PETROLEUM EXPORTS BY THE SOVIET BLOC TO NON-BLOC COUNTRIES SHOW ONLY SMALL GAINS IN 1962

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01003A001500210004-8
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 11
• Document Creation Date: November 16, 2016
• Document Release Date: May 18, 2000
• Sequence Number: 4
• Publication Date: March 7, 1963
• Content Type: BRIEF

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CONFIDENTIAL
Current Support Brief
PETROLEUM EXPORTS BY THE SOVIET BLOC
TO NON-BLOC COUNTRIES
SHOW ONLY SMALL GAINS IN 1962
CIA/RR CB 63-21
7 March 1963
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
CONFIDENTIAL
GROUP 1
Excluded from automatic
downgrading and
declassification
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WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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PETROLEUM EXPORTS BY THE SOVIET BLOC
TO NON-BLOC COUNTRIES
SHOW ONLY SMALL GAINS IN 1962
The Soviet Bloc oil offensive in non-Bloc countries, which had en-
joyed such substantial growth during the years since 1955, appears to
have lost much of its momentum. The Bloc is estimated to have ex-
ported approximately 32 million metric tons (mt) of crude oil and petro-
leum products, valued at about US $440 million, to non-Bloc countries
in 1962. This quantity represents an increase of only 4 percent com-
pared with the amount exported in 1961, but oil again was the largest
single earner of foreign exchange in Soviet foreign trade. Although
there are a variety of possible explanations for the relatively poor
showing in 1963, the increase in domestic requirements probably was
most important in holding down exports.
1. Exports Slowed by Bloc Shortage of Petroleum
Bloc exports of petroleum to non-Bloc countries, including Cuba,
had grown at an average annual rate of about 30 percent during the period
1955 through 1961. There are a variety of possible explanations for the
sharp decline in growth in 1962, as follows: (a) importing countries may
have been influenced by the campaigns of the US Government and the US
oil companies to publicize the danger of too great reliance on Soviet
petroleum; (b) token attempts by the USSR to increase prices in the
marketplace -- notably Japan, India, and Egypt -- may have created
some resistance to Soviet petroleum; and (c) the USSR failed to find any
additional large markets for its petroleum.
Although the foregoing conditions probably had a depressing effect
on Soviet exports of petroleum, of more importance is the probability
that the USSR simply did not have the petroleum with which to achieve
any significant increase in exports in 1962. It is estimated that the rate
of increase in domestic demand for petroleum in 1962 exceeded the rate
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of increase in supply. The USSR may have had to withdraw petroleum
from inventory during 1961 and, considering the various shortages re-
ported during 1961, probably was attempting to reduce internal con-
sumption. These two actions apparently permitted the USSR to meet
its export obligations to its petroleum buyers and preserve its image
as a reliable supplier of petroleum even in the face of increased Cuban
demands.
Petroleum continued to be in short supply in 1962, as the USSR
attempted to resume allocations to domestic consumers and to bring
the levels of petroleum in stock to normal. The increased availability
of petroleum to domestic consumers apparently led to above-plan rates
of consumption in the first half of the year, again causing the USSR to
restrict domestic consumption. Even the slight overfulfillment of the
plan for production of crude oil and the small reduction in domestic
demand were insufficient to afford much flexibility for foreign market
maneuvering in view of the ever increasing domestic need for petro-
leum. In defense of the thesis that the lack of petroleum was the reason
for the decline in growth of exports of petroleum, there is no evidence
to support the belief that the Soviet transport capability would have been
a serious obstacle to the export of more petroleum.
Consequently, attempts, however mild, to increase prices for
Soviet petroleum in the marketplace, the increased demand for petro-
leum at home, and the apparent lack of vigorous effort to sell more
petroleum to non-Bloc countries tend to support the belief that the
USSR did not have additional quantities of petroleum available for sale.
It is, as yet, too early to predict how long this condition will persist.
2. Significance of Exports
The quantity and composition of Bloc exports of petroleum are de-
scribed in. the accompanying chart. The quantities of petroleum im-
ported by the individual non-Bloc countries and the share that such
quantities represented of local demand are shown in the table. Bloc
exports of petroleum represented only about 3 percent of the total
demand of the non-Bloc world outside the US in 1962. Of all the
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Mill." of "t"' eons
33
importing countries, Bloc petroleum was
most important to Cuba, which, for prac-
tical purposes, was completely dependent
on the USSR for its supply. Finland was the
only other non-Bloc country in which Bloc
sales dominated the market for petroleum.
In all of Free Europe, Bloc petroleum con-
tributed less than 10 percent of the demand.
Even in particular countries of the industrial
West, where the largest quantities of Bloc
petroleum were imported, such imports rep-
resented only a minor part of the local de-
mand.
0 1961 1962
COMPOSITION OF BLOC PETROLEUM
EXPORTS TO NON-BLOC COUNTRIES
1961-1962
The Bloc has maintained its position in
a wide variety of markets among the under-
developed countries. Ghana, Israel, Sudan,
and Ceylon, which were not importers of
Bloc petroleum in 1961, were added to the
list in 1962. Conversely, Uruguay and
Lebanon made no purchases in 1962,
3. Origin of Exports
About 85 percent of Bloc exports of
petroleum to non-Bloc countries originated
in the Black Sea from the Soviet ports of
Novorossiysk, Batumi, Tuapse, and Odessa
and from the Rumanian port of Constanza.
Twelve percent originated from the ports of Ventspils and Klaipeda on
the Baltic Sea, and the remainder was shipped by land transport. The
growing significance of the Baltic ports is illustrated by the fact that
about 4 million mt of Bloc petroleum originated from Klaipeda and
Ventspils in 1962, whereas 2 million mt are estimated to have come
from these ports in 1961.
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4. Prospects in 1963
It is too early to forecast with confidence the growth in Bloc ex-
ports of petroleum in 1963. The planned increase of 10 percent in
production of crude oil in the USSR in 1963 is about the same as that
achieved in 1962. Given the expected increases in domestic consump-
tion, it is likely that exports in 1963 will register another moderate
increase rather than resume their previous rapid tempo of advance.
Political conditions in the UK and France might bring about an ex-
pansion of trade with the USSR, including the import of more Soviet
petroleum. In the likely event that Free World oil companies are driven
out of the market in Ceylon, the 'Ceylonese probably would turn to the
USSR for more petroleum. The foreign exchange situation in Brazil
may cause that government to import more Bloc petroleum. India, too,
for a variety of reasons may import more Soviet petroleum. Given a
combination of these conditions, the USSR probably would institute
domestic conservation measures to the extent necessary to respond to
the additional export demands for its petroleum. In the absence of such
a series of events, however, it seems probable that total Bloc exports
will not exceed about 34 million mt in 1963, or an annual increase of
less than 2 million mt.
The success of the Bloc oil offensive, particularly in the under-
developed countries, has. stemmed principally from the unwillingness,
or inability, of Free World oil companies to meet the prices and terms
of payment for Bloc oil. Serious attempts to compete with Bloc sales
tactics at this time might hold the Soviet oil offensive in check and could
even displace Communist oil.
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Analysts:
Coord:
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