THE CIA WAS HALF-RIGHT ABOUT OIL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B00478R000800030006-5
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 23, 2016
• Document Release Date: January 16, 2014
• Sequence Number: 6
• Publication Date: June 12, 1981
• Content Type: OPEN SOURCE

ARTICLE AE THE ECONOMIST'
01 Declassified and Approved For Release 2014/01/16 : CIA-RDP92B00478R000800030006-5
?
The CIA was half-
right about oil
Russia's biggest foreign currency earner,
oil, is beginning to be used up. The CIA
was right in predicting a decline in Soviet
oil production?wrong, by five years or
so, in forecasting when the fall would
begin. The American intelligence agency
fessed up a fortnight ago, saying that the
Soviet Union ought to be producing 10m-
llm barrels per day (500m-550m tonnes
per year) by 1985?enough to meet its
needs without having to import much oil
from Opec countries?t- -
The CIA's original study, published in
1977, suggested that Russia would need
to import 3.5m barrels per day (175m
tonnes per year) by the m1d4980s. The
CIA did not expect Russia to be able to
switch so much investment into oil pro-
duction. During the early 1970s, Russia
invested $4.6 billion a year in its oil
industry. This had risen to over $6 billion
a year by 1976-78 and topped $9 billion in
1979?a sign that the main Volga-Urals
fields were becoming exhausted. -
Fortunately, the country's oil fields in
western Siberia have come on strong.
Last year they supplied 315m tonnes
(52%) out of a total of 603m tonnes. But
the Kremlin has clearly .underestimated
the decline in fields in European Russia,
the Caucasus. and central Asia. And it has
been too optimistic about the growth of
oil fields in Komi and Kazakhstan.
The CIA originally put Russia's proven
reserves at 4 billion-5 billion tonnes. A
recent and more realistic estimate puts
Russia's present' oil reserves at 6 billion-
12 billion tonnes. So' even if no large new
oil discoveries are made anywhere in the
Soviet Union during the next couple of
years, there is no reason why Russia
cannot maintain its current oil production
until about 1986-87. After that, keeping
output steady is going to*get trickier.
The Russians will need to make large
purchases of:?
- ? Exploration equipment. A great deal
more is needed?and in a hurry. The
Kremlin intends to step up exploratory
drilling some 21-fold between now and
1985.
? Rotary drills. The greater depths and
harder rocks of the new oil fields mean
that the Russians will have to rely in-
creasingly on American rotary drills in-
stead of their own turbo versions.
? Submersible pumps. Water injection is
the favoured method of enhancing oil
recovery in the Soviet Union. But lifting
huge quantities of fluid from such depths
is going to be expensive.
? Gas lift equipment. This would be a
logical alternative to water injection. It
needs less maintenance and can cope with
far higher production rates. But whole-
._
sale adoption of gas lift would put Rus-
sia's oil industry in hock to the west. The
Russians are nevertheless nibbling. Ne-
gotiations are underway with the French
to buy some SSOm worth of carbon diox-
ide injection equipment?to try to slow
the decline of the giant Romashkino field
in the Volga-Urals region.
? Offshore technology. Yields from off-
shore wells have proved dismal. The
Russians are impressed with what they
have seen in the North Sea. They would
like to get-their hands on British know-
how to develop oil fields in the ice-free
part' of the Barents Sea. ?
Declassified and Approved For Release 2014/01/16: CIA-RDP92B00478R000800030006-5