Technology and Soviet Energy Availability November 1981 NTIS order #PB82-133455 Library of Congress Catalog Card Number 81-600166 For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402 Foreword This assessment was undertaken in response to requests from the House Committee on Foreign Affairs; the Senate Committee on Banking, Housing, and Urban Affairs; and the House Committee on Science and Technology to examine the contribution of American and other Western technology and equipment to Soviet energy availability in the present decade. In November 1979, OTA published an assessment of Technology and East- West Trade. Among the conclusions of that work was the suggestion that the United States enjoys significant technological advantages over the U.S.S.R. in petroleum equipment and computers, two areas that have been accorded high priority in Soviet economic planning. It therefore appeared that these tech- nologies might offer the United States opportunities to use export controls for purposes of exercising political leverage over the Soviet Union. The present study addresses in detail the significance of American petro- leum equipment and technology to the U.S.S.R. and the resulting options for U.S. policy. However, the scope of this assessment is far broader. It examines the problems and opportunities that confront the U.S.S.R. in its five primary energy industries—oil, gas, coal, nuclear, and electric power. It discusses plausi- ble prospects for these industries in the next 10 years; identifies the equipment and technology most important to the U.S.S.R. in these areas; evaluates the ex- tent to which the United States is the sole or preferred supplier of such items; and analyzes the implications for both the entire Soviet bloc and the Western alliance of either providing or withholding Western equipment and technology. OTA is grateful for the assistance of its project advisory panel chaired by Sen. Clifford Case, as well as for the advice of numerous reviewers in agencies of the U.S. Government, academia, and industry. However, it should be under- stood that OTA assumes full responsibility for its report, which does not neces- sarily represent the views of individual members of the advisory panel. Director /// Technology and Soviet Energy Availability Advisory Panel Clifford Case, Chairman Curtis, Mallet-Prevost, Colt&Mosle E. C. Broun, Jr. Stanley Lewand Hughes Tool Co. Chase Manhattan Bank Robert Campbell Richard Nehring Indiana University The Rand Corp. Leslie Dienes University of Kansas Richard Pipes (until January 1981) John Garrett Harvard University Gulf Oil Exploration and Production Dankwart Rustow Marshall Goldman City University of New York Wellesley College and Harvard University Henry Sweatt Gregory Grossman Honeywell University of California at Berkeley Robert Jackson Allen S. Whiting Dresser Industries University of Michigan iv . .. Technology and Soviet Energy Availability Project Staff Lionel S. Johns, Assistant Director, OTA Energy, Materials, and International Security Division Peter Sharfman, Program Manager International Security and Commerce Program Ronnie Goldberg, Project Director Martha Caldwell Mildred Turnbull* Administrative Staff Helena Hassell Dorothy Richroath Jackie Robinson Project Contractors Battelle Columbus Laboratories Eric Anthony Jones L. W. Bergman& Co. Angela Stent EG&G Corp. Stephen Sternheimer William McHenry and Seymour Goodman, Williams Brothers Engineering University of Virginia Thomas A. Wolf, Center for Science and Thane Gustafson Technology Policy, New York University Edward Hewett OTA Publishing Staff John C. Holmes, Publishing Officer John Bergling Kathie S. Boss Debra M. Datcher Joe Henson ● OT,4 contractor v Acknowledgments This report was prepared by the staff of the International Security and Commerce Pro- gram of the Office of Technology Assessment. The staff wishes to acknowledge the contribu- tion of OTA's contractors in the collection, analysis, and preparation of material for the report; and to thank the following individuals and Government agencies for their generous assistance: Central Intelligence Agency Yuri Ksander and Charles Cooke, Department of Commerce Engineering Societies Commission Centrally Planned Economies Project, on Energy Wharton Econometric Forecasting Paul Langer Associates, Inc. Theodore Shabad Michael Hammett Jonathan Stern John Hardt Myron Uretsky M. K. Horn, Rafail Vitebsky Cities Service Co. Joseph Yager William Kelly Conversions (except where otherwise noted) 1 million tons standard fuel X 4.582 = million barrels of oil 1 million metric tons hard coal X 5,051 = million barrels of oil 1 million metric tons of hard coal X 0,6859 = million metric tons of oil 1 million tons of standard fuel = 0.9091 million metric tons hard coal 1 million metric tons of oil X 7.33 = million barrels oil equivalent 1 million barrels oil equivalent per day X 365 ÷ 7.33 = million tons oil equivalent 1 billion cubic meters natural gas X 0.8123 = million tons oil equivalent 1 billion cubic meters natural gas X 5.982 = million barrels oil equivalent 1 billion cubic feet X 23.01 = million metric tons oil equivalent 1 cubic meter = 264.172 American gallons 1 cubic foot = 0.0283168 cubic meters 1 American barrel = 42 American gallons Abbreviations million metric tons — mmt billion cubic meters – bcm million barrels per day — mbd million barrels of oil equivalent — mboe million barrels of oil equivalent per day — mbdoe British thermal unit – Btu kilowatt-hour – kWh Megawatts – MW VI Contents Chapter Page 1. Summary :Issues and Findings . 3 2. The Soviet Oil and Gas Industry . 19 3. The Soviet Coal Industry . 81 4. The Soviet Nuclear Power Industry . 111 5. The Soviet Electric Power Industry . 145 6. Western Energy Equipment and Technology Trade With the U.S.S.R. 169 7. The Prospects for Energy Conservation in the U.S.S.R. 227 8. Energy and the Soviet Economy . 249 9. East European Energy Options . 283 10. The Soviet Bloc and World Energy Markets . 313 11. Japanese-Soviet Energy Relations . 325 12. West European-Soviet Energy Relations . 351 13. Soviet Energy Availability and U.S. Policy . 385 Appendix . 399 Vll CHAPTER 1 Summary: Issues and Findings CONTENTS Page INTRODUCTION . 3 PRINCIPAL FINDINGS . 4 Energy and the State of the Soviet Economy . 4 Soviet Energy Policy . 5 The Energy Situation of Eastern Europe . 5 Soviet Energy Production in the 1980’s. 6 The Contribution of Western Equipment and Technology to Soviet Energy Industries . 10 The Prospects for Energy Conservation and Substitution in the U.S.S.R. 11 The Foreign Availability of Western Technology and Equipment. 11 The Policies of America’s Allies Toward Soviet Energy Development . 12 FOUR ALTERNATIVE U.S. POLICY PERSPECTIVES.. 13 TABLE Table No. Page 1. 1985 Soviet Oil Production Forecasts . 8 FIGURE Figure No. Page l. Soviet Primary Energy Production . 7 CHAPTER 1 Summary: Issues and Findings INTRODUCTION The Soviet Union occupies the largest outcome of Soviet energy development in the span of territory in the world and is abun- near or midterm. Thus, focusing on the issue dantly endowed with energy resources. It is of whether or not the United States should the world largest oil producer and a major assist the U.S.S.R. in its energy develop- exporter of both oil and gas. Despite this en- ment tends to lead to the neglect of more viable position, however, controversy has basic questions. Among these is the issue of arisen in the past few years over whether the what course Soviet energy production will U.S.S.R. itself, or the Soviet bloc as a whole, take if present policies—in both the West may face an energy shortage during the pres- and the U.S.S.R. itself—remain unchanged. ent decade. This is a controversial question in the West, and perhaps within the U.S.S.R. as well. This possibility has provoked a debate Moreover, there are the central issues of among U.S. policy makers over whether it is whether, how, and to what extent the United in the best interest of the United States to States, either itself or in concert with its assist the Soviet Union in its energy devel- Western allies, could affect the energy future opment. Those who favor such a policy be- of the Soviet Union. lieve it is justified to bolster American ex- ports; to increase the world’s total available This study, undertaken at the request of supply of energy; to obviate extensive Com- the House Committee on Foreign Affairs; munist pressure on world energy markets; the Senate Committee on Banking, Housing, and/or to reduce the likelihood that the and Urban Affairs; and the House Commit- U.S.S.R. would intervene in the Middle East tee on Science and Technology, was designed to acquire oil it could no longer produce in to investigate the latter set of technical sufficient quantities at home. issues so that the policy debate might be placed on a firmer footing. Specifically, it ad- Adherents of the opposing view contend dresses the following questions: that to assist in the development of Soviet energy resources would be to help strength- First, what opportunities and problems en the economy of an adversary and/or that confront the U.S.S.R. in its five primary such assistance may convey direct or in- energy industries—oil, gas, coal, nuclear, direct military benefits, either: 1) because it and electric power—and what are plausible might lead to the transfer of dual-use tech- prospects for these industries in the present nologies that have military application; 2) decade? because oil itself is a strategic commodity; or Second, what equipment and technology 3) because it could enhance the U. S. S. R. ’s are most needed by the U.S.S.R. in these ability to exert “energy leverage” over West areas; of this, how much has been or is likely European nations if it placed the Soviet to be purchased from the West; and to what Union in a position to threaten to withhold extent is the United States the sole or pre- energy exports.