Oil and Gas Exports a Major Part of Soviet Trade Balance

By L. D. Barney | THE JOURNAL RECORD, September 27, 1985 | Go to article overview

Oil and Gas Exports a Major Part of Soviet Trade Balance


L. D. Barney, THE JOURNAL RECORD


The Soviet Union ordinarily doesn't pop into mind as a major oil and gas power, but it is the world's largest oil producer a nd has more crude oil reserves than any nation except Saudi Arabia and more natural gas reserves than any nation.

In addition to being self-sufficient in energy, the Soviet Union is a major exporter and there is speculation it has been trying to prop up prices of the Organization of Petroleum Exporting Countries by raising the price of its own crude.

In the past month the Soviet Union has raised the price of Urals crude three times, totaling more than $1.50 a barrel.

Oil and gas exports are a major portion of the Soviet Union's foreign trade balance, accounting for 41.5 percent of all Soviet exports in 1984 and more than 60 percent of its hard currency receiptsfrom western nations, according to The RAM Group Ltd, of Oklahoma City.

In 1984, Soviet exports to non-communist nations totaled $17.6 billion. Exports to communist countries came to $18.6 billion.

The nation has an estimated 81 billion barrels of crude oil reserves and 1,400 trillion cubic feet of natural gas reserves - more than 43 percent of the world's total gas reserves, according to a background paper by the RAM Group on the Soviet and Western Europe energy situation.

The USSR's largest oil customers were East Germany, Czechoslovakia, Poland, West Germany, Italy, Bulgaria, Finland and France.

West Germany is its largest gas customer, buying $1.4 billion in 1984, the RAM study says. Czechoslovakia was second with $1.3 billion followed by Italy with slightly over $1 billion gas purchases.

Given the size of its gas reserves, the Soviet Union could easily increase natural gas reserves by its industries and export more oil. However, The RAM Group warns, "if the Soviet's oil situation deteriorates to the point that they need to begin importing oil, there is always the risk that they could decide to annex Middle Eastern oil fields rather than paying for the oil."

In the event of another embargo as took place in 1973, Western Europe would be vulnerable to interruptions in its oil supplies from the Middle East and Africa and its oil and natural gas imports from the Soviet Union. Even more so to sabotage or military attack on oil production in the North Sea.

Ten years ago, Western Europe imported 97 percent of its oil from the Middle East, Africa and Eastern Europe, including the Soviet Union. Today that reliance on imported oil has been cut to 70 percent through a combination of fuel switching, energy conservation and increased North Sea production but includes 3.7 million barrels from the Middle East out of a total 8.6 million a day.

Should another embargo occur, the United States, through the International Energy Agency, would participate in sharing arrangements "designed to reduce the economic leverage that any group of producing countries could apply to consuming nations by an embargo," the RAM paper says.

The International Energy Agency represents the United States, Canada, Japan and industrialized nations in Western Europe. Since 1973 the members have made progress in shifting to alternative energysources. …

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