69. Editorial Note

On December 12, 1972, Helmut Sonnenfeldt of the National Security Council Staff wrote a memorandum to President’s Assistant for National Security Affairs Kissinger regarding Project North Star, a proposal to import liquefied natural gas from the Soviet Union to the [Page 240] United States. Sonnenfeldt wrote: “The U.S. consortium of Texas Eastern, Tenneco, and Brown & Root is continuing discussions with the USSR on the proposed $5–6 billion deal that would have gas piped from the Urengoy fields in North Central Siberia to Murmansk, thence by tanker in liquefied form to the Eastern Seaboard of the United States. The Soviets attach very high priority to this proposal—both Brezhnev and Kosygin push it whenever they can—however, several obstacles are blocking progress. As you know, the Soviets would have the project financed by the United States; the consortium is looking to some agency of the U.S. Government for the money, and at present, existing U.S. monetary institutions such as EXIM are not able to handle a project of this magnitude. Added to the financial problem, several agencies, including Defense, Interior, OEP and Peter Flanigan’s CIEP are opposed to the Soviet gas proposal—as is Senator Jackson—arguing 1) it is a security risk to make the Eastern Seaboard dependent on USSR LNG, and 2) rather than laying out billions to buy very expensive USSR gas, it would make more sense to provide the price incentives necessary to encourage further gas exploration within the United States.” Sonnenfeldt continued: “Thus, there is little progress in the consortium’s negotiations with the USSR at present. At the same time, the gas task force has little more than scratched the surface of its work—one meeting and a few largely negative working papers from the agencies. With Peterson about to leave office, the work of the task force is languishing. And, as Flanigan is opposed to the USSR gas projects, it would appear that CIEP has little interest in spurring the work on to conclusion.Sonnenfeldt also summarized developments with regard to proposed U.S.-USSR-Japanese projects regarding natural gas in Yakutsk, Tyumen, and Sakhalin. He noted, “While the Yakutsk, Tyumen, and Sakhalin proposals are all important, and will require the attention of Secretary Shultz or whoever else is given Pete Peterson’s responsibilities in this field, they do not have the same political urgency in terms of U.S.-Soviet relations as does the North Star project.” (National Archives, Nixon Presidential Materials, NSC Files, Box 721, Country Files—Europe—USSR, Vol. XXVII)

On December 15, Sonnenfeldt sent Kissinger a follow-up memorandum on the “impact of new U.S. energy policy on possible U.S.–USSR gas deals.” He wrote: “On December 13, Peter Flanigan chaired a Cabinet-level meeting to review preparations for the President’s energy policy message, now scheduled to go to the Hill sometime in February.” Sonnenfeldt continued: “Natural gas was among the subjects discussed, and it is becoming increasingly clear that, based on present thinking, the energy policy message will give strong Administration support to providing incentives to industry—by deregulating prices for new gas—to increase development of untapped U.S. gas reserves. Not once during the two-hour meeting was the subject of USSR LNG raised—which is not surprising, considering the widespread dis[Page 241]enchantment with the USSR proposals among the agencies, OEP and CIEP. It would seem quite possible that the energy message may be drafted in language which while perhaps not precluding Soviet gas deals will make them even more difficult to realize—should the President wish to have such deals considered sympathetically for reasons broader than U.S. energy considerations alone. I recommend that you advise Peter Flanigan that you would like to review the energy policy message as soon as it is in draft form.” (Ibid.) Kissinger signed an attached memorandum to Flanigan, dated December 23, asking “to review a draft of the proposed Presidential message on energy policy, as well as any other related draft documents planned for release with the message.”

Additional documentation on U.S. involvement in the Yakutsk and North Star Projects is in Foreign Relations,1969–1976, volume XXXVI, Energy Crisis, 1969–1974.