226. Memorandum From William Martin of the National Security Council Staff to the President’s Assistant for National Security Affairs (Clark)1
SUBJECT
- Soviet Gas in European Markets
We have received a troubling CIA assessment on the potential market for Soviet gas in European markets through use of only one strand of the Siberian pipeline and full use of existing infrastructure. This illustrates very clearly that unless we can get a commitment from the Europeans to limit their gas contracts to present levels, the Soviets will capture most of the market of the 1990s and drive out the competitive alternatives.
Attached (Tab I) are three visuals which tell the story.2
Case I is the no Siberian gas case. The key here is that Dutch gas would have to be increased over the short term, but over the longer [Page 763] term, Norwegian and North African producers can meet demand. This is the President’s original alternative energy case.
Case II assumes that the first strand of the pipeline is completed but that there are no more gas contracts with the Soviet Union. As you can see, there is still room for alternatives, particularly Norwegian gas. Sufficient market is preserved to allow development of the giant Troll field.
Case III shows how big a chunk the Soviets can take out of the market with only one strand, if some limitation is not imposed on contracts. The results are dismaying. They can effectively block out all large scale alternatives. Only the Sleipner field in Norway is assumed to be developed. Troll is knocked out.
Bottom line: The Foreign Ministers communique is presently inadequate because it does not contain a statement to limit gas purchases over the longer term. If we do not get this commitment, then economic momentum will be on the side of the Soviets. They have all the advantages. We must even the scales. I think that the President must be made aware of this analytical evidence and the consequences of not pressing the Europeans now to limit their gas purchases over the longer term.