174. Memorandum From the President’s Special Consultant for Energy (DiBona) to the President’s Assistant for National Security Affairs (Kissinger)1
- Soviet LNG
Attached is a point paper on the Soviet LNG project “North Star.” Also attached is a Memorandum for the Record of a discussion with Ex-Im Bank.2
For your information, Senator Jackson is opposed to the project. He questioned Nassikas, Chairman of Federal Power Commission, concerning the defense and economic aspects. Jackson has also focused on the issue of incremental pricing of gas imports. If the gas cannot be “rolled in” so that its price is averaged with domestic gas, the project would probably not fly. I’ve given a copy of Nassikas’ answers to your staff.
In my meetings on the Hill, this issue has come up repeatedly, and unfavorably. I have responded by stating:
With rising U.S. costs, the price could well be competitive. The project sponsors believe there will be a shortage of gas, even with deregulation, so they feel they will be able to sell it. The amount involved is a small fraction of total U.S. projected consumption (2% or 3%).
- Source: National Archives, Nixon Presidential Materials, White House Central Files, Staff Member and Office Files, Energy Policy Office, Box 22, Charles J. DiBona Subject Files, Committee Memos. No classification marking. Printed from an uninitialed copy.↩
- In the attached March 10 memorandum to DiBona, Schaefer informed him that Don Bostwick, Executive Vice President of the Ex-Im Bank, opposed the proposed LNG project “not so much because of the large size of the loan, but on the merits.” Furthermore, Bostwick “believed that the American companies were responsible for initiating the idea and his information is that, initially at least, the Russians did not like the project.” He also “strongly suggested” that an engineering feasibility study be a requirement prior to any endorsement of the project. Based on their conversation, Schaefer concluded: “Ex-Im has no requirements per se that could block consummation of the Soviet LNG project; however, Ex-Im financing will provide a vehicle for congressional debate of the merits and politics of the project.”↩
- Attached but not printed at Tab A is “Summary of North Star,” itemizing the costs associated with the project.↩
- Tab B is attached but not printed.↩