Soviets Begin Construction of Siberian Gas Pipeline Summary

  • Last updated on November 10, 2022

The Soviet Union planned to open vast Siberian natural gas reserves to the international market through the construction of a massive gas pipeline. The project raised environmental and political concerns, but economic prospects outweighed other considerations.

Summary of Event

On November 20, 1981, two days before a summit meeting between Leonid Brezhnev, the leader of the Soviet Union, and Helmut Kohl, the chancellor of West Germany, the Soviet government signed a contract with the West German Energy firm Ruhrgas to bring natural gas from the vast resources in Siberia to Western Europe. Ruhrgas officials announced that the firm would participate in a multinational consortium to help build a 3,600-mile pipeline from the Urengoy-Yamal gas fields, the largest in the world, near Yamburg in northeastern Siberia. Six other West European nations shared in the enterprise. Natural gas;Siberian pipeline Siberian natural gas pipeline Energy;natural gas [kw]Soviets Begin Construction of Siberian Gas Pipeline (Nov. 20, 1981) [kw]Construction of Siberian Gas Pipeline, Soviets Begin (Nov. 20, 1981) [kw]Siberian Gas Pipeline, Soviets Begin Construction of (Nov. 20, 1981) [kw]Gas Pipeline, Soviets Begin Construction of Siberian (Nov. 20, 1981) [kw]Pipeline, Soviets Begin Construction of Siberian Gas (Nov. 20, 1981) Natural gas;Siberian pipeline Siberian natural gas pipeline Energy;natural gas [g]Central Asia;Nov. 20, 1981: Soviets Begin Construction of Siberian Gas Pipeline[04710] [g]Soviet Union;Nov. 20, 1981: Soviets Begin Construction of Siberian Gas Pipeline[04710] [g]Russia;Nov. 20, 1981: Soviets Begin Construction of Siberian Gas Pipeline[04710] [c]Energy;Nov. 20, 1981: Soviets Begin Construction of Siberian Gas Pipeline[04710] [c]Trade and commerce;Nov. 20, 1981: Soviets Begin Construction of Siberian Gas Pipeline[04710] Ivanov, Yuri Liesen, Klaus Rashish, Meyer Brezhnev, Leonid [p]Brezhnev, Leonid;Siberian gas pipeline Kohl, Helmut Christians, F. William

The project had three parts: the importation to the Soviet Union of high-technology machinery from the advanced countries, the actual construction of the pipeline, and the financing of the construction. To finance the project, the Soviets borrowed funds from European and Japanese banks to buy pipe, maintenance equipment, cold-weather equipment, and services. Repayment was to be through the export of the gas at prevailing market prices after the pipeline was completed. Moscow guaranteed an annual export of 1.5 trillion cubic feet of natural gas at that time.

The contract and the construction of the pipeline was a response to the worldwide energy crisis that occurred in the 1970’s. A number of European and Japanese firms were negotiating with Moscow to obtain rights to exploit the rich, largely untapped gas fields and oil and coal reserves in Siberia. Such exploitation was controversial because of the pristine nature of the Siberian environment and the downturn of Soviet-Western relations in the early 1980’s. After the détente of the 1970’s, a new phase of the Cold War Cold War began. Although in many ways East-West relations were irrelevant to the exploitation of the Siberian gas fields and the international negotiations associated with it, the political atmosphere could not be completely separated from the impact of this event. In fact, at the time, the political controversy completely overshadowed any environmental concerns. While the fledgling environmental movement in the Soviet Union a collection of writers, academicians, and private individuals was able to stop a number of Siberian projects, energy needs made exploitation of the gas fields inevitable.

The proposed pipeline was four times the length of the recently completed Trans-Alaska Pipeline System. Trans-Alaska Pipeline System[Transalaska Pipeline System] The Yamal Peninsula on the Arctic Ocean, near the northern Russian port of Archangel, was a barren stretch of tundra where winter temperatures reached minus 60 degrees Fahrenheit. The Siberian ground was nearly impenetrable in winter and was a quagmire in summer. More than twenty-five trillion cubic meters of natural gas, however, lay in the fields beneath the surface. The technical challenge of the exploitation was unprecedented for the Soviets, and the contract with Ruhrgas and the other European firms was the largest ever between the Soviets and the West.

European consumption of natural gas had risen since the 1960’s, when Dutch fields began to be heavily exploited. By the late 1970’s, these fields were past their peak, and because the use of oil was the main cause of the energy crisis of that decade, the Europeans looked for new gas sources. The Siberian fields were the most logical alternative from an economic and geographic point of view. The Soviet Union contains about one-third of all of the natural gas in the world. In fact, tapping of Siberian gas had been going on for some time before the contract was announced, and the Soviets had already built several pipelines from Siberia to European Russia. Moreover, West Europeans had been using Soviet gas for domestic purposes since 1968, when Austria began importing it from Siberia. Germany, Italy, and France followed suit during the mid-1970’s.

In 1976, the Soviets began the great Baikal-Amur Magistral railway Baikal-Amur Railway[Baikal Amur Railway] (BAM) project, connecting Lake Baikal in Eastern Siberia with Irkutsk on the Siberian Pacific Coast. This northern line paralleled the renowned Trans-Siberian Railroad built under the last czar, Nicholas II, at the beginning of the twentieth century, which linked European Russia with the Pacific port of Vladivostok through southern Siberia. The 1,200-mile BAM project, built with Japanese financial help, was exceptionally controversial. Its purpose was to bring the wealth of Siberia to both European and Pacific industrial centers. Controversy centered on the destruction of the Siberian landscape and the exploitation of resources. Furthermore, both Soviet and Western critics objected to the involvement of foreign, particularly Japanese, funds for the project.

The BAM was designed to deliver Siberian coal and metals. Other Siberian resources were seen as sources for necessities both for domestic Soviet use and for export commodities to the fuel-hungry industrialized countries of the world. Siberia contained one-half of the Soviets’ oil reserves, 38 percent of its timber and coal, and 35 percent of its natural gas. Because natural gas was relatively easy to obtain, after the energy crisis of the mid-1970’s the industrial countries of the world were particularly interested in this resource.

Soviet construction of Siberian pipelines to obtain natural gas was well under way. Cities were built to accommodate the needs of the construction workers on the Siberian tundra in the late 1970’s. The task of extracting the Soviet natural gas, however, was too large and too difficult a job for Moscow to handle itself, and the Soviets sought their potential European customers as eagerly as the latter sought them.

Under the terms of the contract, the Europeans would provide easy capital for the building of the pipeline at the rate of $7 billion per year. West Germany, the Soviets’ biggest natural gas customer, planned to buy one-third of the gas delivered. Other European customers included France, Italy, Belgium, the Netherlands, Austria, and Switzerland. The associated loans were to be granted to the Soviet Union for $15 billion at 7.75 percent interest, to be paid back over the course of ten years following the completion of the pipeline. The prevailing interest rate was between 11 and 14 percent, and some Western banks objected to the favorable terms granted to Moscow.

Moscow also carried out negotiations with a number of countries other than Germany: France, Italy, Belgium, the Netherlands, Spain, Austria, England, Japan, and the United States. Superficially, the Soviet natural gas deal appeared to satisfy all of the participants. The Yamal pipeline was a boon to the slumping European economy. Western steel and construction plants could reduce inventories and use idle plants. Gas distributors could diversify their sources. Europe could lessen its dependence on Middle Eastern oil. The Soviet share of Western European gas was projected to increase from 6 to 25 percent.

Significance

Although a number of environmentalists in the Soviet Union and abroad expressed concern about the negative impact of the pipeline, its benefits for Soviet and European economies far outweighed its drawbacks. Much more criticism over the pipeline was raised in the political arena. The pipeline contract occurred at the time when the détente of the 1970’s had waned and had been replaced by a new, more confrontational wave of the Cold War. This was spurred on by the new administration of Ronald Reagan, Reagan, Ronald [p]Reagan, Ronald;U.S.-Soviet relations[U.S. Soviet relations] whose anticommunist conservative ideology fueled the foreign policy of his first administration. The Soviet invasion of Afghanistan in 1979, even before the election of Reagan, and the imposition of martial law in Poland, perceived to have been inspired by Moscow just a few weeks before the contract was signed, also contributed to the new hostility.

The pipeline caused tension among the North Atlantic Treaty Organization North Atlantic Treaty Organization (NATO) allies. This confrontation was more pronounced in the United States than it was in other Western countries, whose officials considered the pipeline an apolitical economic venture and of mutual benefit to all partners. Furthermore, construction of the pipeline provided thousands of jobs in Western European factories, where machinery was built for the project.

Reagan objected to the pipeline contract because he believed that it increased Western European dependence on Soviet resources and made them vulnerable to pressure from Moscow. The contract also eased the Soviets’ energy problem and enabled them to devote more resources to the military. The president even made the statement that dependence on Soviet energy could lead to the “Finlandization” of Europe that is, it could lead to a state of almost complete political dependence on Moscow.

Although the actual amount of natural gas exported to Germany was to be only 7 percent of the total German need, American analysts maintained that, in fact, this was a key proportion because Germany could not adapt quickly enough to alternative energy sources if Moscow shut off supplies. Washington tried to make more U.S. fuel resources available to Western Europe as an alternative to Soviet natural gas, but the United States could not match the advantage of the Siberian export.

Conservative critics also argued that, because of the easy credit, the West would be subsidizing’s Moscow’s inefficient economy. Even some European bankers who were not opposed to their countries’ exploitation of Siberian resources wanted the Soviets to pay prevailing market prices for their loans and equipment. In the transaction, the high technology necessary for the drilling of oil and gas in the Siberian tundra would be transferred from the West to Moscow.

The conservative American magazine National Review argued that the contract would relieve the Soviets of the need to divert military resources for use on the domestic front a scenario believed to be disadvantageous to the West. National Review called for the revocation of the export licenses of U.S. companies sending equipment for use in the pipeline construction. The government adopted this policy, relenting in some cases when guarantees were provided that equipment would not be used on the pipeline. Some observers in the West, however, noted that fuel produced anywhere was beneficial to everyone. Confrontation between East and West would be more likely, they argued, over energy needs forcing risky ventures than in an unlikely conspiracy of blackmail. Count Otto von Lambsdorff, the German foreign minister, countered U.S. objections, stating that he believed the Soviets, from whom the Germans had already been receiving gas for a decade, were more reliable than the Middle East countries on whose energy Germany was then dependent.

For the Soviets, the natural gas would provide an energy alternative to the state’s falling oil reserves and production, and in the future the gas would be a source of currency for the Soviet Union. The Soviets also saw the political aspect of the pipeline, calling it an energy bridge to Western Europe.

Ultimately, none of the dire political or economic consequences occurred. The easing of the energy crisis in the 1980’s and the demise of the Soviet Union at the end of the decade made those issues moot. The pipeline, however, was completed, and the environmental impact remained. Although environmental concerns of the pipeline debate had been virtually ignored in 1981, it was finally in the area of the environment that the exploitation of the Siberian wilderness drew attention. In the summer and fall of 1994, oil pipelines near Archangel burst in almost two dozen places, causing one of the largest oil seepages in history. Natural gas;Siberian pipeline Siberian natural gas pipeline Energy;natural gas

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Bothe, Michael, Thomas Kurzidem, and Christian Schmidt, eds. Amazonia and Siberia: Legal Aspects of the Preservation of the Environment and Development in the Last Open Spaces. London: Graham & Trotman, 1993. Studies the effects of development of pristine wilderness areas. Compares Brazil’s rain forest to Siberia. A scholarly study.
  • citation-type="booksimple"

    xlink:type="simple">Goldman, Marshall I. The Spoils of Progress: Environmental Pollution in the Soviet Union. Cambridge, Mass.: MIT Press, 1972. A classic American work dealing with environmental issues in the Soviet Union. Written before the pipeline controversy.
  • citation-type="booksimple"

    xlink:type="simple">Komarov, Boris. The Destruction of Nature in the Soviet Union. White Plains, N.Y.: M. E. Sharpe, 1980. An English translation of an important document on environmental issues in Russia and the Soviet Union. Originally published in the underground samizdat press, it helped formulate the dissident environmental movement. For general audiences.
  • citation-type="booksimple"

    xlink:type="simple">Pelloso, Andrew J. Saving the Blue Heart of Siberia: The Environmental Movement in Russia and Lake Baikal. Bloomington: Indiana University, School of Public and Environmental Affairs, 1993. Studies the environmental movement in Russia, particularly in Siberia, and discusses both official and dissident conservation organizations and efforts. A specialized work.
  • citation-type="booksimple"

    xlink:type="simple">U.S. Congress. Senate. Committee on Banking, Housing, and Urban Affairs. Proposed Trans-Siberian Natural Gas Pipeline: Hearing Before the Committee on Banking, Housing, and Urban Affairs, United States Senate. Washington, D.C.: U.S. Government Printing Office, 1982. The Senate hearings on the pipeline held in November, 1981. Gives details of the contract and the controversies it provoked.
  • citation-type="booksimple"

    xlink:type="simple">Volgyes, Ivan, ed. Environmental Deterioration in the Soviet Union and Eastern Europe. New York: Praeger, 1974. A collection of scholarly essays on pollution problems. Written before the pipeline controversy, it provides valuable background material.

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