with Alaskan natural gas
development projects. All are moving slowly because Japanese LNG
consumers have been unwilling to make new purchase commitments
since their needs through 1995 are fully covered by existing and
prospective contracts and demand is growing more slowly than
originally projected. The participation of Japanese banks,
trading companies and equipment manufacturers--frequently with
government encouragement--does not automatically imply large
purchases by Japan's nine influential power companies. But LNG-
consumers would no doubt like to see increased competition help
them break the rigid take-or-pay clauses in their current
contracts.
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Trade. There is a consensus in Japan that it is time to
improve ties with the USSR, and both Prime Minister Nakasone and
Foreign Minister Abe have made smoothing relations with Moscow a
priority. The Japanese also want to promote economic
cooperation.
o Steel companies, some of which have a large stake in
pipe sales to the Soviet Union, are just coming out of
a three year depression.
o Equipment manufacturers are reluctant to give up the
expanded market shares they have developed over the
past two years, especially at a time when sales seem
to be leveling off.
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o The government would lose the $181 million dollars it
had invested as of November 1984 in the Sakhalin
project if the contracts are abrogated and might have
to pay insurance on any funds invested by private
firms.
Export Controls. Tokyo would probably react strongly to a
US demand for further restrictions of energy equipment exports to
the Soviet Union at this time and would be skeptical that all the
allies could be induced to cooperate. Tokyo will probably argue
that restrictions are not justified at this time--unlike after
the Polish crisis or the invasion of Afghanistan. Since most of
the items concerned are not COCOM controlled, Tokyo would insist
upon a multilateral consensus on any sanctions by the Western
allies before taking action. The Japanese felt betrayed when
West European firms sold equipment to the USSR after Japan had
cooperated with the United States on sanctions after the Afghan
invasion. Business interests will continue to argue that energy
equipment is not strategically significant, is widely available,
and has been freely sold in the past. They will also maintain
the United States is promoting export restrictions to further US
business at the expense of foreign firms.
Implications
A_
On balance, we believe that Western attitudes and Moscow's
marketing strategy will lead to additional purchases of Soviet
energy, particularly natural gas. Concerns over an undue
dependence on Soviet imports, however, should help limit the size
of additional purchases. Nevertheless, if substantial progress
on the development of indigenous Western gas resources is not
achieved over the next few years because of weak demand, the high
price of new gas, and stringent tax structures, Soviet gas may
make significant further inroads. Thus far the West Europeans
have shown little indication of takin7 the steps necessary to
prevent this outcome.
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Table 2
West Germany: Natural Gas Supply and Demanda
(billion cubic meters)
Production
Import demand
1983b
1990
2000
15
32
18
35
16
43
Contracted Supplies
32
46-49
46-49
USSR
10
20-23
20-23
Netherlands
17
15
Norway
5
10
10
Denmark
1
1
Shortfall (surplus)
(11-14)
9-12'
aNumbers may not add to totals shown due to rounding.
Actual trade.
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Table 3
France: Natural Gas Supply and Demanda
(billion cubic meters)
1983b 1990 2000
Demand 28 35 45
Production 6 3 2
Import Demand 22 32 43
Contracted Supplies 22 24-26 24-26
USSR 4 11-13 11-13
Algeria 9 9 9
Norway 2 4 4-
Netherlands 7
Shortfall (surplus) 6-8 17-19
?
aNumbers may not add to totals shown due to rounding.
bActual trade.
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Table 4
Italy: Natural Gas Supply and Demanda
(billion cubic meters)
2000
1983b
1990
Demand
25
36
45
Production
12
14
14
Import demand
13
22
31
Contracted Supplies
14
31-33
25-27
USSR
7
11-13
11-13
Libya
2
2
Algeria
2
12
12-
Netherlands
5
6
Shortfalls (surplus)
(9-11)
4-6
aNumbers may not add to totals shown due to rounding.
bActual trade.
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Table 5
Belgium: Natural Gas Supply and Demanda
(billion cubic meters)
1983b
1990.
2000
Demand
9
12
12
Production
Import demand
9
12
12
Contracted supplies
9
8-10
5-7
Netherlands
5
3
Norway
7
2
2
Algeria
2
3-5
3-5
Shortfall (surplus)
2-4
5-7
aNumbers may not add to total shown due to rounding.
bActual trade.
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Table 6
United Kingdom: Natural Gas Supply and Demanda
(billion cubic
meters)
2000
1983b
1990
Demand
48
58
60
Production*
34
44
41
Import Demand
14
14
19
Contracted Supplies
13
Norway
13
12
Shortfalls (surplus)
2
19
aNumbers may not add to totals shown due to rounding.
bActual trade.
*Low end of UK future production estimate.
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Table 7
Norway:
Natural Gas
Supply and Demanda
2000
(billion cubic meters) -
1983b
1990
Demand
--
Production*
22
28
16
Import demand
(25)
(28)
(16)
Shortfall (surplus)
(28)
(16)
2Numbers may not add to totals shown due to rounding.
uActual trade.
*-
No future production from Sleipner or Troll.
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Table 8
Netherlands: Natural Gas Supply and Demanda
(billion cubic meters)
1983b
1990
2000
Demand
36
32
32
Production*
68
67
54
Import demand
(35)
(35)
(22)
Shortfall (surplus)
(35)
(22)
aNumbers may not add to totals shown due to rounding.
bActual trade.
*Continued high future production.
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Japan:
Table 9
Demand
2000
Natural Gas Supply and
(billion cubic meters)
1990
1983a
Demand
28.0
51.8
61.1
Indigenous Production
1.6
4.3
5.0
Import Demand
26.4
47.5
56.1
Contracted supplies
28.5
40.0
28.4
Abu Dhabi
2.9
2.9
Alaska
1.4
1.4
Brunei
7.3
7.3
Indonesia
15.2
19.9
19.9
Malaysia
1.7
8.5
8.5
Renewable or Planned
Contracts
12.6
22.8
Abu Dhabi
2.9
Brunei
7.3
Canada
4 . 1
4.1
Australia
8.5
8.5
Potential contracts
up to 43.5
Alaska
22.1
Qatar
up to 8.5
Thailand
4.3
USSR-Sakhalin
4.3
Indonesia
4.3
Supply shorfall (surplus)
aActual trade.
(2.1) (5.1) (up to 38.6)
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