SOVIET AND EAST EUROPEAN PETROLEUM TRADE WITH THE FREE WORLD IN 1969

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001600030041-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: December 22, 2016
• Document Release Date: October 31, 2011
• Sequence Number: 41
• Publication Date: April 1, 1970
• Content Type: IM

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/ e a
fl
tl_ a o a
ence Memorandu
Soviet And East European Petroleum Trade
With The Free World In 1969
ER IM 70-41
April 1970
Copy No. 5
DIRECTORATE OF
INTELLIGENCE
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' I S-1 'X' 1
CENTRAL INTELLIGENCE: AGENCY
Directorate of Intelligence
April 1970
Soviet And East European Petroleum Trade
With The Free World In 1969
Introduction
This rnr-~morandum summarizes the trade in petro-
leum between the Communist countries* and the Free
World in 1969. It also examines the unusual develop-
ments in such trade, including the sizable increase
in oil imports from the Free World, and speculates
on the probable extent of oil trade in 1970.
Origin and Composition of Oil Exports
1. The USSR and Eastern Europe exported about
50 million metric tons of petroleum to the Free
World in 1969, a decline of 2.6 million tons from
the level in 1968 (see the chart). All of this
decline was accounted for by Soviet oil exports
which were down from about 45 million tons in 1968
to about 42 million tons in 1969 -- 25 million tons
of crude oil and 17 million tons of petroleum prod-
ucts. Exports from Eastern Europe rose slightly in
1969 to a total of 8 million tons (all petroleum
products). Almost half of the exports from Eastern
Europe were from Romania.**
* References to Communist countries in the context
of oil trade refer to the USSR and the Communist
countries of Eastern Europe -- Bulgaria, Czechoslo-
vakia, East Germany, Hungary, Poland, and Romania.
** Exports from Czechoslovakia were 1.4 million
tons; Poland 1.4 million tons; Hungary 900,000 tons;
East Germany 500,000 tons; and Bulgaria 100,000 tons.
Note: This memorandum was produced solely by CIA.
It was prepared by the Office of Economic Research.
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KID,(,R F,, I
Exports of Petroleum from Communist Countries to the Free World
Millinu Mohr, lm%
70 r
0 l 1 1 1 1 1 1
1960 1961 1961 1963 1964 1965 1966 1967 1968
2. The estimated total value of Communist pe-
troleum sales to the Free World in 1969 was almost
$700 million. I-Iard currency sales made up about
$340 million of total Soviet sales of $575 million,
and Eastern Europe earned about $60 million in hard
currencies on total sales of $120 million.
3. In 1969, 90% of the oil exports to the Free
World were delivered in tankers, principally from
ports on the Black Sea (see Table 1). About 60% of
the tanker deliveries were Carried in Conuuunist-flag
vessels.
Destination of Oil Exports
4. Communist oil exports to Western Europe in
1969 declined to 40.6 million tons, about 3 million
tons below the 1968 level. These exports accounted
for more than 80% of Communist oil exports to the
Free World ind represented about 7? of Western
Europe's demand, compared with about 9% in 1968.
The principal recipients were Italy, Finland, West
Germany, and Sweden.
25X1
25X1
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Methods of Delivery and Ports of Origin
of Oil Exported by Communist Countries
to the Free World
1969
Million Metric Tons
Deliveries
USSR
Eastern
Europe
Total
Percent
r,f Total
By tanker
40.0
4.8
44.8
90
Black Sea ports
24.5
3.8
28.3
57
Baltic Sea ports
14.8
1.0
15.8
32
Far Eastern ports
0.7
--
0.7
1
By rail and l,ary,-:!
1.8
3.2
5.0
10
Total
41.8
8.0
49.8
100
5. Outside of Western Europe, the most signif-
icant importers were Japan, Egypt., and Greece.
Both the United States* and Canada imported token
shipments of oil from the USSR for the first time.
The United States also continued to import small
quantities of low-sulfur fuel oil from Romania.
The Appendix shows the Free World destinations of
oil exports from Communist countries in 1969.
Soviet Exports to the Free World
6. Soviet sales to developed countries in 1969
declined for the first time since 1955. Exports of
36.4 million tons were more than 3 million tons
less than in 1968 (see Table 2). Lower shipments
to Italy, West Germany, and Japan accounted for
most of the decrease. Soviet shipments to less
developed countries in 1969, however, increased
* A total of 70,000 tons of residual fuel oil ar-
rived in the New York area in Gate 1969, consigned
to the Joc Oil Company, an international oil broker.
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SI ('A 1.I~-I'
slightly, following several years of decline. The
increase occurred principally in deliveries to
Egypt_* (On a net basis, Soviet exports to Egypt
were down, as the USSR acquired more than 1 million
tons of Egyptian crude oil for shipment to Cuba and
Bulgaria from the El Morgan oilfield in the Gulf of
Suez.)
Table 2
Soviet Oil Exports to the Free World
Million Metric Tons
Importing Area
1965
1966
1967
1968
1969
Developed countries
26.1
32.8
37.2
39.7
36.4
Of which:
Western Europe
22.2
28.7
33.9
36.9
34.0
Japan
3.9
4.1
3.3
2.8
2.4
Less developed coun-
tries
9.4
8.6
6.3
5.0
5.4
Total a/
35.5
41.3
43.5
44.7
41.8
a. Because of rounding,
components may not add to
totals shown.
A Egypt is a net oil (-.:porter. As a result of the
loss of the Suez refit'ries through Israeli bombing,
however, Egypt lacks sufficient refinery capacity
and must import petroleum products from the USSR
(and elsewhere) to meet its domestic needs. More-
over, Egyptian sources of crude oil at the Mediter-
ranean are insufficient to operate the refinery at
Alexandria, and crude oil also is imported from the
USS1;. Egypt could transport its own crude o2. 7 frnm
the Gulf of Suez around Africa to Alexandria but
apparently prefers to export that oil and import
supplemental supplies at Alexandria.
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7. Soviet oil exports to markets east of Suez,
continuing to show some effects of the Canal clo-
sure, declined for the third successive year (see
Table 3). Exports to Japan, the largest Soviet
market in the area, probably would have undergone
an even greater decline in 1969, were it not for
the oil made available through east-west oil ex-
changes.* nigher transport costs caused a complete
suspension of exports of Soviet petroleum products
to Ceylon in 1969. These high costs probably pro-
hibited the USSR from malting a competitive bid to
supply crude oil to Ceylon?s new refinery. The
contract was awarded instead to a consortium of
Shell Oil Company and British Petroleum.
Soviet Petroleum Trade
with Customers East of fluez
Year Japan India Ceylon Burma Total
1966 4,149.7 1,213.7 644.6 214.8 6,222.8
1967 3,275.6 473.5 564.9 79.0 4,393.0
1968 2,764.2 a/ 432.4 177.4 9.6 3,383.6
1969 2,350 a/ 400 0 0 2,750
a. Including 740,000 tons in 1968 and 1 mIZZion
tons in 1969 received through east-west exchanges,
Under an arrangement inaugurated in late 1967
to overcome the transport problems resulting from
the Canal closure, non-US western oil companies
make oil avai table to the USSit at the Persian Gulf
for deliver/ to Soviet markets east of Suez. In
exchance, the USSR provides oil to those companies
at the Black Sea for their markets in Western
Europe.
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SECT i '.I'
Soviet Oil Exports to Other Communist Countries
8. Soviet shipments to other Communist coun-
tries in 1969 increased. about 3 million tons over
1968, offsetting the decline in exports to the
Free World. A breakdown of total Soviet oil exports
is shown in Table 4.
Table 4
Soviet Oil Exports
Million Metric Tons
Destination 1965 1966 1967 1968 1969
Total a/ 64.4 73.6 79.0 86.2 86.3
Free World 35.5 41.3 43.5 44.7 41.8
Communist countries 28.9 32.2 35.4 41.5 44.5
Eastern Europe 22.4 25.3 27.7 32.4 35.4
a. Because Of, rounding, components may not add to
totals shown.
Oil Procured from the Free World
9. In 1969 the Communist countries procured
more than 4 million tons of crude oil. from Free
World countries in North Africa and the Middle East
(see Table 5). This was about 3 million tons more
than in 1968. Without this oil, exports from East-
ern Europe to the Free World would not have in-
creased and exports from the USSR might have de-
clined further.
10. Soviet oil procurements were used exclu-
sively to meet export commitments and indicate that
demand for oil in the USSR and other Communist
countries probably exceeded the growth in Communist
oil production in 1969. The increase in imports
from the Free World by Bulgaria and East Germany is
consistent with Soviet advice to East European
countries to satisfy part of their growth in oil
demand from Free World sources.
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Communist Imports of Crude Oil.
from North Africa and the Middle East
1969
Thousand Metric Tons
a. Most of the A Zgerian of Z was delivered, on -Soviet
account, to Spain and some probably to Bu Zgaria and
customers in West Africa.
b. About 750,000 tons of the Egy1 tian ni Z was
delivered, on Soviet account, to BuZgarta and the re-
mainder to Cuba.
From
USSR
Bulgaria
East
Germany
Roma
i
T
t
l
n
a
o
a
Algeria
500 a/
450
--
--
950
Egypt
1,150 b/
--
500
--
1,650
Iran
--
250
--
750
1,000
Libya
--
--
--
550
550
Syria
--
100
--
--
100
Total
1,650
800
500
1,300
41250
cts for I11creased C Mmunist Impure..
11. In the n(-xt few years the Communist coun-
tries probably will increase significantly their
imports of Free World oil as a result of a recent
series of credit and trade agreements. Because
Communist countries are unlikely to purchase oil
with hard currency, the volume of oil imports will
be limited by the amount of goods and services that
Free World of 1 producers are willing Lo accept in
barter. The following is a discussion of credit
and trade agreements between Free World and Commu-
nist countries involving petroleum.
USSR
12. The USSR has contracted to receive 500
000
,
tons of crude oil from Algeria annually through
WIN
9
1
75 in exchange for manufactured goods. Moreover,
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the USSR signed credit and trade agreements with
Iraq in 1969 that probably will. result in Soviet
access to some oil from the North Rumaila field in
Iraq, which is not yet producing but where output
may reach an annual rate of 5 million tons in 1973.
In addition, the Soviet-Egyptian trade agreement
for 1970 provides for the export of Soviet petro-
leum to Alexandria and the import of 2 million tons
of Egyptian crude oil from the El Morgan field.
El Morgan oil probably will continue to be used for
Soviet markets in Cuba, Bulgaria, and perhaps else-
where. This exchange probably will last at least
as long as the Canal remains closed and Egypt's oil
economy suffers from domestic imbalances and dis-
locations.
Eastern Europe
13. Romania may import as much as 3 million tons
of crude oil from the Free World in 1970, and be-
tween 5 million and 6 million tons annually by the
end of 1975. Transport problems probably were
responsible for restricting Romanian imports of
Iranian crude oil in 1969. About 250,000 tons of
Iranian crude were shipped to Romania via the Cape
of Good Hope, and 500,000 tons were transferred
from the Red Sea to the Mediterranean through the
old trans-Israel pipeline (this 500,000 tons was the
maximum capacity of the line in excess of Israel's
own needs). The new trans-Israel pipeline, now in
operation with an initial annual capacity of 20
million tons, will provide Romania with an oppor-
tunity to take substantially more Iranian crude.
The present agreement calls for Romania to import a
total of 6 million to 7 million tons of Iranian oil
during the next four years (1970-73).
14 A barter agreement between Romania and Saudi
Arabia authorized the transfer of between?9 million
and 12 million tons of Arabian oil during 1968-72.
After the delivery of 350,000 tons in 1968, ship-
ments were suspended, pending a decision by Saudi
Arabia on the use of Romanian credits. Agreement
has been reached on the use of part of these credits,
and deliveries of Arabian oil are scheduled to total
about 700,000 tons during the next two years.
15. No details are available on the arrangements
which provide for the Romanian import of oil from
private companies in Libya. These imports were first
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noted in 1968 and are continuing in 1970. An east-
west oil exchange may be the basis for this trade.
Romania also is exploring the possibility of a trade
agreement with Venezuela. A trade delegation late
in 1969 indicated Romania's interest in obtaininq
a total of 4 million tons of Venezuelan crude during
1971-75. A formal agreement has not yet been con-
cluded.
16. East Germany has imported Egyptian oil for
several years under a series of trade agreements.
The current agreement provides for the import of
more than 1 million tons of Egyptian crude oil in
1970. During 1969, East Germany extended a credit
of $84 million to Iraq for goods and services
covering the period 1969-74. Seventy percent of
this credit may be repaid in oil, but it is unlikely
that repayment will begin until the North Rumaila
oilfield begins production (now scheduled for 1972).
17. Bulgaria concluded a trade agreement with
Iran in 1967 providing for 2..3 million tons of
crude oil imports during a four-year period but
the Suez Canal closure delayed implementation until
1969. Shipments under this agreement may reach
1 million tons in 1970. Imports from Egypt (on
Soviet account), Algeria, and Syria are expected to
continue in 1970, but details on these agreements
are unavailable.
18. Czechoslovakia and Hungary have concluded
credit agreements with Iran and Iraq that permit
repayment in oi_i. These two East European coun-
tries are landlocked, however, and the full effect
of the agreements probably will not be realized
until overland transport problems are solved. In
November 1969 an agreement in principle was reached
on extending a pipeline now under construction in
Yugoslavia. to Hungary, Czechoslovakia, and Poland.
Financial arrangements appear to be the main ob-
stacle to a final agreement. As presently proposed,
the pipeline would provide an annual throughput
capacity of about 5 million tons for Czechoslovakia
and about 2 million tons eaccch for Hungary and Poland.
The earliest date for its completion would be 1974.
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Conclusions
19. The growth in petroleum demand in the Com-
munist countries in 1.969 probably exceeded the
growth in petroleum production. As a consequence,
oil exports to L1-le Free World declined to about
50 million tons, 2.6 million tons less than in 1968.
This decrease, all of which was accounted for by
the USSR, represents the first drop in oil exports
to the Free World since 1955. The drcp in exports
probably would have been greater if the USSR and
the countries of Eastern Europe had not procured
some 4 million tons of oil from the Free World.
20. There is no evidence to indicate any signif-
icant change in the quantity or pattern of Communist
exports to the Free World in 1970. Communist im-
ports of oil from Free World sources may increase
to between 7 million and 8 million tons in 1970,
compared with about 4 million tons in 1969.
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Communist Exports of Petroleum to the Free World a/
1969
Cl)
h
Western Europe 20,450 13,81G 6,350 20,160
r '
Austria 600 20 2,100 2,120
Belgium -- 1,200 150 1,350
Denmark -- 550 220 770
Finland 5,200 2,700 300 3,000
France 1,800 900 700 1,600
Iceland -- 400 -- 400
Ireland -- 150 -- 150
Italy 9,000 1,100 330 1,430
Netherlands -- 200 -- 200
Norway -- 400 50 450
rte`: ""1
`t
77
) -:7
Sweden 4,500 bs' 513
49,830
6 c/
40,610
7
2.720
36
1,350
6
770
5
8,200
82
3,400
4
400
67
150
4
10,430
13
200
Negl.
452
7
c
5;
35
2?
Switzerland -- 250 300 550 550 5
United Kingdom -- 40 10 50 50 Neal.
West Germany 3,600 1,400 1,300 2,700 6,300 5
Total 24,730 17,100 8,000 25,100
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Crude Oil From the Percent of
from From East European Total Recipient's
Destination b/ the USSR the USSR Communist Countries Total Petroleum Demand
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Crude Oil From the
EMBRIMEM,
Percent of
Destination -'
from
the USSR
From
the USSR
East European
Communist Countries
Total
Total
petroleum
:e=a=z
1,550
1,770
1,070
2,S40
1,390
19
Cyprus
--
151)
-150
-15O
-30-
Egypt
90G
651)
450
g,100
000
25
Greece
650
W)
300
930
1;S53
2-
Syria
21)
2 0
390
390
Turkey
21)
30,
Africa
850
190
Ghana
300
yon---_-.
Guinea
70
70
70
23
Morocco
550
35
Senegal
51)
-~"J
10 V
40
aSonial sl_- _
70
70
70.
93
1,700
1,180
1,420
3,120
2
Afghanistan
1?)
1 C) _...-
1-3
4
'Ceylon
20
20
20
err 1 .
ndLa__. ._ _. _
400
70
470
470
3
Japan
650
150
800
2,500 - .
_ ---2
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Destination D/
Latin America
Canada
United States
Crude oil From the Percent of
from ?rom East European Total .ecios
the USSR the USSR Communist Countries Total Petroleum De-and
2C
70
30
250
320
50
320
`dec l
a. t re ~i,~ 2rwra ea a,es Y~-
Z` 7 =r
WorZd moor da,a.
C. Percen
~riea re~re~_ - a 77.cr
a_ f: _ . r We
d. :iot rtc._ Z ar
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