European Alternatives to Importing Soviet Natural Gas

ID-83-31: Published: May 16, 1983. Publicly Released: May 25, 1983.

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In response to a congressional request, GAO reviewed alternatives which Western Europe could use in lieu of purchasing natural gas from the Soviet Union.

Assuming moderate growth in consumption, GAO could find no simple alternative which could easily eliminate the European need for the natural gas which the Soviet Union is expected to deliver beginning in 1984. Problems associated with security of supply, technical feasibility, and cost eliminated the possible alternatives, which were considered less desirable by the Europeans than accepting the risks associated with the Soviet pipeline. However, alternatives might be available to offset the need for future European imports of Soviet gas. The price of Soviet gas seems to be very competitive with that of available alternatives. The Europeans feel that the Soviet Union's satisfactory record as a gas supplier will continue. Furthermore, the Europeans believe that they should import the Soviet gas now and conserve indigenous gas reserves for the future. However, U.S. officials have pointed out that, although the Soviet Union's stated gas price seems lower than that of other sources, it is exclusive of the extra costs which the Europeans will incur in taking steps to reduce their vulnerability to possible Soviet supply disruptions. The Europeans have started to identify ways to improve their contingency planning and reduce the impact of any disruptions. In addition, several nations have agreed to forego any further contracts for Soviet gas pending completion of a multinational study.

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