The Russian petroleum industry's plight has been described in a detailed, extremely pessimistic new forecast of oil production during the rest of the 1990s.
Viktor Orlov, chairman of the Russian Federation's Committee for Geology and Use of Underground Resources, flatly says the nation's crude and condensate production will never again reach the record level of close to 11.4 million b/d reported for 1987 and 1988.
As quoted by Moscow's Financial Izvestia newspaper supplement, Orlov emphasized the rapid depletion of western Siberia's most productive oil fields. He charged that exploitation of these fields has been "very irrational and wasteful" since they first went on stream, generally 15-30 years ago.
In Orlov's opinion, Russia can no longer depend on western Siberia's once prolific giant fields to support even the republic's presently depressed production level of less than 8 million b/d of oil. That is down from 9.22 million b/d in 1991 and close to 10.36 million b/d in 1990 (OGJ, Nov. 16, p. 34). The Moscow weekly Ekonomika i Zhizhn (Economics and Life) reported late last month that crude deliveries by Russian production associations in the fourth quarter will total only about 82 million metric tons, which translates to 6.5 million b/d (Table).
"We must now begin to concentrate on development of medium and small fields," Orlov said.
WESTERN SIBERIA
At the same time it reported Orlov's glum views, Financial Izvestia published data showing western Siberia's oil flow will drop steeply during the balance of the decade as the region's biggest fields are further depleted.
The newspaper predicted western Siberian crude/condensate production will plummet from 8.3 million b/d in 1988 and 7.5 million b/d in 1990 to a little more 4 million b/d in 1995 and to less than 3.64 million b/d in 2000. Any such deep drop in the region's production would almost certainly slash total Russian oil flow in 2000 to as little as 6 million b/d.
Financial Izvestia presented specific projections regarding western Siberia's oil production by district to support its gloomy forecasts. Of the 13 major oil production associations cited, nine were expected to show declining flow between 1995 and 2000, two were regarded as likely to have steady production, and only two were tagged for gains.
Crude and condensate flow in the huge Nizhnevartovsk Oil Production Association, which includes supergiant Samotlor and its satellite fields, is expected to slide from 508,000 b/d in 1995 to 344,00 b/d in 2000.
The Nizhnevartovsk association's production peaked at 3.1 million b/d in 1980. Its production was by far the largest in western Siberia and the entire Soviet Union.
Financial Izvestia believes that by the start of the 21st century, Nizhnevartovsk production will be less than Tyumen Province's Tugansk association (an estimated 506,000 b/d in 2000 vs. 572,000 b/d in 1995), Surgut association (538,000 b/d in 2000 vs. 592,000 b/d in 1995), Noyabrsk association (362,000 b/d in 2000 vs. 468,000 b/d in 1995), and Kogalym association (498,000 b/d in 2000 vs. 536,000 b/d in 1995).
The only oil association in western Siberia's Tyumen Province expected to show a production gain between 1995 and 2000 is Pur, which is well north of the main producing districts close to the Ob River.
Tomsk Province, which adjoins Tyumen to the south and east, is believed likely to hike overall crude and condensate flow between 1995 and 2000. Production from Tomsk Oil and Gas Association, which includes giant Sovetskoye field, now in decline, is seen falling from 224,00 b/d in 1995 to 220,000 b/d in 2000, while Tomsk Oil and Gas Association is expected to boost production from 42,000 b/d to 128,000 b/d in the same period by developing remote fields.
Overall, Tomsk Province flow likely will drop from 295,000 b/d in 1990 to 266,00 b/d in 1995, then rebound to a record 348,000 b/d in 2000, the study indicates.
Financial Izvestia says the proportion of western Siberian "explored" (proved, probable, and possible) reserves in highly productive reservoirs dropped from 91% in 1971 to 45% in 1990. Conversely, explored reserves in low production reservoirs soared from 9% to 55% in the same period.
The region's highly productive reservoirs accounted for 99-100% of total flow in 1971-79, then fell to 95% in 1983 and climbed back to 9798% in 1984-90. The rate of reserve depletion in highly productive western Siberian reservoirs was 5.4% in 1990 vs. 0.1% for low production reservoirs then being tapped.
Because higher flow can be achieved only by developing more low yield reservoirs in the future, the cost per barrel of western Siberian oil production inevitably will rise significantly during the balance of the 1990s.
Financial Izvestia's data show that only an enormous cut in Russian domestic oil consumption can prevent the republic from becoming a net oil importer by the mid-1990s and a big oil importer by 2000. The effect on world oil markets could be substantial. Moscow may be forced to return to its cold war policy of trading arms for Iranian and Libyan crude.
SHUT-IN WELLS
During the early 1980s, the newspaper recalled, the normal proportion of shut-in wells in the former Soviet Union was 2-4%, depending on the region. Now, it said, 28,000 of Russia's more than 90,000 oil wells - close to 31 % - are idle.
During recent years, especially since 1989, some Russian oil production associations raised their norms for shut-in wells to 20-25% of the total. But, as the latest figures show, many associations were unable to keep the number of idle wells even within the expanded range, Financial Izvestia reported.
According to unofficial data, the number of above-norm "dead" Russian oil wells has climbed past 9,500. Their estimated production potential is 500,000-540,000 b/d.
"In the United States," Financial Izvestia said, "it was estimated that 251,000 of 660,000 oil wells, mostly in the low production (stripper) and difficult-to-operate categories, were shut in during July 1991. The great majority of them are in working condition and could go back on production if world oil prices increase sufficiently.
"But Russia's idle wells would most likely remain shut in even with increased world oil prices. Russian oil industry personnel aren't inclined to make large outlays to provide these wells with new equipment if it means a loss of money for social programs.
"Probably just the reverse would occur. It's likely there would be an even greater tendency to close down wells that don't provide the maximum profit so necessary to oil producing associations at present domestic Russian market prices."
In this event, Financial Izvestia said, there would be a further decline in Russia's oil flow.
"Last year, when a government decision was being prepared to permit participation by foreign firms in restoration of idle Russian wells, there was talk about quickly reequipping 7,0008,000 shut-in wells. The actual figure turned out to be quite different.
"During the first 10 months of 1992, according to Russian Oil and Gas Construction Administration specialists, contracts for restoring no more than 3,500 wells were signed with foreign firms.
"Foreign credits to fields with shut-in wells were practically nonexistent. The same can be said regarding investment funds from Russia's central government budget."
MONEY REQUIREMENTS
Financial Izvestia asserted that prospects for solving the money problems of Russian oil producing associations are poor.
"The range of opinions regarding how much money is needed to put idle wells back in operation is so great-different sources cite $700 million to $5-7 billion-that one gets the impression no real way out of the dilemma through budget investments is even being considered," the newspaper said.
Andrei Konoplyanik, Russia's deputy minister of fuel and energy, told Financial Izvestia the nation's fuel and energy complex needs about $50 billion in new investment.
"Of this," he said, "the oil industry's requirements in the period to the end of this century are $30 billion."
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
