STAFF NOTES: MIDDLE EAST AFRICA SOUTH ASIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000400030003-3
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 7
• Document Creation Date: December 16, 2016
• Document Release Date: July 22, 2004
• Sequence Number: 3
• Publication Date: April 9, 1975
• Content Type: REPORT

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Middle East
Africa
South Asia
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134
April
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MIDDLE EAST - AFRICA - SOUTH ASIA
CONTENTS
Libya: Oil Prices Cut Again to Stimulate
1
Sales . . . . . . . . . . . . . . . . . . .
Iran: The Soviet Presence . . . . . . . . . . 2
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I Apr 9, 1975
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Libya
Oil Prices Cut Again to Stimulate Sales
Libya has cut oil prices for the third time
this year to stimulate sales; output plummeted to
an 11-year low in February. The government sale
and buyback price on crude oil was cut by 30 cents
per barrel to $11.40, effective April 1. The cost
of the producing companies' equity oil fell by
about 55 cents per barrel. Average company costs
of Libyan crude are expected to be about $11.20.
Libya thug has recognized not only the need
to cut the price of government oil, but also the
need to give foreign oil companies incentives to,
boost production. If output is to rise substan-
tially, Libya must sell more oil in markets tradi-
tionally controlled by the international companies.
The state oil company has been unable to maintain
sales of its overpriced oil in recession-hit inter-
national markets.
The two earlier price cuts came in January
and February. The cut in January followed the
pattern endorsed at the meeting of the Organiza-
tion of Petroleum Exporting Countries in December,
The overall effect was to leave average company
costs essentially unchanged at about $11.70 per
barrel, but to reduce the direct sale price of
the government oil from $12.50 to $11.86. In
February, Libya reduced the buyback and direct
sales price of some of its lower quality crudes.
Despite the two earlier price cuts, produc-
tion declined by 13 percent, to 920,000 barrels per
day, in February. Output in 1974 averay ' about
1.5 million barrels per day.
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The Soviet Presence
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There are approximately 5,000 Soviets in Iran,
including dependents. They are widely dispersed
geographically and connected with virtually every
phase of Iranian industrial and commercial activity.
In comparison, there are 16.000 US nationals resi-
dent in Iran. The official Soviet community numbers
about 360, a slight increase over 1974.
The Shah's reputation as an anti-communist
ally of the West tends to mask the extent of his
accommodation with his northern neighbor, the
Soviet Union. Although still deeply suspicious
of Moscow, the Shah, since the early 1960s, has
recognized the need to keep relations on an even
keel, and he has succeeded in doing so. The basis
for this relationship was laid in 1962 when Moscow
accepted a unilateral pledge from Tehran that it would
not permit the establishment of foreign missile
bases in Iran. Moscow in return offered to end its
propaganda against the Shah. Since then economic
relations have been gradually expanded. The Shah
holds regular consultations with Soviet leaders;
the last occured in November 1974,
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ou o o'n.e military specialists are training
Iranians in the use of routine Soviet military equip-
ment such as transport and conventional artillery.
Other Soviets in Iran are connected with a wide variety
of activities ranging from banking to gas and petroleum.
(Ce,*itinued)
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The largest group of Soviet specialists--about
550--is attached to the Soviet-built Aryamehr steel
mill in Isfahan. The mill was constructed in the
late 1960s under a $289 million Soviet credit,
which also provided for a natural qas pipeline to
the USSR.
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The mill has operated well below capacity.
It has been in perodic danger of shutting down
since August 1974 because of delays in the arrival
of coal from Europe. The coal transits the Soviet
Union, entering Iran by rail at the northern border
town of Joifa, where it must ;De transfered from the
Soviet broad-gauge rail line to the Iranian regular-
gauge system.
Moscow claims the delays are attributable to
inadequacies in the Iranian transportation system.
The Iranians, for their part, reportedly believe
Moscow is deliberately creating a bottleneck at the
border in order to give force to its argument that
Iran must open more crossing points, as well as
allow the Soviet Union to construct a broad-gauge
rail line in Iran opposite a second border crossing
point near the Caspian Sea. The Iranians initially
refused both requests because of security considera-
tions, but their attitude seems to have softened in
recent months.
Apr 9, 197!,
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