Russia: Fill Up with Commilube

An important part of Soviet foreign policy these days floats to the outside world on a thick black tide of oozing oil. Russian oil salesmen with barter deals in their briefcases stride the sidewalks of Beirut, Colombo and Tokyo. Earnest technicians from Moscow probe the earth in India, Ghana, Cuba and Pakistan to help the locals find petroleum of their own. Fat tankers chug out of the Black Sea toward a score of nations already signed up at bargain-basement prices for Commilube, the fuel of friendship.

Ten years ago, all this was impossible, for Russia produced barely enough oil for itself. But now, with expansion of the old Baku fields and opening of the vast new deposits east of the Volga, Soviet output has soared to an annual 148 million tons, next only to the U.S. (368 million tons) and Venezuela (149 million tons). From this gushing wealth comes the surplus pumped into export channels by Soyuzneftexport, Russia's oil marketing agency, which hopes to break the world monopoly of the eight Western "majors" with alluring sales stunts.

Coffee, Cocoa & Rubber. With no royalties to pay and no leases, worldwide distribution networks, dividends or profit statements to worry about, Soyuzneftexport was able to move into the Swedish market with 1,500,000 tons (one-seventh of Sweden's imports) in 1959 simply by knocking 22% off the price that Western suppliers were charging. In Brazil, there was hardly a discount at all in Russia's big contract last year; there the attraction was that Soyuzneftexport accepted Brazilian coffee and cocoa beans in a straight barter deal, whereas the "majors" demanded hard currencies.

In the same way Fidel Castro, who pumps Soviet oil through confiscated U.S.-owned refineries, pays in both money and sugar for the 2,500,000 tons of crude he is scheduled to get from Russia yearly. To get into the important Italian market, Moscow signed up with Oil King Enrico Mattei's mammoth state-owned ENI oil monopoly to deliver 12 million tons of oil in 1961-64 in exchange for 240,000 tons of steel pipeline tubing and 50,000 tons of synthetic rubber. The cost works out at about half the normal price for Persian Gulf crude.

Furious Motorists. Moscow's attractive offers find ready listeners in almost every underdeveloped country, for many Asian and African governments bridle at the "rigged" prices of the Western oil companies. Making its first major deal with Russia, Pakistan fortnight ago signed up for a $30 million Soviet exploration scheme, which will bring in Russian teams to look for oil in Pakistan itself. Reason: most U.S. and British oil firms, after years of vain exploration there, have given up the search, leading some Pakistanis to suspect that their failure was intentional to keep prices high.

In Ceylon, motorists complain incessantly of the high fuel prices of Western firms; as a result, an official Ceylonese delegation returned from Moscow last week with a deal for cheaper Russian oil.

Western firms have had to cut their own prices to meet the Soviet competition, regardless of the shrieks of anger from the Middle East Arab producing lands, which suffer losses of revenue every time the price goes down. Arab opinion, in fact, is one reason why Russia selects only certain key targets for its cutthroat dumping, elsewhere keeps its price only slightly lower than the going rate.