Soviets step up oil sales to West Europe to keep profits high
Rotterdam — The Soviet Union is stepping up the flow of its oil products into Western Europe to try to keep its earnings high as oil prices fall. Trading sources in Rotterdam estimate that Moscow currently is selling about 1 million tons of products - mainly gas oil from which diesel fuel is obtained - each month in Europe, the equivalent of 7.5 million barrels, or 250,000 barrels a day.
That is more than the entire daily output of such OPEC producers as Ecuador and Gabon and not much below Qatar. It is worth about $240 million a month.
''In the first quarter of the year,'' according to a well-placed Rotterdam trader, ''the Soviets usually drop their export volume of gas oil, apparently because its own internal demand is very high.
''But in the first quarter of last year and now again in the same period this year, Moscow has kept its exports high. We assume it's to earn as much foreign exchange as possible.''
Much of the Soviet oil and oil products coming through the enormous port of Rotterdam comes from the Baltic port of Ventspils on the coast of Latvia, and from the southern city of Odessa on the Black Sea. Traders say it is of good quality and is used both as a source of energy and as a commodity to be traded for profit.
With oil prices falling rapidly since Britain and Nigeria announced substantial oil price reductions, Moscow must plan its marketing strategies tightly.
The Soviets, among the first to see lower oil prices coming, began dropping their crude oil prices soon after OPEC nations failed to agree on production quotas in Geneva Jan. 23 and 24.
The Soviets sell their oil products on the spot market and link their prices to those reported at the end of each day's trading by the McGraw-Hill publication, Platt's European Marketscan, compiled in New York. Moscow looks at the Platt's report of the price range for cargoes, takes the midpoint on any given day, and calls that its own selling price.
In the current period of falling gas oil prices, that means traders can be confronted with selling at a loss today what they bought at so-called ''Platt's-related'' prices the day before. A number of traders have stopped handling the gas oil as a result, forcing Moscow to organize sales through their own directly controlled organizations in Europe.
When prices were rising, the Soviets often ordered their tankers to sit at anchor outside Rotterdam for a few days, until prices had risen just a bit more. Now Moscow has a dilemma. With prices falling, it is tempted to sell more and more gas oil to keep its revenues high. On the other hand, the more it sells, the more it helps force prices down still further.
The Soviet Union is the world's largest producer of oil and the second biggest exporter after Saudi Arabia. It has long used its oil, along with its immense supplies of gold, diamonds, and other precious metals, to generate foreign currency to buy grain and high technology from the West.
In the late 1970s the Central Intelligence Agency in Washington predicted that Soviet oil production would peak by 1985 and that Moscow would begin buying oil in the open market.
Now it is generally accepted that Soviet oil growth will continue, at a slower pace, in west Siberian fields in the Tyumen-Surgut areas. The Soviets are exploring and drilling even further north near the Arctic Circle and making efforts to conserve oil in factories and plants.