JPRS ID: 9696 WEST EUROPE REPORT

• Document Type: CREST
• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000300100059-3
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• Original Classification: U
• Document Page Count: 42
• Document Creation Date: November 1, 2016
• Sequence Number: 59
• Content Type: REPORTS

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a
J~PRS L/9696
29 April 1981
West Euro e Re ort
_ p p
- ~ cFOUO 2s~81 ~
FBIS ~OREICN BROADCAST INFORMATION SERVICE _
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NOTE
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other characteristics retained. -
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Unfamiliar names rendered phc~netically or transliterated are ~
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J
JPRS L/9696
29 April 1981
~ WEST EUROPE REPORT
(FOUO 23/81) -
CONTENTS _
THEATER FORCES '
FRANCE
_ Integrated Ground Air Defense S~rstem Described
. (Jean de Galard; AIR & COSMOS, 21 Mar 81) 1
Brief s
Nuclear Submarine Clarification
TERRORISM
FEDERAZ REPUBLIC OF GERMANY
Ex-Terrorist Baumann on His F,acperiences, Views
(sTERIV, 12 Mar 81) 5
ENERGY ECONOMICS
- ITALY
Official Denies E~ergy Problems Alleged by 'ENERGTA'
_ (Giuseppe Ammassaxi; ENERGIA, Mar 81) 12
Problems of Coal Supply, Logistics for 1980's
(Oliviero Bernardini; ENERGIA, Mar 81) , 22
- a - [ III - WE - ],SO FOUO]
nnn ~r�nr~r ~ r r*c~va r~ ~i
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THEATER FORCES FRANCE
INTr",~RATED GROUND AIR DEFENSE SYSTIl~I DESCRIBID
Paris AIR & COSMOS in French 21 Mar 81 pp 38-39
~Article by Jean de Galard: "Thomson-CSF's Air Defense MIDAS System"]
[TextJ Thomson-CSF has dev~;:loped a new phased-array antenna for the 2215-D
version of its TRS 2215 electronic-scan radap system. The company chose to show
this new antenna to the press before its firat public exhibition at the next -
International Aeronautics and Space Show. At this press showing, key officials �
responsible for the broad range of air defense pro~ects in Thomson-CSF's various
divisions and subsidiaries discuased the different aspects of air defense and des-
- f cribed their company' s philosophy for tackling the problems to be solved in meet-
ing each armed force's particular requirements. They also reviewed the specific
characteristics and performance data of the air-defense equipment developed by
Thomson-CSF.
Air Defense Systems -
In dealing more speci fically with the missions and organization of air defense
systems and tactical operations control syst~ms, Mr Rouviere strongly emphasized
a major p~inciple, namely that it is fundamentally erroneous. ~ to believe that the
air defense proble~ is universal in cha.racter and has relatively standard solutions.
After having out~ined the primary func~ions of an air defense system--intelligence,
decision-making, operations control--and certain co~plementary functions--electronic -
warfare, search and rescue, radioactive f.allout F~drning--R!--ayi.ere defined the basic
missions of tactical control imits ard ~escribed the equipment and facilities =
required to carry ou.t those missions.
T3e explained that four ma~or categories of equipment wexe used in executing air
defense tasks: sensors that are generally radars, processing, display, and com-
munications equipment. Thomson-CSF has developed a wide range of products adapted
to the characteristics of each p=oblem and to each country's operational specifi- -
cations. This range of equipment ma.y be placed in four ma~or categories:
a. Radars for fixed installations or mobile radars such as the three-dimentional
radars of the 1"RS 22 15 family that are highly resistant to ~amming, and the Tiger
radar specificallq designed for low-altitude detection.
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b. Processing units.
c. Display units.
3. Ground-to-ground and ground-to-air com~unications equipment.
These ma~or items of equipment con~titute the basic components of the MIDAS [Inte- _
_ grated Air Defense Groimd Environment] systems offered by Thomson-CSF.
l?perations Centers Adapted to Requirements
The differenC center facilities offered are:
a. The main CODA-COC (Air Defense Operations Center-Joint Operations Center).
This i~ a high-level decision-making echelon. It is generally located at or near
= the field army headquarters from which it recP~ves requests for air support. It
o~~_rates through two command and control chatxnels: an air defense channel and a
tactica~ control channel.
The air defense channel consists of one or more fixed-site CDCS (Sector Control
and Reporting Center) that receive mission allocations and employ them in accordance
with directives issued by the CODA. The active air defense means allocated to the
CDCS are interceptors and high-and medium-range surface-to-air missiles. The
CDCS maintains liaison with the mobile CD(: (Control and Reporting Center) to '
coordinate its actions on the tactical level.
The tactical channel consists of the Joint Operations Center (COC) combined with
the CODA. The COC is responsible for the planning of air support for ground opera-
tions in coordination with the CODA. It deter~~ines requirements and then the i
�appropriate support mission allocations. It is loeated at or near the field army
_ headquarters from which it receives requests fo~� support.
b. The mobile CDC (Control and Reporting Center) is a subordinate element of the
CODA-COC from which it is assigned missions. It is attached to the army corps~for
short-term operations requiring rapid coordination, particularly relative to the
employment of tactical surface-to-air missiles. ~
c. The CDBA-PDTA (Low-Altitude Reporting Center-Tactical Air Control Post) is a
subordinate element of the mobile CDC. It has a dual mission: provide additional
low-altitude coverage and maintain tactical control of air support missions.
d. The Electronic Warfare Center is also a subordinate element of the mobile
CDC. It is responsible for the detection and location of enemy radars and radio
transmittin~ stations, and also for jamming such facilities.
- e. The PGA (Air Control Team) is the last link fn this chain of control and rPport-
ing centers. Its task is to direct air support strikes onto tl-.�~i_r targets.
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Detection Equipment
Another Thomson-CSF executive, Mr Mondon, then discussed the new generation radars
and listed their three main characteristics:
- a. Adaptability in coping with changing environmental, atmospheric, and counter-
= measures cdnditions, or with different operational requirements;
b. Functional automaticity, in other words, requiring no operator at the radar
- proper or to perform detection functiQn in the oper~tions centers;
c. Manageability permitting maintenance to be performed by skilled operators and
no longer by technicians; a capability resulting from the total automation of the
radar's principal functions.
~ The most characteris tic elements of the equipment designed for the coming genera- ~
tion and offered by Thomson-CSF include: the Tiger family of two-dimensional radars
especially designed for acquiring targets flying at low and very low levels; and
the TRS 2215 and TRS 2230 family of high-performance three-dimensional radars.
Mondon emphasized that both the Tiger and TRS 2215 equipment utilize the most
advanced technology in the design of their antennas, electronic transmirters, and
information process ing circuits. The TRS 2215 transmitter consists of a Tiger
= transmitter component combined with a 10-kilowatt medium-power final amplifier.
As for the antennas, an essential component of any high-quality radar, both the =
Tiger and TRS 2215 are equipped with antennas of relatively standard construction
but of extremely advanced design as far as their ability ta resist 3amming is
concerned, particularly in the area of the side lobes. Both radars are eq~aipped
with an integrated IFF antenna. Despite their exceilent performance, these
antennas cannot always compete with phased-array antennas that perform much more
effect~vely in a jau~ing environment.
Mondon then described the main qu~lities of the new high-perfmrmance phased-array -
antenna recently placed on the mari~et by Thomson-CSF' and intended for the 2215D
version of the TRS 2215 radar.
Development of this new anCenr..a benefited from tl~e extensive experience acquired -
in developing linear arrays like thos~ of the reflector-equipped TRS 2215, as well
as in developing two -dimensional beam-scanning phase-array antennas. The plane .
array which constitutes this antenna consistu of 50 superimposed beams. ~he feeds ~
of each of these beams are energized by a symmetrical branch transmission-line ' -
system. Since there is absolutely no frequency dri.ft or dispersion in azimuth,
this antenna can ope rate in a pure random frequency, which is not the case with
- the large air defens e 3D radars in current use. Lastly, this antenna has a circu-
larly polarized radiation capability, a most important feature for a radar designed
to operate in the 10-cm band. Thomson-CSF consid~rs this new antenn~ of original- -
design to be a marl.ed improvement over the present state of the art. -
COPYRIGHT: A. & C. 1981 �
8041
- CSO: 3100
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_ _
THEATER FORCES FRANCE
_ BRIEFS
NUCLEAIt SUBMARINE CLARIFICATION--In replying to Michel Debre's question of
- 5 January 1981, the minister o~ defense explained--in the 9 March 1981 issue of
the JOURNAL OFFICIEL--that the 5ixth SNLE [missile-launching nuclear submarine],
L'Tnflexible, will be operational in 1985. fle also revealed that the five SNA's
(:~uclear attack submarines) are scheduAed to be placed in active service as fol-
lows: the first, Rubis, in the summer of 1982; the second on 1 July 1984; the
third in the summer o~ 1986; and the fourth and fifth, probably before the end of
1987 and 1988 respectively. It will he recalled (editor's note) that future SN4,'s
will be armed with versions of the SM39 missile enclosed in a powered and guided
_ capsule. Debre had also asked: "Wh~n will construction of the seventh SNLE
begin?" The defense minister answered: "To keep pace with technical develop- ~
ments, studies are now being conducted to examine the future evolut3.on of the
Strategic Naval Force." [Text] [Yaris AIR & COSMOS in French 21 Mar 81 p 39] 8041
CSO: 3100
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FEDERAL REPUBLIC OF GERMANY ~
EX-TERRORIST BAUMANN ON HIS EXPERIENCES, VIEWS
Hamburg STERN in German 12 Mar 81 pp 34-38, 207
[Text] Michael "Bommi" Baumann was one of the early terrorists.
He was also the first one to quit. "Friends, throw away your
arms," he urged as early as the beginning of 1974. Four weeks
ago he was arrested. STERN spoke with him in the Berlin jail
- about his life on the run, about squatters, Greens, punks,
_ and about how the GDR helped him get away.
STERN reporters Gerhard Kromschroeder and Raimund Kusserow had
to pass through four checkpoints and a frisking before they
were allowed in visiting room 122 in the investigatory prison
in Berlin-Moab it to v3sit Michael "Bomcai" Baumann. The
~ 33-year-old pri~oner, with a black punk jacket, tight jeans and
jogging shoes, was in a good mood. "Things really aren't so
bad for me here, The cells here look like hotel rooms in
Afghanistan," he said. The man who had been on the run from
the police and from his former companions for 9 years had
rejected a pro tracted extradition process and voluntarily
allowed himself to be flown to Berlin--to the city where for
him, 14 years ago, "everything began." In the STERN interview
Baumann spoke frankly. What the former bomb thrower said is
dynamite for his ex-companions, for the Alternatives and Greens
and for the GDR security service.
STERN: Mr Baumann, do you like it better in the familiar Moabiter prison than ~
in the London jail?
Baumann: Well, I thought I would be extradited no matter what. I also thought I
could speak German here, but that didn't work out either. My guard is a Bavarian
and the rest are Turks. I got shit on againe
STERN: The arrest order that brought you here accuses you of: membership in
the terrorist organization, "2 June," taking part in bank robberies, attempted
murder of police and taking part in a bombing attack in Berlin-Gatow, where a
man lost his life. What is the truth in all these allegations, anyway?
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. Baumann: I think the arrest warrant is wrong as it is written.
STERN: What's wrong with it?
Baumann: Well, for example, I wasn't even there at the three bank robberies I
- am accused of. I have never been in Gatow where the bomb went off~-at the most
to go swimming.
STERN: But you can on~y count on leniency if you tell everything to the state
prosecuto r. Fourteen days after your arrest, your old friend and fellow-terrorist,
Hans Peter Knoll was suddenly arrested in Australia. A coincidence--or did you
squeal?
Baumann: I knew you'd ask that. No, I didn~t. T_ don~t rat on anybody.
STERN: You say you laid down your arms as early as 1971. How many times did you
us- them? ,
Baumann: Let's say I used them in order never to touch them again.
- STERN: The "Red Army Faction "(RAF) around Andreas Baader, in contrast to the
"2 June," really did shoot at people.
Iiaumann: In the beginning we never thought of shooting. We didn't have a
leadership cadre, either, the way the RAF did. We thought of ourselves as a
part of the whole leftist moveanent. Our goal was to support mass campaigns by
military actions.
STERN: For example?
Baumann: At that time the American war in Vietnam was going on. So bombs just
got thrown.
STERI`: Today, squatting is the order of the day...
Baumann: ...well, the way it was then with the "2 June," today a few bombs would
get thrown in the squatting cases, probably against a few construction senators
or such. But the young people should be told toc~ay that this is stupid. You
don't have to go underground. I can change things without bombs, too.
STERN: What would you recommend to young people, then?
Baumann: llefinitely not a march through the institutions. No use of force,
either. We don't need the machine pistol anymore. I think it is good that they
are Einding new ways to live--by not trying to fird a job with an automobile
- company but by opening an auto repair shop themselves. The leftists today should
really fight to see that not one person goes into the underground anymore.
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STERN: If you were out there in Berlin today, would you be a squatte1?
Baumann: Well, I don~t have a place to live. I might.
STERN: All over the FRG squatting has led to real street fights between
demonstrators and police, and many people have been wounded. What do you think
of this?
Baumann: I can understand this very well, although I don't approve of it. More
_ and more it seems to me today that the policeman who does his work has nothing
directly to do with the matter. He wants to get home safely to his family. Why
should I throw bombs at him? That's just plain stupid,
STERN: Is this the new Bommi Baumann?
Baumann: I have always thought differently~about the use of force than the RAF
student asses clid. How many mild-mannered intel.lectuals have I met who were
- perhaps in their mid-twenties and who had never fought in their whole lives. In
our group we all saw a film back then, an Italian western called "Face to Face."
It was really a good show. A university professor goes out to the Wild West
and meets a bandit. The bandit is shooting his way out because he is about to
be arrested. The university professor helps him, ar,~d they both take off -
together. And in the end the professor is worse than the bandid. He doesn't
care who he kills. This is the way it is in gart in the RAF.
_ STERN: During the student riots in 1968, Rudi Dutschke was probably the most
_ fascinating figure. Would Dutschke still pack them in today? ~
Baumann: He would speak to empty houses, because the young people can't stand
this ideological political garbage any more. Who is interested in that, anyway?
I haven't got a place to live, so I have to find a place to get off the street.
Here it is not because there is some kind of war in Asia. The squatters say
today: What do I care about Palestine or Karl Marx' letters to Friedrich Engels _
when I haven't got a place to live. -
STERN: It's all well and good to get a place to live, but isn't it possible
that under certain circumstances this could lead to the same thing that happened _
in 1968--namely force that escalates on both sides?
Baumann: It's very possible, but it depends upon the participanzs. In England,
in the houses I lived in, there were also empty places that the government wanted
to tear down. They let us use thf h~u~es on co ndition that we renovate them.
Then we were allowed to stay there. The English are more liberal and under-
standing than the Germans. Here stones have to fly before anyone starts to
think about a grievance.
STERN: Have you had any contact with your old German companions in recent
- years?
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Baumann: No, I have stayed completely away. Z'm not tired of living. I haven't
_ had anything to do with them for 1Q years. I completely left the picture.
STERN: Once you said that if Andreas Baader were president, "I would kill him~" _
Baumann: (la~ighs): Of course. I w+~u].d have been the first one that he put
- against the wall. It would have been pure self-defense.
~ STERN: Who would you be most afraid of if they were after you, the police or
your former companions who were out for revenge?
Baumann: I would be more afraid of certain guerillas. Two or three--I wouldn~t
want to meet them in the dark.
STERN: Have you ever met them in the dark?
_ Baumann: I met one of them by chance on the street in beautiful Rome.
STERN: Who was th~t?
Baumann: I won't say. That's too hot for me even today. Anyway he didn't
- recognize me, thank God. I got away again. It was ~ust my Karma.
STERN: Karma? Where did you get that?
Baumann: It means divine intervention. I got it in Afghanistan where I learned ~
- Eastern think3ng. Everything that has been important for us up to now doesn~z
exist for the people there at all. The gassport official gave us a form to fill
- out, and under "Professior~" the people write agent. and in the space, "Purpose
of Trip": espionage. He looks a~ it and would just as soon throw it in the =
- wastebasket. He's tiot in~erested in it at all. -
Then I went ~nto a bank. It was just a shed with the sign "Bank" over it. I
_ went in and nobody was there. The safe was in the corner. It was funny - me,
_ wanted for bank robbery, alone with th~ money chest. Then one of these Afghanis
- came up and asked me in his broken English what I wanted. I said: "To
exchange money." He al.most died laughing. I asked, "What's there to laugh
aboiit?" Then the Afghani said: "Listen here, first you have to go on the black
market. The rate is much better there. In the second place I haven't had the
key to the safe here for 3 years. I can't change anything anyway." Things
like that happen to you all the time there. The people are just crazy. This
was all before the Rtissians came.
STEItN: B~mmi Baumann, the bomb thrower from Berlin, on the way to new self-
discovery? Were you perhaps in Poona, too?
- Baumann: Xes, I drove through there quickly. I knew Baghwan before he drove
around in a Rolls-Royce reviewing his disciples. In 1972 he was sitting in r.he
Sea Green Hotel on Marine Drive in Bombay as an unemployed ~,~ofes~or. They had
kicked him out of the university. Baghwan sat down calmly in this apartment
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house where passing foreigners live and listened to their problems. Some time or
other he said to hiu~self: "These people can be helped."
" STERN: And did he help you?
Baumann: I don'.*_ need any ~et -set guru. I don't need an organization like that
either. They ~v�:n have a unifo rm. And they are also told how to a~t. Isn't
that great?
STERN: In the last 10 years you have often been arrested--but snmehew or other
you have always got off. Were you in ~ermany, too?
Baumann: Yes, in the GDR. I was there in the beginning of 1973 on the train
from Czechoslovakia on my way to West Berlin. There was something about my
fake passport that .:hey didn't like. They suddenly started to hald my identifica-
tion card under the light. They they saw right away of course that it was forged.
ThFn they arrested me and took me to Dresden.
STERN: Why to Dresden? What did they want from you?
- Baumann: They think anyone who comes in with false papers is helping people
escape to the West. They were about to give me 2 years. But then I said: "I'm
Bommi Baumann, you must know me." After all, I come from the East. I told them
; exa tly how and where we lived then. They checked it all for a week unt~l they .
realized it was really me. Then the state security service [Stasi] took over..
I was put in the Stasi prison in Berlin-Niederschoenhausen. One morning two
gentlemen came int~ my cell, gave me back my false passport, and sent me on the
train to West Berlin, by way of Friedrichstrasse.
STERN: Why didn't the GDR turn you ove:: to the police in the West, since you
were wanted as a terrorist?
Baumann: I really don't know. At any rate, they didn't just do this with me.
They let Baecker* and another guy, whom I don't want to name, off just as easily.
STERN: What did you want to do in West Berlin? Meet old friends?
Baumann: No, it had to d~ with my book, "Wie alles anfing" [How Everything Began].
STERN: In the meantl.me, that book has sold abo ut 100,000 copies. You are
something ~f a bestseller author. Have you been living off the proceeds of your
book all these years of exile?
Baumann: I hardJy saw any of that. Naturally I got a mark or two out of it now
and then. I think about 200,000 copies have been sold. But the publishing house
was very stingy in paying. I couldn't do much with that.
*The miner, Hans-Juergen Baecker, who was sought as s terrorist, was sentenced
in 1974 to 9 years prison for bank robbery and membership in a criminal group.
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STERN: And where did the rest come from?
Baumann: I had various jobs. For example, I was a disc jockey in a bar in an -
- Italian resort that mainly American hung around, and I helped with the grape
harvest. I worked as a farmer. What I c~uld get at the moment. I even worked
a little as an actor in 1975.
STERN: What? As an anarch3st, maybe?
- Baumann: On the contrary. At first they engaged me for a very small role--that
I was really made for: I was supposed to play a policeman. But then the film
- people noticed that T_ ~vas the only one in the troup who knew English. And than
I got a speaking role. I got the part of an English lord who was kidnaped by the
Italian anarchist, Carlo Fisacane. There really was an Italian anarchist like
that in the last century. He wanted to ransom 300 comrades. Of course everything
went wrong--~in the mcvie. It got a lot of prizes and even played in Cannes and at
ttie biannual in Venic~. It was called "How Nice To Be Killed." -
~TERN: And here at Moabit--is this Bommi Baumann's last appearance?
- lBaumann: No, not by a long shot. First I'll write another book...
STERN: ...Entitled: "How Everything Stopped...?"
Bauman: ...at most: "How Everything Goes On!" I stay calm and happy, really,
- I meditate. The Soufis, the holy men in Afghanistan, say that the whole world is
_ only a caravanserai. a resting place.
- STERN: Well, you have had quite a few resting places: Commune I* and then the
"2 June" movement, then Afghanistan. And ac~ording to the outfit you have on now,
y ouu are a punk.
Baumann: I'm a very normal guy from Berlin. It's what I've always been, someone
f rom the streets of Berlin. I started with street musicat the Memorial Church.
And here I am again with rock'n'roll. I wanted to tnake a record in England.
But the police gor. there first. The punks are not so bitter and irritable and
worried, not as narrow-minded as the student asses from the extraparliamentary
_ opposition.
STERN: Many students f rom this period are with the Greens today. Wouldn't
this be something for you, too? -
Baumann: Greens--no thanks! That's not for me. They seem a little like garden I
dwarfs to me. Country communes in Luechow-Dannenbert. I'm not a cow. It's nice
*"Co~nune I" was the first one in West Berlin. It was formed during the student
riots. Its most prvminent members were Fritz Teufel, Rainer Langhans and Uscrt
Obermeter.
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to see a few trees now and then. But I can`t live in the country. I~m a
big-city person. In India l always ran to Bombay. A valley in the Himalayas
is fine, but after a while 3.t ~ets too boring for me.~
STERN: Fritz Teufel said: "We must make Berlin into a large commune." Would
this make you take part again?
Baumann: For all I care, he can grow strawberries on the Kurfuerstendam. Why do
they have to make another commune? If Fritz Teufel ever really becomes mayor
of Berlin, then I will have to deal with him, too. After all, I am a citizen
of this city.
_ COPYRIGHT: 1981 Gruner + Jahr AG & Co.
9124
CSO: 3103/268
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ENERGY ECONOd~IICS ITALY
- OFFICIAL DENIES EDTERGY PROBLEMS ALLEGED BY 'ENERGIA'
Rome ENERGIA in Italian Mar 81 pp 70-75 ~ -
~Letter to editor by Prof G;.useppe Ammassari, head of the General. Dire~torate
of Energy Sources, Ministry of Industry; reply by ENERGIA Editor-in-Chief Romano
Prodi; for reference article, see JPRS L/9557 of 19 February 1981, West Europe
Report series, titled "Overview of Nation's Energy Situation" pp 2-19~
~Text~ Dear Editor: �J
- Among the things of greatest interest I have had the opportunity to read, since
the end of the summer vacation period, is~ something published in the first
issue of ENERGIA magazine, namely, item number 10 dedicated by the IEFE
_ to the "Subject of Electrical Energy Tariffs and Control of Demand" and the
Report by the Olivetti Foundation Center for Studies on the "Nuclear Question
and on Legislative Policy~"
Recently, of course, the energy question has been addressed by a great many
magazines and is the object of evaluations and studies by many research centers -
and study centers. We are grateful to them all for their views, their comments
- and their criticisms, which are always useful and always stimulating on a subject
of this complexity.
It is my custom to take note of the substance of the comments that reach me from
the outside and, if I~ind them convincing, to make the appropriate corrections
in the operation of the General Directorate, without malcing of them the object of
a reply.
Wi~h respect to the first issue of your magazine, however, published under the -
spansorship of a respected enti~ty, that of the Automobile Club of Italy, I find
myse?.f compelled t,o mdke an exception to this. self-imposed rule, in order to
- furnish some answers to the many questions that have been raised concerning the
operation of the General Directorate, and to also make some comments of my own, _
if I may, and request clarifications on the suppositions that are being advancec3.
First, let me say that I am gratified by the decision to publish a new magazine
the object of which is to make available, besides many articles and documents,
statistical informatinn as well.
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I am certain that readers cannot he lacking if the information the magazine
intends to pu~lish is timely, accurate and, above all, objective and impartial.
I have the impression--mistakenly, I hope--that some parts of the first issue are
lacking in objectivity of viewpoint and hence lead the magazine to conclusions
that cannot be called accurate interpretations of the facts.
Permit me to dwelZ on some points contained in two articles "The Introduction"
signed by you and Alberto Clo, and "The Italian Energy Situation: Problems Old
- and New" signed by Alberto Clo:
1) Status of publications and information in the possession of the Ministry of
Industry: Let me start by pointing out the 2ack of factual basis for the affirma-
tion that the BOLLETTINO PETROLIFERO disappeared from circulation or that it is
18 months overdue. The fact is that this publication was distributed prior to
_ the start of summer, vactions and contains a quite analytic survey of the
b~l~avior of the national oil market during 1979.
Next week, moreover, two issues combined into one of the magazine L'INDUSTRIA DEL
- PETROLIO, the publication of which had stopped, will be published. In my view,
this publication, in its new edition, provides information and news nevercompiled
heretofore, with ,ubstantial quantities of detail and analysis. I do not exclude
_ the probability that the content of the two above-mentioned publications will be
improved in the future; for the moment, however, this is not possible because of
the Directorate's Iimited staff, which consists of 103 persons, of which only 24
hold college degrees and all of whom are quite busy.; I.assure you.
The article to which this refers raises the question of whether the General
Directorate possesses the necessary information to reach or to enable tr,e Min:ister
to reach the proper decisions, and af why such information is not released to the
' public domain.
The government undoubtedly has information in addition to that which it makes
available to the above-mentioned publications; I refer to information in the
form of greater detail and related to international situations, fa~ts and
' strategies of a financial nature on which the government is duty-bound to place
restrictions.
The government has instituted a system for gathering actual and estimated
analytical data,through a report each month covering a 4-month span (1 month's
~ final figures, 1 month's semifinal figures, 2 months' projected figures), for each
operator and for the country as a whole, relative to the following rubrics:
a) characteristics of the crude and of the oil products being imported;
b) quantities being put on the consumer market at the provincial level.
In addition, the Directorate receives and analyzes:
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c) projected annual supply pians followed by quarterly and semiannual updates
for each individual operator;
d~ semimonthly reports of unsold and reserve stocks on hand for each operator and
each individual installation.
2) Policy decisions and measures adopted by the government: The Introduction
_ affirms, "many of the fears and alarms raised on the scarcity of oil supplies
being shipped to our country (owing, it was said, to the Iranian crisis and to
c]omestic and international price differentia3.s) have proven for the most part
_ unfounded, as has been amply demonstrated by the net increase in reserve stocks."
The foregoing affirmation is contradicted by the facts; allow me to comment on it
as follows:
a~ The 1979 annual plans submitted by the operators clearly reflected the effect
of Iran's absence on supplies; further to the annual figures, which were certainly
significant, the monthly report of 3 February and successive ones of 3 March and
3 April showed that the amount of incoming crude was dropping rapidly and that the
demand was beinq filled solely from existing st~cks. All of this was reported to
the ministers of industry in time for appropriate decisions. I must recall that
several months went by without any action being taken, possibly owing to t,he
nearness of elections.
b) Despite the Iranian crisis, domestic consnmption during the first 6 months of
_ 1979 was exceptionally high by comparison with the same period in 1978 (first
quarter: gasoline +4.9 percent, gasoil +6.8 percent..., total product +3.2 per-
cent; second quarter: gasoline +11 percent, gasoil +2.2 percent..., total product
+5.5 percent).
c) The decreased rate of incoming crude was insufficient to restore to the refin-
_ ing cycle its stocks of crude and semi-distillates, which, after having ree~ched
'their lowest level in the last 10 years in April 1979, showed no tendency to
regain their normal levels; as a matter of fact, stocks, in millions of tons, as
of 30 June and 30 September were, respectively, in 1977: 11.87 and 11.86; in 1978:
11.20 and 11.48; in 1979: 9.26 and 10.68; and in 1980: 10.71 and 12.70.
d) President Theodoli's alarmist statements on the unavoidable gasoline shortage
_ (and on the imperative need for a gasoline price increase) were consistently
contested by the government, which asserted that quantities were sufficient,
- despite even a sharp rise in demand. _
In October 1979~ Dr Theodoli admitted that the quantities of gasoline had indeed
been sufficient to cover the country's needs during the summer months.
The government's fear that the full pressure of demand might end up being borne
entirely by the two most critical products, gasoil and fuel oil, was not
- unfounded.
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Even as the ENEL ~National Electric Power Agency~ was authorized to buy fuel oil
on the foreign market, in the interest as well of maintaining a substantial
balance between domestic and international prices, the problem of how to resolve
the gasoil shortage was already looming. -
The slowdown in arrivals of crude, the status of stocks, the increase in quanti-
ties entering the consu~er market as compared to the preceding year, the domestic
ex-refinery price level ($192,78/ton) as compared to those on the international -
market ($362.28/ton): these all led the CIP ~Interministerial Price Committee~,
at the end of July, to take steps to increase prices, which included, with respect
to gasoil alone, the authorization of an additional 17 lire per kg in exchange for
a specific commitment by the operators to increase by 15 percent the quantities
they planned to put on the consumer market. Immediately following the summer
vacation period, the crisis that had beset a major national market operator
brought to the surface again the problem of insufficiency of quantities to cover
needs. The minister brought the situation to the attention of the Energy Commit-
t~a and then to that of Parliament: Despite the steps that had been taken to
contain consumption, it was estimated that the gasoil shortage would reach 800,000
tons for the entire 1979/1980 winter season, and the noted decision was taken to -
- set up an adjustment fund to facilitate the importation of that product, for which -
50 billion Zire were appropriated, and under which the ENI ~National Hydrocarbons
Agency~ was authorized to import 425,000 tons, the international companies 232,000
- tons, and the Italian independents 43,000 tons.
It must also be remembered that the recognition of the gasoil shortage before it .
actually became operatively apparent in the various Italian provinces, relating
to the supply vacuam caused by the absence of a major domestic oil operator, made
it possible to meet the situation head-on, by the appropriate shifting of stocks
_ from one province to another, to intervene in good time based on the hundreds of
signals received from the various prefectures, and to cover the needs of the
- distribution network, which was leaving its weakest and least lucrative points
exposed: public housing, schools, etc. Was this then a crisis or an invented one?
Not only, therefore, was there a 1979/1980 winter g~soil crisis,.whatever your .
magazine may think of it, but the crisis was also recognized in good time on the
basis of forecasts of available quantities and of consumption.
With regard to this difficult period and to the timeliness of the information
provided, I should like to call your attention at least to the measures passed
by Parliament, from which it emerges that the minister of industry has consis-
tently and in good time kept Parliament informed c~n the supply situation and on
the steps being taken (27 Sept 79, 4 Oct 1979, 13 Dec 1979, 20 Dec 1979, 28 Feb -
1980, 12 biar 1980, 6 May 1980, 26 May 1980).
3) Other Inaccuracies Found
a) The measures to contain consumption were not decided in Novemher as was erron- -
eously stated in the article, but on 14 September 1979.
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b) In the table on page 49 showing energy consumption in millions of equivalent-
oil tons--in the comparison between the.first quarters of 1979 and 1980--it is
not understandable how the energy consumed in 1979 was arrived at (I suppose by
taking the difference between the primary sources total of 75.9 and the consump-
tion and los~es total of 8.1).
For 1980, the value of energy consumed does not follow from the two aforementioned
_ quantities.
c) The statement regarding the movement of stocks on hand is not very accurate
when it complains that reserve stocks in Italy did not reach the levels found in
other European countries; during the third quarter 1980, our stocks reached a
level never before recorded; on this point, I must also recall that the government
has drafted a bill providing for the setting up of strategic reserves, the cost of
which is to be borne by the state, as occurs in other European countries. Unfor-
tunately, as of today, the 'bill has not been approved by Parliament.
d) The statement that the only agreement signed by our country with another
country was, at the time, Venezuel:a is not in accordance with the facts. It over-
looks other agreements, as for example with Libya, Iraq, etc.
e) Other comments are made with regard to the kinds of imports, the level of use
- of installations, and the drop in exports, ascribing all of these to speculative
behavior on the part of the market operators and to scant monitoring on the part
of the government.
These problems warrant a more objectively based examination. The causes that
have led to these complaints, and that, among other considerations, do not all
present negative aspects, are many and more precisely as follows:
--Since the third quarter of 1979, a major indeper.dent operator has gradually reduced
his share of the market, phasing it out completely at the beginning of 1980. Some
major petrochemical enterprises have done likewise. The other operators who have
- had to fill in on the market to cover the demand have probably not been able to
modify their working plans accordingly and have consequently had to resort to the
import of finished products.
--As has already taken place in other European countries, Italy has also begun to
consider the refining cycle from another standpoint. Topping, which was at one
time a qual.ifying function of a refinery,~has now taker~ a secondary~place; today,
a refinery qualifies if it has conversion plants. Consequently, the operator
seeks now to make maximum use of cxacking and viscosity breaking processes, and
to offset a barrel of product with a barrel of consumption he raust import inter-
mediates and finzshed products. The very energy plan the government is about
to examine proposes as an objective the gradual reduction of the consumption of
- fuel oil, leading in turn to the gradual abandonment of topping capacity and the
_ increase of conversion capacity. Cosideration is also being given to the possi-
bility of using excess topping capacity for foreign accounts, but that is not
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easy; other Western European countries also have excess topping capacity--very
_ recently, in fact, a major international company has decided to sus~end operations
in three of its European refineries--and besides, foreign buye~s, for reasons o f
= profitability, seek topping capacity combined with conversion capacity. _
--An effort was made,.trherefore, to make up for the scarcity of crude by dis-
couraging exports by domestic operators. The status of reserve stocks in the
country as of 30 September 1980 would have enabled a slacking of controls, but in
the face of the most recent crisis between Iran and Iraq, the government not only
decided not to alter its policy but in fact requested and obtained the agreemen t
of the EEC to again place the system of controls on the export of products to the
Community area.
I find therefore that the reasoning developed on page 54 exactly reversed. One
need only, in fact, articulate the behavior of the market with that of the EI3I,
the major international operators, and the domestic operators, to realize that -
al.t!~ough on the one hand some plants did experience very high utilization level s,
or~ the other hand, to the extent that some major domestic operators experienced
a shortage of crude, exports dropped and imports rose sharply because the mark e t =
demand as a whole had in any case to be covered.
Allow me, dear Professor, also ~o express, with my customary frankness in deali ng -
with my relationships, my sense of bitterness. Certainly, anyone can be unin-
formed, or can express different or opposite opinions to my own, since I lay no
claim to being one of the infallibles in ~r~atters of energy. But surely, one who
like yourself has had occasion to head, and hence to also know, this administra-
tive agency, migh* perhaps have been expected to have a different opinion of i t
- than the one expressed in the Introduction.
Thanking you for the hospitality of your attention, I shall be grateful if you
will be good enough to publish this letter in the next issue of your magazine.
Please accept my best regard~.
~signed~ Giuseppe Ammassari, Rome, 1 November 1980.
Reply _
In the Introduction to our first issue of ENERGIA, we expressed the conviction
that the task we had undertaken in the field of natianal energy information (s eek- _
_ ing in particular to bring more light to bear on the oil market) could be accom-
plished only through the broadest possible cooperation from those who--in thei r
various capacities--are involved in this sector. We are gratified therefore to
welcome this contribution from Giuseppe Ammassari, director general of Energy
Sources in the Ministry of Industry since 1974, who, though critical of some
- individual points in our analysis, confirms in substance the concerns we expre s sed
regarding the deterioration of the domestic energy situation: squeezed between,
_ on the one hand, continued international instability with adveL~e effects on -
- prices and quantities, and, on the other, continued inopera~ivenPss of domesti c _
palicies. The .importance of the issues addressed and the analytical nature of
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the criticisms formulated by Professor Ammassari require an equally particularized
response, which we set forth as follows, point by point in the order in,which they
were taken up in the letter addressed to us.
1) Status of Yublications and Information
On this issue, Professor Ammas~ari confirms the serious delays that characterize
the distribution of official.information by the Ministry of Industry in the field
of energy, to say nothing whatever regarding its completeness and quality. To
be more specific, the BOLLETTINO PETROLIFERO's 1979 quarterly issues were not
circulated until the end of September and beginning of October 1980, containing
informati.on dating back as far as 18 months previously, whereas the combined
issues of the more analytical L'INDUSTRIA DEL PETROLIO, which Professor Ammassari
mentions will be coming out"next week," were found to relate to the 1977-1979
3-year period with a delay of up to 36 months. Putting aside these specific
aspects, however, the basic question raised was certainly not "whether the
Directorate possesses the necessary information"--as Professor Ammassari appears
- to have understood it--we being well aware of the massive volume of statistics
that the system of authorizations to which each and every oil production and
marketing activity in Italy is tied requires the enterprises to furnish continu--
ously to the General Dire~torate (as we pointed out on pages 49 and 58).
The question raised concerned insteac~ the negative consequences that couid derive
from the scant (if not~nonexistent) divulgation of such information (even the.
unrestricted) not only abroad but also, and more importantly, within the state
organizations whose responsibility it is to carry out the energy policy. The
restrictiveness to which Professor Ammassari claims to be "duty-bound" appears to
us exceedin.gly zealous when we compare it with that of the governments of other
countries. The French and the Lnglish governments, for example, publish (in
quantity and quality) the analytical data relating ~o their energy balance sheets
with a delay of only 45 days, whereas the U.S. Department of Energy publishes
them with a delay of barely 1 week in its WEEKLY PETROLEUM STATUS REPORT.
2) Policy Decisions and Measures Adopted by the Government
The det~ils furnished by Professor Ammassari, but even more so the BOLLETTINO
PETROLIFERO circulated in October by his services, confirm the accuracy of our
analysis with respect to the actual situation.as to the availability of oil
(relative to needs) throughout the 1979 time span--a more positive situation than
the one that was being painted at the time.
This is confirmed by the fact that during 1979 reserve stocks of products in the
hands of consumers increased by nearly 500,000 tons, while those of crude in
_ the hands of the producers increased by approximately 700,000 tons. During the
second half of that year, a period in regard to which the gravest concern was
being expressed, these figures rose to 1.7 million and 1.0 million tons respec-
tively.
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An increase in reserve stocks is exactly the opposite of a short-supply situation.
For greater clarity, we reproduce herewith the figures of the 1979 BOLLETTINO
PETROLIFERO (page 40):
Reserve Stocks in Hands of Consumers: 1979
(in thousand tons)
- lst 2nd year
Half Half
Gasolines - - 20 - 20 -
Automotive gasoil - - -
Heating gasoil -1,010 +1,710 +700
Fuel oil - 219 + 21 -Z98
' Total -1,229 +1,711 +482
- Let us recall also that most of the concern over suppl~ shortages was centered on
gasoil, with regard to which a second-half-year shortage of 2.7 million tons had
been projected (according to the document "Energy Availabilities, etc" of June
1979p50).
Professor Ammassari himself, in reminding us of the measures ac3opted to "resolve
the gasoil shortage," confirms the fact (though not an incomprehensible one) of
an error in projection (of almost 18 percent) of the final-demand dynamic for .
this product. At the end of July 1979, the enterprises were granted a"price
add-on" of 17,000 lire a ton for gasoil (which produced, amo:~g other things, a
sliding wage scale index rise of a~proximately 0.35 points) with "the undertaking
to increase the quantities released to consumption by 15 percent": an increase
- 3.5 times greater than that of the first half-year, despite the fact that there
had already been a real price increase of over 40~percent since the beginning of
the year. Another measure adopted was the instituting of an adjustment fund
(proposed in D. L.No 438 of 14 September 1979 in the amount of 50 billion lire
and approved definitively by Law 178 of 16 May i980 in the amount of 57 billion
lire) to facilitate additional import~ of gasoi}..by the enterprises.
The increase in imports and availability of gasoil that actually took place in
the second half of the year, though less i:.han the amount funded, nevertheless
increased {and this is the point) gasoil r~serve stocks held by producers by 60 -
percent and those placed on the consumer market--~or~the purpose; however, (as -
was said). of increasing~the reserve stocks held by consumers--by 40 percent.
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~ The fact that Professor Ammassari still defends t?~e accuracy and the "foresight"
of the evaluations made at that time (ex post facto figures to the contrary
notwithstanding), and actually sustains that the different trend of events was
owing to the effectiveness of the measures put in being, attests not only to the -
totality of conviction that actuated him but also to his less than full awareness
of the unfolding of the international and domestic market mechanisms. We do not -
mean by this to say that fear of the crisis was the product of a pure invention,
but rather one of errors in evaluation, for which the uncertainty of the inter7a-
tional situation bears its share of the justification. _
Gasoil Balance in Italy in 2nd Half of 1979
according to Projections and Final Figures _
by Ministry of Industry (in thousand tons)
Projections Final Figures
(June 1979) (October 1980) Difference Percent
Availability 10,102 13,128 +3,026 +29.0
Shortage(-)/Surplus(+) - 2,698 + 864 +3,562 -
~ Put on consumer market 12,800 12,264 - 536 - 4.2
Pinal consumption 12,800 10,554 -2,246 -17.5
Reserve stocks held by
consumers - +1,710 +1,710
3) Other Inaccuracies Found -
a) It is true that the consumption control measures were approved on 14 SeptembEr
1979 by D. L. 438, as we stated on page 50, but it is also true that they did not
enter into effect as of that date but rather on 1 November;
b) The error on page 49, which Professor Ammassori so kindly pointed out to us, is -
obviously a printing error (1.8 instead of 7.8) as is clear from the correct
percent variation alongside it; -
c) Having completed the article to which Professor Ammassari refers in July 1980 _
(as is stated in our magazine), its span of analysis could clearly not cover the
_ third quarter of 1980;
d) The uniqueness of the development agreement with Venezuela lies not only in its
substance, which is highly innovative on the international scale, but also in its -
being tne sole case of a political agreement--and more this than a trade agreement _
at that--being initialed in advance at an intergovernmental level;
e) The major moditicati~ons made in the supply flow in 1980 (less crude and more -
products) and the negative implications in them that we felt it proper and needful _
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- to goint up stem not only from reasons of a speculative nature but also �rom those
of a comgany nature that are obviously not always compatible with interests of a
national nature. It is obviously difficult to verify this congruency (and to en~ .
force it) through the control organizations, given the modest staffing at their =
disposal (barely 103 persons, of which almost half are from publ.ic agencies that
are subject to the controls these persons are expected to oxercise), a situatiori
which Professor Ammassari himself rightfully points out is distressing.
As rF-garc3s the policy change with respect to refining patterns, favoring now the
- upgra.~ing of conversion plan ts--for a higher relative yield in intermediate frac-
tions--w~ could not be more in agreement. We need only stress that it is a wel-
come changt in policy that comes after the government has for years categorically
refused to a~athorize investments in this sense which the companies have been seek-
ing to make--refusals that have impaired the economic viability and competitive-
ness of our industry. ~
These, dear Professor, are our analytical comments on your observations, for which
we are genuinely grateful, since it is our belief that in our country there is
mure and more need to know the real facts of our problems and to debate them
openly and in depth.
We ~re certain therefore that this exchange of views, precisely because of its
many divergences and convergences, has been extremely helpful toward a better
awareness of the Italian energy reality.
Lastly, we would Zike to add that it was not and is not our intent to slight the -
merits of the government or to underestimate the operative difficulties in a field
that requires orgarizational flexibility and ample availability of funds, charac-
teristics both of which are incompatible with the constraints currently being
imposed on the Italian public structures.
No one appreciates more than we the difficulty of your operation and the scarcity
of funds available to it in the face of the vastness of its objectives.
We hope therefore that an initial bitterness will not impede a=ruitful coopera- _
- tion aimed at broadening more and more our understanding of a situation as complex -
as is the Italian one in the field of energy. Since our objectives and our
motivations are identical, we believe our w~ork in this respect will be, at least
insofar as concerns the issues, complementary and mutually helpful.
- In thanking you for your valuable contribution to the improvement of our magazine,
- I am pleased to express to you my warmest regards.
~signed~ Romano Prodi
(editor-in-chief)
COPXRIGHT: L'Editrice dell'Automobile LEA-Roma 1981
- 9399
~ C50: 31d4
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ENERGY ECONOMICS IT,~,y
PROBLEMS OF COAL SUPPLY, LOGISTIC5 FOR 19SO~S
Rome ENERGIA in Italian Mar 81 pp 40-51 �
[Article by Oliviero Bernardini of Montedison, Srategic Coordination: "Logistic and
Market Problems of Coal Supply in Italy in the Eighties"] `
[Text] Premises
Italy has never had a great incl~nation toward the use of coal. Differently from _
most of the other industrial countries, it did not have sizable domestic resources
1 an" in the past, it barely skimmed off this source. In fact, for its first indus-
trial development, the country was able to tap its relatively vast hydroelectric
poteni�ial. Then when the margins of utilization of the so-called white coal began
to dimjnish, oil and natural gas came to prevent a process of adaption to the uses
of coal from starting in depth in Italy. In a country so well located with regard
tq the Mediterranean areas of oil and natural gas supply and so far fz�~~m low-cost
coal deposits, there absolutely seemed to be no more room for coal to play an im-
- portant part.
The problems raised by the recurring, but constantly more credible, forecasts of the
approach of the end of the oil area seemed solved, moreover, with the promise of an
abundance of nuclear energy,whose development Italy had advocated at the start among
- the first in the world. Therefore, on the eve of the 1973-1974 energy crisis, coal .
was an energy product rapidly going out of use in every sector of Italy's economy,
with the exception, naturally of inetall~urgy.
_ These and other factors often of a psychological nature explain a large part of the
lag with which this country moved on the path to coal. It suffices to think that,
in the First National Energy Plan (PEN) that came out in 1975, and therefore already
a year after the energy crisis, coal was practically not mentioned, while a program _
- of fuel-oil-fired powerplants with a good 10,000 to 14,000 megawatts was initiated
thoughtlessly. The Italian system had, moreover, frozen on a view of the future
hinqed on nuclear energy. It was the period in which forecasts of 20,000 megawatts
nuclear installed by 1985 and 60,000 megawatts by 1990 circulated freely! _
~ut something was in the air already in 1976. Suddenly the decline in coal consump- -
tion in cement works stopped whi~l~ the start of a resumption of consumptiun in elec-
tric powerplants became evident. Coal was still, however, something theoretical. -
The assumptions of the WAES1 [expansion unknown; possibly World Alternative Energy
Strategies] study proposing an increase in consumption from 13 million tons coal
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equivalent (Mt~~:) in 1975 to 16-20 Mtce in 1985, up to a maximum of 47 Mtce in
_ 2000, including 31 Mtce in electricity production, were received with much circum-
spection.
- At the end of 1977, prospects for nuclear development in Italy, just as in evety
country moreover, were considerably revised and Italy had begun to m~ve timidly,
if not downright unwillingly, in the direction of coal, with an initial endeavor
- to transform 3,100 megawatts of bivalent power, in order to bring coal consumption
to 5 million metric tons (Mt) by 1980. In that year, also cement wo~ks~.,,lequip-
ped; for handling and burning coal were able to respond quickly to the price advan-
tage in comparison with fuel oil by quadrupling their consumption, with a definite
reversal of a trend that had been gning on for 20 years.
It was, however, only after the second energy "shock," caused as a result of the
1979 revolution in Iran, that there was in Italy an actual, general recognition of
a chronic state of wlnerability characterized no longer only by the rise in the
price of crude oil, but also by limitations in its availability. In fact, the
�~ze ~y problem has entered a new phase of tension characterized by the possibility
~ ~i sudden and potentially lasting interruption in oil supplies.
The electricity sector was the on~ most exposed among the production sectors. The
plans in effect and especially the obstacles appearing constantly on the nuclear
� development front, now cut down to the bone, did nat even leave much hope of con-
taining a dependency on oil by already very high limits of 60-65 percent. For post-
ponement of the ENEL [National Electric PowPr Agency], CIPE [Interministerial Com-
mittee for Economic Planning] gave, it its directive, a quantitative indication of
the objective of reduction of oil consumption for the production of electricity, in-
_ viting ENEL to examine the possibilities of not exceeding, in 19~0, its 1980 fuel
oi1 consumption.
It is, however, no longer a question of precautionary guidelines. Although there
might be room, in the first half of the 1980's, for an increase in Italy's oil
consumption, perhaps even up to a maximum of 115 million tons oil eguivalent (Mtoe),
the situation is, however, destined to become worse in the next period. In 1990,
- the amount of oil on which Italy can count always with a certain degree of op-
timism and beyond which it would not be advisable to program, is on the order of
~ the aznount of present consumption and certainly not mare than 105-110 Mtoe.
'I`here are the principal stages with which this country has moved on the road to
coal, not, therefore, as a free choice, but out of compulsion and necessity. In
fac`, now coal represents for Italy the final hope against a future of difficulties
in the economic apparatus and of spreading of social tension.
The uncertainties and the delays of the 1970's have been tranformed by the 1980's
_ into a situation that can be regarded with se�rious if not dramatic prospects. In
fact, tliere is no longer talk of an objectiv~ growth rate in income of 4.5 percent
year, as in the First PEN and still in the 5econd PEN. T}~ere is no longer hope
for a 3.5 tc 4 percent growth rate, as in some assumptions in thc qovernment plan
just started. In fact, now there no longer seem to be ener~,� premises for an annual
development greater than 3 to 3.5 percent on the average between 1980 and 19~0 and
even this only in the following assumptions:
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[1.J Drastic rationalization and saving measures of the final uses of energy, ~n
order to reduce constunption by 20 Mtoe, or 10 percent of the overall requirement.
[2.j Development of nuclear energy at the rate of 8,000 megawatts of new facilitr _
that would replace over 9 Mtoe of oil.
[3.] Very intensified development Qf use of steam coal, whose imports from third
countries should amount to 48 million metric tons a year by 1980, equivalent to
about 29 metric tons of oil.
As is well known, it is a question of the conditions of the Third PEN. If one
single one were to decline, the country might risk entering a phase of zero or even _
negative growth. Nevertheless, one of them has an especially high probability of
being fulfilled, because of which the combined probability, with regard to the over-
all success, must be regarded as relatively low. For example, assuming a deficit _
of 20 Mtoe in 1990 distributed at random among the three conditions, the most likely -
scenario for the 1980's would be an increase in income that would range on the aver-
- age around 3 percent in the first 5 or 6 years to become then stably negative (less -
~ tiian -1 percent a year) on the average in the last 4 or 5 years. _
In this situation of precariousness it goes without saying that every effort should
be made so that each conditinn will have the maximum probability of success. Time
is so limited both for stating and for organizing and starting the strategies for
attackiny the problem that each one is destined to fail, if maximum attention, the
maximum degree of technical competence and maximum political awareness are not de-
voted to space and time phasing o= the requisite actions Gnd operations and to their
physical and organizational support and also to the associated problems of a social -
and environmental nature. These aspects will be examined briefly, below, with re- -
~ard to the case of coal logistics understood in the broadest sense of the strategy
for the 1980's.
Problems ot Coal Logistics in the 1980's
- The 1980's represent for Italy the decade of takeoff in uses of steam coal. From
a consumption of around 5.5 million metric tons in 19802, there should be an increase .
ta a consumption of 48 million metric tons in 199Q. Z'here, it is more a question -
- of a particularly strong stimulation rather than of a takeoff. In terms of accel-
- eration in the physical h andling of material, only a comparison with oil car be
found, whose imports increased from 10.7 to 45.7 million metric tons a year between
1955 arid 1965. A valid comparison is involved in that the systems of sea transpar-
tati.on in the period had already attained considerable size with the use of tankers
' with a gross dPadweight tonnage of 100,000 to 150,000 tons. However, the consider- .
able differences between oil and coal should be pointed out. One is liquid and the
other is solid. This makes the transportation and handling problems completely dif-
. ferent. _
Although the speed of transportation may be very similar, in fact,the complexity and
the transfer times between the various phases in the coal cycle are considerably
greater.
Nevertheless, it would be wrong to think t~iat the problems of coal logistics in the
1980's are reduced to tr.~ single question of organization of physical movement from
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the point of origiit to the point of final use. In a period of such strong growth
and in such short times, it is not sufficient to take into account merely the
static-space dimension of the phenomenon, optimizing the use of the means in the
short times of the regular operation of transports, as if e~_sy part of the sys-
tem were always and at every moment in a state of perfect, optimum balance. 'The ~
- problem of the dynamics of building up to speed emerges in all its priority when
it is realized that the technical times for starting some of the more basic phases
of the coal cycle are on the same order of magnitude,~'or sl.ightly�less, as the tptal
period o~ increase, which is barely a decade. ~
For example, 4 to 8 years are needed between conclusion of negotiations and bringing
a mine to fuLl production rate. A railway connection or establishment of a new line _
may alse require 3 to 5 years, if time is included for settling legal di$putes on
right-of-way. Four to five years are needed, and in som~ case even longer, for ap-
proval, construction and startup at full operation ~f a large export terminal and
_ the same for an import terminal. Even a medium-sized port, sufficient for supplying
a powerplant, may require 2 years, if there are no delays of an administrative na-
'-.~.ir~. Construction of a la~ge collier takes not over 2 years, but establishment of
adequate fleet for satisfying the demand for coal antici,.pated in Italy and in
~he world by the end of the 1980's may take 6 to 8 years. A coal-fired powerplant
= can hardly be ordered and built in less than 7 years.
obviously, most of these phases can be carried out simultaneously for which it can
be thought that there should not bQ problems of a strictly technical nature. 13ever- -
theless, the fact should be pointed out that at the start of the period there is no
"master plan" shared by all the participants involved during the entire coal cycle,
~ from the starting point to the final use. Instead, many of the phases for esta-
blishing the supply 5ystem are sequential, to the effect that it is not possible _
to start one without having first decided on the other. For example~; mines�will
rarely be opened, if there is no definite demand for their coal. Ships will not be _
built, if there is no definite feeling that they will be used, a feeling that the
sector operators may perceive only if sufficient signals come in from the other com-
ponents of the system. And a few messages, like the obstacle ~o installation of
powerplants, are sufficient to create mistrust by one party of the other in the
chain, delayinq the whole process. The large number of decision-makers with dif-
_ ferent objectives and interests, the numerous phases in organization of the coal -
cycle and the probability of slipping, even merely `or technical reasons, charac-
teristic of each of them, make fulfillment of a plan for an intensive development
- of the use of coal in Italy difficult to bring about in the limited space of only -
10 years.
Therefore, for an examination of the logistic problems of the 1980's it does not -
- suffice to take into account merely the problem of handling and transportation with
development completed at the end of the period. Under the conditions raised by
the limited time available that characterize the Italian plan for coal, organiza-
tion of logistics must take into acc:ount both achievement and proper functioning of
the coal cycle, which must exist in each year of the peric~:i to cope with the coun-
try's needs, and ar~ adequate time phasing of all those actions nPe3ed for checking
the development dynamics during the entire period. In othe.r words, it is necessary
to solve the problem of how to arrive from there to here, from today to tomorrow, _
opt.imizing not only in a space and static dimensio~i of the problem, but also a.~d
on a priority basis in a dynamic and time dimen~yon. This last one mentioned is the
real "loqistic" problem of coal in the eighties and failure tc realize it might mean
failure of the entire strategy.
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Present Situation
The stil'1 relatively low consumption of steam coal in Italy has not raised great
problems, either with regard to market availability or to the logistic phases of
transportation and importation. Up to now, Italy has based its supply exclusively
on commercial supply contracts, often of a multiyear nature. That was facilitated
both by the still .relatively small quantities of steam coal imported into Italy
(barely 7 percent of the amount that enters in international commerce), and by the
- present excess of supply in almost all the major producing areas in the wor1~3.
The leading supplying countries are still South Africa and Poland, although supplies
from Poland were considerably reduced in 1980 owing to blockage of the Baltic ports.
Most of the coal arrived by sea in ships of 25,000 to 40,000 deadweight tonnage di-
rectly to the docks of ENEL's powerplants, part to the public wharf in the port of
Savona, shipped primarily to the cement works in Piedmont and Lor.ibardy, and finally
smaller amounts in other ports.
In this phase of very first start, great problems of a logistic nature could not
come up, in view of the small amount of coal involved. Nevertheless, some events
that occurred already during 1980 bring to l.ight the precariousness that is pre-
sent, even in the short term, during the entire coal cycle, owing to the scanty
margins of flexibility characteristic of the present situation of accelerated trans-
ition both in Italy and in the exporting countries.
~ In particular, the piling up of some apparently disconnected events, like the mine-
workers' strike in the winter of 1979-1980 and the especially severe winter itself
that practically blocked port operations in the main ports of the United States,
proved to be rather insidious for the normal development of the logistic chain of
coal. In turn, Australia, overcommitted with regard to its own export capability
and also because of port strikes, saw its suppliers compelled to rescind a number
of European contracts selected among the ones least advantageous, creating by re-
percussion a considerable increase in demand in the United States that added to the
' delays accumulated in the winter months. Added to this is the fact that South Afri-
_ ca also is experiencing serious bottlenecks and delays at present in coal exports,
and, in addition, the strikes that occurred in Polish ports also reduc~d the amounts
of steam coal available from Europe's traditional supply areas. The excessive de-
mand dumped on the United States, in addition t~ confirming that country's role as
a potential balancing force between demand for and supply of coal, created, in the
short term, no small problems of a logistic nature. It suffices to think that the
lines waiting in United States ports amounted to 180-200 ships in November. Assum-
ing an average wait of 60 days and demurrage at $15,000 a day for a typical ship
with a deadweight tonnage of 45,000 tons, these delays are reflected in a increase
in freight costs amounting to a good $20 a metric ton of coal. ~
Situations like the ones described may be regarded as quite abnormal in an adequately
developed system operating under conditions of equilibrium, bu*_ they are not entirely
_ unlikely. In fact~;in comparison with oil,'the coal cycle is relatively more complex.
Z'he number of different phases in the logistic chain is greater and the technical i
transfer times from one phase to the next tend to be much longer, with the result
that the likelihood of impediment proves to be much greater. Generally, thc~ pro-
blem can be solved by establishing a coal reserve at every transfer point sufficient
for stopping up the random effects in such a way as to keep the risk within optimum
- limits of a cost and profits estimate. In the short term, howeper, when the system
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is in full t ransition phase and especially when it is compelled to move rapidly, the
maneuvering margins prove to be more restricted and especially adverse combinations
of events are more likely to emerge.
The main prob lem pertains to the lack of an optimum agreement between the dimensions
' and the times characteristic of the infrastructures involved in the various phases
of the chain. The importance of the scale factor in the future of ocean transpor-
tation of coal has been accepted Everywhere fully and is reflected in the fact that
- the majority, if not all, ofthe new terminals built or planned today are spe~ially
equipped for taking co?.liers with dimensions certainly greater than 100,000-120,000
de adweight tonnage. Nevartheless, 15 to 20 years must pass before the ocean trans-
portation fleet can be completely adapted to the characteristic scale of the new ~
ports3, creating in the meantime no small imbalances in the feasibility of port oper-
ations.
In this respe ct, the logistic problems that the very new port of Richards Bay, in
the Republic of South Africa is experiencing, equipped to load ships up to 160,000
dez .weight tc~ns (250,000 deadweight tons in the 1985 outlook) but compelled, for
-he present, to receive shi~s wit~. a much lower average deadweight tnnnage, with
cons iderable inefficiency and losses in management of the port activities. In per-
iods of congestion now a.lmost constant owing precisely to the below optimum
size of most of the present ships, this port is often forced to defer loading ships
with a capacity b~low 50,000 dead:aeight tons, in favor of larger ships more profit-
aUle from an economic point of view. In fact, smaller ships take up more room and
require more time for every ton loaded, or slse the occupy docks equipped f~r lcya~l
transportation. All these factors are reflected in an increase in the lines at
the entrance to the terminal and in a decline of productivity. In the outlook for
the 1980's, it is likely that with the worldwide development of a fleet of large-
- capacity colliers (12`_~,000 to 150,000 deadweight tons), better suited and economical
- for long-distance runs, ships with a smaller capacity (