ABCs of the Soviet pipeline
With the Aug. 31 loading in Glasgow Harbor of the first six British turbines bound for the Siberian gas pipeline - and the simultaneous arrival in the Soviet port of Riga of the first three French compressors - the United States-European fight over the pipeline has escalated from rhetoric to action. It's an appropriate time, perhaps, to stand back from the polemics and review the facts.
To begin with, ''the'' much-discussed 3,500-mile pipeline that the Soviet Union is building with Western equipment is really only one of six under construction from western Siberia westward in the 1981-85 Soviet five-year plan. The Soviet Union - the world's second-largest producer of natural gas (29 percent of total output in 1981) and the world's leading exporter (31 percent of total trade) - is building the other five lines with Soviet and Eastern European equipment.
The Western-supplied pipeline will be the most sophisticated of the lot. Its 120 line turbines will be 25 megawatt behemoths of a size the Soviet Union hopes to manufacture serially next year. So far, it has turned out only two prototypes. In the West this size turbine is an effective American monopoly, since General Electric developed it first, and foreign companies chose to license the technology rather than engineer it themselves.
There is nothing in this technology that is inherently beyond the Soviet Union's own engineering and metallurgy capabilities. It is more cost-effective and lasts longer than its Soviet equivalent, but Soviet compressors are quite capable of moving gas, and of moving it at projected rates.
The reasons for the Soviets' drawing on foreign technology for this pipeline are thus seen as the available financing in the West and the greater reliability of the Western technology. There was an advantage in turning to the West, but no compulsion, it is generally believed here.
Economic and diplomatic specialists here expect that now that the pipeline has become a matter of honor in the Soviet-American duel, the Russians will make it a point of finishing the pipeline as planned.
They also anticipate that the Soviet Union will have no difficulty in meeting its expected Western European gas contracts of about 30 billion cubic meters a year by the mid-'80s. This seems assured by the current slack in existing Soviet-European pipelines, the normal redundancy included in the new pipeline plans, a soft Western European gas market that inclines buyers here to postpone their peak purchases - and, if necessary, the capacity to divert gas from the Soviet to the Italian housewife.
The line to be built with Western equipment will cost the Soviet Union an estimated $5 billion in hard currency, according to specialists (and not the $10 -to-$15 billion that keeps getting bandied about). This includes a $940 million purchase of 22 compressor stations through the general contractors of the West German Mannesmann and the French Creusot-Loire; the $560 million purchase of 19 compressor stations from the Italian Nuovo Pignone; and purchase of between 700, 000 and 1 million tons of pipe per year from Mannesmann and other companies. The compressors are to be built by American subsidies or licensees in Europe.
All these contracts were signed prior to last December's imposition of martial law in Poland. They were thus signed prior to President Reagan's initial ban on the export of American energy technology to the Soviet Union, and his extension of this ban last June to American licensees and subsidiaries abroad.
Under these contracts the major suppliers are: West Germany's AEG-Kanies (five 10-megawatt turbines for the head stations and 42 25-mw turbines for the line stations); West Germany's Demag (five turbines for the head station); Britain's John Brown Engineering (21 25-mw turbines); Creusot-Loire (42 gasline compressors); Dresser-France (21 gasline compressors); France's Thomson/CSF (computer controls); France's Alsthom-Atlantique (40 25-mw rotor sets); and Nuovo Pignone (57 turbines and 57 compressors).
The interest rates the Soviet Union is paying for these credits run from France's subsidized 7.8 percent to West Germany's unsubsidized 9.6 percent. (The latter is nominally also 7.8 percent, but as a public gesture to Marxist economists, the real rate is achieved by above-market prices for compressors.)
The Italian and British rates have not been made public, but the subsidized British rates are generally assumed to match the French. All the rates thus fall below the London Interbank offer rate.
The Western European governments have been unanimous in rejecting Reagan's application of US law outside US territory. The British and French governments have ordered companies within their jurisdiction to defy the American ban and fulfill pipeline contracts signed prior to the American ban. The Italian and West German governments are urging firms on their soil to do the same, though more informally.
It is under this governmental authority that John Brown Engineering has dispatched its first six turbines - and Dresser-France its first three compressors - for the Siberian pipeline. Soviet ships are also currently waiting to be loaded with the first Nuovo Pignone equipment in Italy. AEG-Kanis, whose parent company is just being bailed out of bankruptcy this week, is delaying its shipments to see what happens to the other firms.