FOREWORD (By Senator Kenneth B. Keating) In 1950 the Soviet Union produced about 37.9 million metric tons of petroleum and exported 3 percent. In 1960 the Soviet Union produced 148 million metric tons of petroleum and exported 14 percent. This tremendous increase in Soviet oil production and export during the last decade represents a grave threat to the free world. Sold at prices determined by political rather than economic considerations, accompanied by propaganda, technicians, and all the prerequisities of a Communist marketing system, and designed to undermine the commercial activities of the free enterprise system, Soviet oil has already begun to injure the West. Unless steps are taken now, the onrush of Soviet oil over the next 5 to 10 years may seriously undermine the economic independence of Western Europe and the future of private enterprise in the undeveloped countries. In this study, Dr. Halford Hoskins, a recognized authority in international oil transactions, has pinpointed and analyzed the Soviet threat. In Europe, and especially in Italy, the Soviets have supplied oil in return for precision-manufactured equipment to expand their oil development. Over the long run, such trade could give the Soviets important economic leverage over the policies of NATO countries. Throughout underprivileged areas, the Soviets export not only oil, but also oil technology and oil experts. In a deliberate effort to displace Western oil companies and weaken confidence in Western methods, the Soviets are encouraging the formation of state oil monopolies. Often, as in Cuba, and recently in Ceylon, that means expropriation of Western facilities and enhances Communist influence and power. Dr. Hoskins gives a penetrating analysis of Soviet aims and successes to date. It is a problem we can no longer afford to ignore. What can we do to halt this Soviet tactic which appears to be working so well? There are a number of avenues that must be explored. I have recommended that we actively work for 1. Uniform oil policies for the entire NATO community comparable to current weapons programs, with curbs on imports of Soviet oil to each country. 2. Common policies with regard to preventing Western supplies to the Communists of oil transportation, pipeline, extracting or refinery equipment. 3. Continued public disclosure of Soviet price-cutting tactics designed to hurt not just the West but also the oil-producing countries dependent on oil revenues. 4. A determined effort, with or without Government assistance, to increase oil exploration or reserves in other areas of the world, more removed from the Soviet pressures. Dr. Hoskins' study, which was prepared at my request, should be a valuable guide, not only to alert the whole country to this menace, but also to provide the Government agencies concerned with useful background and data. While there may be disagreement with some of the proposals outlined in the report, it offers an excellent and comprehensive introduction to the field. SOME ASPECTS OF THE SOVIET OIL OFFENSIVE THE OFFENSIVE: RUSSIAN AIMS AND PRODUCTION AND THE WESTERN RESPONSE The Soviet invasion of Western oil markets and Soviet pandering to oil ambitions in a number of free and uncommitted countries is essentially a logical projection of the trade-and-aid program launched by the U.S.S.R. about a decade ago. The post-Stalin Soviet regime, making trial of the competitive coexistence gambit,' found that ideological barriers generally were not proof against mutually advantageous economic relationships and that political profit not infrequently accompanied economic gain. Petroleum did not enter into the aid-trade program at the outset. Sources of oil supply still were too limited and the demands of Soviet and satellite industry were too great to admit of oil export beyond the Communist bloc on any but a carefully restricted scale and for immediate advantage. Within the space of a few years, however, this situation was changed radically by a series of major oil discoveries that placed the Soviet Union in the forefront among the oil-producing nations of the world. Major oil discoveries in the Ural-Volga area in 1955-57,2 in six districts of Uzbekistan and Turkmenia in 1957-59,3 and in the Bokhara region and in Kazakhstan in 1960-62,* have more than kept pace with expanding domestic and export needs alike. (Late discoveries in Yugoslavia also have overtaken dwindling production from older fields and undoubtedly have had some bearing on Soviet oil strategy.) It has been estimated that the total petroleum reserves of the U.S.S.R. may amount to twice those of the United States. Dependable statistics for the Soviet Union are hard to come by. The United States, however, is considered to have proved recoverable reserves amounting to 38,800 million barrels." Proved reserves for the four principal producing countries of the Middle East-Iran, Iraq, Saudi Arabia, and Kuwait-are of the order of 175,000 million barrels.8 5 Thus far, the incidence of Soviet oil production has not kept pace with that of oil discovery for a number of reasons. Regardless of the extent of petroleum reserves, production at any given time must be geared to various sets of circumstances: Total demand-domestic and foreign-in terms of crude oil and/or refined products, the relationship of the quality of exploitable crudes to market demands, the refining and transportation facilities available, and the objectives other than 1 Cf. the Atlantic, February 1961, 12 ff. 1 New York Times, Jan. 4, 1955, Mar. 10, 1957. 1962. New York Times, Nov. 22, 1957, Dec. 5, 1959. Christian Science Monitor, Sept. 27, 1960; Washington Post, Oct. 25, 1960; New York Times, Jan. 14, New York Times, Dec. 24, 1961. New York Times, Nov. 12, 1960. ? Petroleum Press Service, April 62:155. Middle East Oil Statistics Summary. |