PROSPECTS FOR SOVIET OIL PRODUCTION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP08S01350R000602080002-0
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 13
• Document Creation Date: December 22, 2016
• Document Release Date: March 26, 2012
• Sequence Number: 2
• Publication Date: April 1, 1977
• Content Type: REPORT

Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
Prospects for Soviet
Production
ER 77-10270
April 1977
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
This publication Is prepared for the use of U.S. Government
officials. The format, coverage and contents of the publication are
designed to meet the specific requirements of those users. U.S.
Government officials may obtain additional copies of this document
directly or through liaison channels from the Central Intelligence
Agency.
Non-U.S. Government users may obtain this along with similar
CIA publications on a subscription basis by addressing inquiries to:
Document Expediting (DOCEX) Project
Exchange and Gift Division
Library of Congress
Washington, D.C. 20540
Non-U.S. Government users not interested in the DOCEX
Project subscription service may purchase reproductions of specific
publications on an individual basis from:
Photoduplication Service
Library of Congress
Washington, D.C. 20540
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
0
FOREWORD
Our analysis of the Soviet oil industry results primarily from a
detailed review of Soviet publications and a comparative study of
these results with information freely available from all other sources
on the economics of the world oil industry. These include studies of
the technical aspects of oil production, reserves and demand, and
their relationship to general developments in the Soviet economy.
STAT
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
Prospects for
Soviet Oil Production
Apri/ 1977
The Problem
1. Unlike the United States, which has long restricted production for reasons
of conservation and profit, the USSR favors a forced draft approach. Short-term
production goals are considered floors, not ceilings, and rewards are given for
exceeding them with little regard to productivity over the longer term. Under these
conditions, Soviet production has expanded much more rapidly in the last 20 years
than that of the United States.
Soviet and US Crude Oil Production
MILLION B/D
12 ?
10
6
4
FIGURE 1
'Including a small amount of natural gas liquids (20,000 b/d in 1960 to some 300,000 b/d in the 1900s).
2Excluding natural gas liquids (0.8 million b/d in 1956, 1.6 million b/d in 1976, and an estimated 1.2 million blel in 1985).
II I
1111111111111i 111111
1956 60 65 70
572041 3.77
75 76
80 85
projected -1
2. The Soviet stakhanovite approach has led to (a) an emphasis on
development drilling over exploration, with the result that new discoveries are failing
to keep pace with output growth; (b) overproduction of existing wells and fields
through rapid water injection and other methods, with the result that less of the
oil in place is ultimately recovered; and (c) new capacity requirements that soon
will run far beyond the Soviet oil industry's capability.
1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
USSR: Production of Crude Oil,'
by Region
Million Barrels per Day
1970
1980
1975 Goal
CIA Estimates
of Peak Output
High
Low
Total
7.06
9.82 12.80
11.8
11.0
Western region and Urals
5.80
6.00 5.71
5.6
4.9
Urals-Volga
4.17
4.50 NA
4.1
3.5
Tartar
2.01
2.07
1.5
Bashkir
0.81
0.81
2.85
2.9
0.6
Kuybyshev
0.70
0.69
0.5
Perm'
0.32
0.45 0.62
0.6
0.5
Orenburg
0.15
0.24
Lower Volga
0.14
0.14
0.6
0.4
Udmurt
0.01
0.07
Saratov
0.03
0.03
Belorussia
0.08
0.16
1.74
0.2
Caucasus
0.69
0.47
0.3
Azerbaydzhan
0.41
0.35
0.4
1.0
Ukraine
0.27
0.23
0.2
Other
0.03
0.07
Negl
Komi and Arkhangersk
0.15
0.22 0.50
0.4
0.4
Eastern region
1.26
3.82 7.09
6.2
6.1
West Siberia
0.63
2.96 6.16
5.2
5.2
Central Asia
0.58
0.82 NA
0.9
0.8
Mangyshlak
0.21
0.40 0.54
Emba
0.05
0.08
Turkmen
0.29
0.31 0.28
Other
0.03
0.03
Sakhalin
0.05
0.04 o.11}
0.1
0.1
Other
Negl
Negl
1. Including gas condensate.
3. As the ratio of reserves to output has fallen, the bulk of Soviet output
has come increasingly from fields approaching exhaustion. The result has been an
acceleration of drilling requirements, which will level off or decline only when-and
if--very large new additions are made to the producing reserve base. The Soviets
speak of this problem in terms of the depletion offset--the amount of new capacity
required to offset depletion of old capacity in each 5-year plan period.
2
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
4. During the 1961-65 plan period, only 1.3 million b/d (67 million tons
per year) of capacity had to be replaced. In 1971-75, 5.1 million b/d (254 million
tons per year) of replacement capacity was required because of rapid depletion.
Viewed in another way, about 72 percent of 1970 capacity had to be replaced
by the end of 1975. The target for the 1976-80 plan is 10.6-10.8 million b/d
(530-540 million tons per year) of new capacity; 7.8 million b/d?equal to about
80 percent of the capacity on line in 1975?is to offset depletion. If depletion
is more rapid than the Soviets expect?and, based on their past record, it may
well be--considerably more of the 1975 capacity will have to be replaced.
Reserves
5. There is uncertainty about the size of the USSR's reserves, because of
definitional problems as well as Soviet secrecy. Our best estimate is that Soviet
proved reserves are 30-35 billion barrels, roughly comparable,--with those of the
United States. There is no doubt that Russian proved reserves have been falling
in recent years, and there is very little chance that enough new oil will be discovered
during the next few years to appreciably improve the reserves-to-production ratio.
Indeed, despite major efforts it will probably deteriorate further.
6. Although the USSR has abundant potential reserves in Arctic, East
Siberian, and offshore areas, development of such reserves is at least a decade away.
Thus, during the next 8-10 years, almost all Soviet output will have to come from
existing fields and from new fields in existing producing regions.
The Outlook for Output from Existing Production Regions
7. From World War II through 1970, the growth in Soviet oil output came
either from the Caspian fields or, after the mid-1950s, from large fields in the
Urals-Volga region. Since 1970, nearly all output growth has come from West
Siberia, primarily from the giant Samotlor field. Current Soviet plans call for holding
aggregate output nearly constant west of the Urals, while doubling production in
West Siberia. Because of a variety of problems, we believe that output west of
the Urals will decline, while that of West Siberia will fall far short of doubling.
8. Production from fields in the western part of the country is coming
increasingly from greater depths and from in-fill drilling which allows more intensive
exploitation of already tapped reservoirs. All growth in output through 1980 will
3
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
USSR: Additions to Oil Producing Capacity FIGURE 2
MILLION BARRELS OF OIL PER DAY
4.0
3.2
2.2
1.9
1.8
1.3
7.8
2.7
5.1
10.8
3.0
7.8
1961-65 1966-70
572463 3.77
1971-75 1976-80 plan
4
GROWTH
DEPLETION OFFSET
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
come from West Siberia, where the inhospitable climate, difficult terrain, and vast
distances greatly complicate operations. In 1976, approximately 60 percent of West
Siberian output and roughly one-fifth of national production came from the giant
Samotlor field on the middle Obt.Soviet sources indicate that this field will reach
peak production in the next year or so and will hold peak levels for no more
than 4 years. It is already experiencing rapid water incursion. The water cut reached
47 percent in 1975, and increasing quantities of fluid (water plus oil) must be
lifted to recover any given quantity of oil. Although new fields are being discovered
in West Siberia, no giant fields comparable to Samotlor have been found.
The Drilling Problem
9. The USSR does not have the drilling capability to pursue adequate
development and exploration programs simultaneously. The Soviets have some 1,600
active rigs, about the same as the United States. In terms of meters drilled, however,
the Soviet effort amounts to only about one-fifth that of the United States. In
1971-75, the Soviet Ministry of the Oil Industry drilled a total of about 52 million
meters. In 1-975 alone, the United States drilled 53 million meters with about
1,700 rigs. We estimate that, even with a maximum effort, the Soviets will not
be able to come close to drilling by 1980 the 75 million meters called for by
their current 5-year plan.
10. The poor Soviet drilling record is in part the result of the fact that 80
percent of their drilling is done with turbodtilling rigs that are highly inefficient
for deep drilling or for use in soft formations.
The Fluid Lifting Problem
11. In the 1950s, when wells in the Urals-Volga region began to stop flowing
naturally, the Soviets were forced to begin pumping. At that time, ;ho'Wever,
pumping equipment was in short supply. To forestall a slowdown in the growth
of oil output, the Soviets adopted the practice of massive water injection within
and along the edges of each field. If enough water is forced into a formation,
it raises reservoir pressures so that wells once again flow without pumping. The
Soviet system differs from the standard Western secondary recovery technique of
5
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
waterflooding in that the object is to increase rather than just to maintain pressure.
Much more water is injected than oil produced.
12. Although massive water injection can boost production for a time,
eventually the water will find a channel of least resistance and break through to
the oil-producing well, a process that leaves behind much oil in the less permeable
portions of the formation. When the wells begin to show water in large quantities,
the natural flow will usually stop and the wells must be pumped. In this case,
however, conventional pumping equipment cannot be used; special high-capacity
submersible pumps are needed because much greater volumes of fluid (water plus
oil) must be lifted.
13. Such pumps began to be used extensively in the USSR in the late 1960s.
In 1973, these pumps provided 2.5 million b/d of the Soviet total of 8.6 million
USSR: Fluid Lifting Requirementsl
MILLION METRIC TONS
3,500 ?
3,000
2,500
2,000
1,500
1,000
500
WATER
FIGURE 3
B3
OIL
3,200
1,828
640
1975 1976 1977 1978 1979 1980
plan
1Crude oil, condensate, and water.
2Water which constituted 50 percent of liftings in 1975 will rise to 80 percent in 1980.
3Water which constituted 50 percent of liftinps in 1975 will rise to 65 percent in 1980.
6
572442 3-77
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
b/d. The Soviets had some 12,000 of these pumps in 1975, and their need for
such equipment is increasing rapidly as water encroachment becomes a problem
in more and more fields. As an alternative to high-capacity submersible pumps, at
least in some fields the Soviets are considering wider use of gas-lift equipment.
The Longer Term Outlook
14. The initial falloff, when it comes, will almost certainly be sharp; thereafter
output may continue to fall sharply, level off, or perhaps even increase as new
fields are brought into production in frontier areas. There is no question that new
fields?some quite large?will eventually be discovered. Given the rapid rate of
depletion of existing fields and the technical difficulties associated with exploration
and exploitation in frontier areas, however, we doubt that the new discoveries
will come on stream rapidly enough to do more than temporarily arrest the rapid
slide of Soviet output.
15. As we stated earlier, only small amounts of Soviet production during
the next decade will come from outside existing producing areas. In the early 1980s
new offshore Caspian reserves may make some small contribution to output, as
will new discoveries on the Mangyshlak Peninsula on the east shore of the Caspian
and in the Pechora region west of the Urals. The Soviets also hope to find oil
in deep structures in the northern part of West Siberia's Tyumen' Oblast. Limited
exploration in this region, however, has so far yielded mainly natural gas and
condensate.
16. Geological conditions favorable to large future discoveries exist over much
of the Arctic offshore regions (especially in the Barents and Kara Seas), in the
East Siberian lowlands, in deep structures in the Caspian area, and perhaps off
Kamchatka and Sakhalin in the Sea of Okhotsk. Production from most of these
areas, however, is at least a decade away. In the offshore Arctic, environmental
7
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
conditions are much more severe than in the North Sea; technology for exploration
and production in this region does not yet exist, even in the West. Although
conditions are more favorable near Sakhalin and in the East Siberian lowlands,
production and transportation difficulties make it doubtful that significant
production could take place until 10 years after a major discovery--which has yet
to be made. The lead time would be shorter for production from deep wells in
the Caspian region; the USSR, however, lacks the equipment and experience
necessary to undertake a deep drilling program without extensive Western help.
Economic Implications
17. When oil production stops growing, and perhaps even before,
repercussions will be felt on the domestic economy of the USSR and on its
international economic relations. The extent of such repercussions can be only
guessed at without further research. At a minimum, the USSR will find it difficult to
continue to simultaneously meet its own requirements and those of Eastern Europe
while exporting to non-Communist countries on the present scale. More
pessimistically, the USSR will itself become an oil importer.
18. These are important considerations for the Soviet Union. It now supplies
three-fourths of the oil required by the Communist countries of Eastern Europe.
For many years the export of oil to non-Communist countries, mainly in Western
Europe, has been the USSR's largest single source of hard currency.
19. In the long run, considerable substitution for oil will be possible
domestically and perhaps in export markets as well. The USSR has large reserves
of coal and natural gas. Development of these reserves will take time and large
capital investments. The cost of Soviet energy almost certainly will increase. The
largest known gas reserves are in permafrost zones of Siberia where production
and transportation will be difficult. Deposits of coal scheduled for exploitation
in the next decade are also east of the Urals; considerable investment in transport
facilities and on-site thermal powerplants and other coal-using industrial facilities
will be required.
20. Electric power from hydroelectric and nuclear powerplants will make only
a small contribution for many years to come. Although there are vast hydroelectric
resources in Eastern regions of the USSR, the technical problems of long-distance
8
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08501350R000602080002-0
transmission must be solved before such resources can be fully exploited. The
Soviets consider nuclear power to be the best source of new electric power in
European areas. A program for constructing nuclear powerplants is under way, but
it will be quite some time before these plants can have an important effect on
the power base. In 1975 nuclear power represented 2 percent of total power
production, and it will reach only about 6 percent in 1980.
Summary
Soviet oil production will soon peak, possibly as early as next year and
certainly not later than the early 1980s. The maximum level of output reached is
likely to be between 11 and 12 million barrels per day (b/d)?up from the 1976 level
of 10.4 million b/d. Maximum levels are not likely to be maintained for long,
however.
The Soviets have two basic problems: one of reserves and one of production.
Barring an extremely unlikely discovery of a massive new field close to an existing
field, new deposits will not be found rapidly enough to maintain acceptable
reserves-to-production ratios, and those fields that account for the bulk of Soviet
production are experiencing severe water encroachment. As a result, increasingly
large quantities of water must be lifted for each barrel of oil produced, and
high-capacity submersible pumps will be required if production declines are to
be staved off even temporarily.
During the next decade, the USSR may well find itself not only unable to
supply oil to Eastern Europe and the West on the present scale, but also having
to compete for OPEC oil for its own use. This would be a marked change from
the current situation, in which exports of oil to the West annually provide 40
percent of total Soviet hard currency earnings. The USSR has large reserves of
coal and natural gas, but those scheduled for exploitation over the next decade
are east of the Urals, far from consuming centers in the western USSR. Distance,
climate, and terrain will make exploitation and transport difficult and expensive.
Exports of gas will increase, but will not compensate for the loss of earnings from
the export of oil. Although some substitution of coal and gas for oil in domestic
use will be possible in the long run, the effect of such substitution will be minimal
in the short run. Neither hydroelectric power transmitted from the east nor
construction of nuclear electric plants (mainly in the western USSR) can be
expected to afford much relief in the Soviet energy situation for more than a
decade.
9
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26: CIA-RDP08e01350R000602080002-0
Declassified in Part - Sanitized Copy Approved for Release 2012/03/26 : CIA-RDP08501350R000602080002-0
NORTH
SEA
Ventspils
u/cA
Mazheykyayl
1
Major Soviet Petroleum Deposits, Pipeline Systems, and Refineries
/Murmansk a---\
Peninsula
Kola 1:3
Ins an
1
1,
/
Leningrad ?
Brest
Kirishi'
Polotsk
Kalinin
U k rn
Odessa. Kremenc,4
1220/1000
Orel
oltava
ryansk
02074
Michurin
?scow
Cherepovets
Vologda
insk
aroslay1'
NO
N Usinsk
SEA
1220/37.0
Gor'kiy
1220/37.0
Penza
.Bokhra
Novorossiysk itra.1,""
Krasnodar
Volgograd
Stavropol'
North
aucasus
]
G.roZnyy
Urals-Volga
--"t5 azan'
lzhevsk '
1020/23.3 n
TATARSKAYA\ ASSR Perm
CNZtllUn Arrnet'yevsk
_n_ybyshav
3
leksandrov Gay BASHKIRSKAY'A
Makat
S.
si
ns- Mangyshlak
sus
CASPIAN
SEA
Beyneu
ASSR
Nizhniy
Tagil
Serov Srrlr,
Chant
Mansiy
1220/1000
1220/37.0
KARA SEA
Yambor
Porton
g
Taros,
ts1;? ? Medvezh'ye '-?441301YanlYY
720/11.0
soyakha
..//tIronsoy
PangotGublrin
Koinsomorstm
TYUMEN'SKAYA Oyen",u,
,
Urengoy-ChelyabinskWest
1420/79.5
gut
Norilsk
1220/1000
6.--.Orenburg
he Ira 151
1020/23.3,
Omsk
Novosibi
Kazakhstan
1020/23.3
/-"Pavlodar
Astara
,
uic
Siberian
Lowland
1020/800 Achinsk
f