COST ESTIMATES OF SIBERIAN PIPELINE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84T00109R000100090002-0
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 6
• Document Creation Date: December 20, 2016
• Document Release Date: April 30, 2007
• Sequence Number: 2
• Publication Date: April 12, 1982
• Content Type: MEMO

Approved For Release 2007/04/30: CIA-RDP84TOO109R000100090002-0
CONFIDENTIAL
National Intelligence Council
MEMORANDUM FOR: Lawrence J. Brady
Assistant Secretary for Trade
Administration
Department of Commerce
12 April 1982
FROM: Maurice C. Ernst
National Intelligence Officer for Economics
SUBJECT: Cost Estimates of Siberian Pipeline
REFERENCE: Your memorandum, same subject, dated 19 March 1982
1. This is .a response to your memorandum of 19 March to
in which you raised some additional questions on the Siberian pipeline.
2. Western bankers do not appear concerned about their prospective
exposure to the USSR resulting from financing the Yamal pipeline. First,
the bulk of the Western credits, including some 85 percent of the equipment
and probably a substantial part of the pipe, will be covered by government
guarantees, so that the risk to the banks is fairly small. Second, the
project would be self-liquidating over a relatively short period (i.e., 4-
5 years) at currently anticipated sale volumes and prices, although the
loan repayment period is eight years. It would still be very attractive to
Moscow if the stream of earnings were less.
3. We have seen no cost estimates for the pipeline project in excess
of $25 billion. A cost estimate'of $25 billion was based on an Alaskan
pipeline analog, which was probably too high. We currently estimate the
costs of Western equipment and pipe (including finance charges) at
$10 billion. The additional Soviet domestic costs of construction are
unknown but would probably be less in dollar terms than the pipe and
equipment costs. The labor costs of the pipeline would be less than a
similar undertaking in the West because Soviet wage rates are relatively
low. Despite the growing shortage of new entrants into the labor force the
Soviets should have little trouble fielding enough manpower for the
pipeline. Major construction programs in the past (e.g., the BAM.railroad)
have made use of a wide variety of unskilled.and semi-skilled labor from
the Komsomol and military construction troops, as well as contingents from
East European countries. Although the Soviets deny the use of prison
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labor, we believe that penal labor without confinement has been employed in
the past and could be used again.
Maurice C. Ernst
CONFIDENTIAL
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0 CONFIDENTIAL
DDI #3001-82
12 April 1982
SUBJECT: Cost Estimates of Siberian Pipeline
NIC/NIO/Econ:M.Ernst=(12 Apr 82)
0
Distribution:
Orig - Addressee
1 - D/OGI
1 - DV'SONA
1 - DDI Registry
1 - C/NIC
1 - NIO/USSR
1 - NIO/AL
2 - NIO/Econ
1 - SOVA
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MEMORANDUM FOR: NI0/USSR
NI0/AL
C/NIC
ave taken the action on this at
request and have contacted SOYA
Maurice Ernst
NI0/Econ
Date 25 March 1982
5_75 .1 O1 EUSE D r 4S PREVIOUS
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40 F
National Intelligence Officer
Central Intelligence Agency
for Trade Administra1tion
Lawrence J. Brady
Assistant Secretar
SUBJECT: Cost Estimates of Siberian Pipeline.
I have quickly reviewed the most recent C.I.A. assessment of the
Siberian pipeline. There are still a few unanswered questions
relating to cost which deserve further attention.
1. At what point does the entire project become uneconomic for
Western banks because of construction delays, Soviet failure to
deliver gas at specified volume or price, or slackness of demand
in Western Europe? -
2. I have seen cost estimates for the project ranging from $22
billion to $45 billion. What would account for this wide
variation? Has CIA undertaken any assessment of the labor costs
of this project? Where will the manpower come from, given the
severe labor shortages in Siberia? Will there be sufficient
volunteers (Komsomol students, etc.) for the pipeline and
infrastructure, or will forced labor, including dissidents, be
utilized?
Copies to:
1 - D/OGI
1 - DD/SOVA (LDX)
-U~1 BST 'Pdl : ~ OF COMMERCE
International Ole Administration
Washington, D.C. 20230
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Approved For Release 2007/04/30: CIA-RDP84TOO109R000100090002-0