SOME PERSPECTIVES ON THE PIPELINE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84T00109R000100090031-8
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 2
• Document Creation Date: December 20, 2016
• Document Release Date: November 15, 2007
• Sequence Number: 31
• Publication Date: February 10, 1982
• Content Type: MEMO

Approved For Release 2007/11/15: CIA-RDP84T00109R000100090031-8
? SECRET ?
National Intelligence Council
10 February 1982
MEMORANDUM FOR: Chairman, National Intelligence Council
FROM: Maurice C. Ernst
NIO for Economics
SUBJECT: Some Perspectives on the Pipeline
1. The insistence on precise estimates of how much US sanctions could
delay completion of the Yamal pipeline indicates a lack of perspective
concerning Soviet capabilities and options in gas pipeline construction.
Specific estimates of delays are feasible only when comparing technical
options involving specific sources of equipment (for example, producing GE
rotors in France instead of the lJnited States). In practice Moscow is
likely to use a variety of technical options and Western sources of
equipment unless the latter are all shut off. This flexibility would
presumably mean smaller delays than would occur if only one technical
option were involved.
2. Even if Moscow had no access to Western compressors, there is no
question that it would be able to make adjustments in domestic production
and in its pipeline construction plans. Consider the following:
o The USSR builds more long distance gas pipelines than the rest
of the world put together; the Yamal line is only one of six planned
for construction during 1981-85.
o Although the Soviets have found their own compressors to be less
satisfactory than some of those built in the West, their compressors do
work and may be improving. Since 1978, most Soviet long distance lines
have used Soviet-built 10 Megawatt compressors. The existing line to
Western Europe uses Soviet as well as some Western compressors of this
size.
o Moscow has been developing a 25 Megawatt compressor. It hopes
to get Western help, but does not lack technical capability. The USSR
is among the world leaders in electric power generation and builds
large numbers of effective and reliable, if not efficient, jet
engines. There is every reason to believe that the Soviets could
develop an adequate large compressor without Western help. It might
take more maintenance and use more fuel, but that is characteristic of
most Soviet equipment.
Approved For Release 2007/11/15: CIA-RDP84T00109R000100090031-8
 Approved For Release 2007/11/15: CIA-RDP84T00109R000100090031-8
SECRET
o The GE compressors on which so much is being written are
characterized as including "1950's technology." What the Soviets like
is their proven track record and reliability, but that doesn't mean
something else won't do.
3. Even if they have to go it alone, the Soviets almost certainly
will build pipelines to expand gas exports to Western Europe. They realize
they badly need the hard currency. If they build the Yamal pipeline with
their own compressors, there would be greater gas consumption to run the
pipeline, and therefore slightly smaller gas sales to Western Europe. The
foregone earnings, however, are not massive except when cumulated over many
,years. Completion of such a pipeline need not be delayed if Moscow gives
it a very high priority. Some domestic pipelines might be delayed, but
perhaps not much since it seems reasonable to expect domestic compressor
production to be accelerated beyond planned level.
4. Even if there were substantial delays, Moscow could partially
bridge the gap using new domestic pipelines for most of the distance to
Western markets.
5. If Moscow could not buy Western compressors, it would still be
dependent on Western suppliers for a great deal of pipe. However, France
and Italy, which are large potential suppliers of compressors but not pipe,
might find buying Soviet gas less attractive. The principal potential
attraction of Soviet gas for these countries would then shift from larger
export sales to low gas prices. There is little question that Soviet gas
is potentially the cheapest source of large amounts of new gas for Western
Europe. The cost of producing and transporting Algerian gas is probably
less, but Algerian reserves are far smaller than Soviet reserves. Norway
has the reserves to supply substantial amounts of new gas in the 1990s, but
I suspect that much of the new Norwegian gas would be more expensive to
transport than Soviet gas. Consequently, if the West Europeans want to
ensure long term supplies of gas at prices low enough to compete with oil
in widespread industrial uses, they probably must go to the Soviet Union.
This key selling point for Soviet gas will remain even if there are no tied
exports of equipment. Even so, French and Italian government enthusiasm
for the pipeline might weaken considerably, especially in the face of
political criticism.
Maurice C. Ernst
Approved For Release 2007/11/15: CIA-RDP84T00109R000100090031-8