NO NEAR TERM SOLUTION SEEN FOR HALTING RUSSIAN OIL PRODUCTION SLIDE

Russian economic observers believe the nation's oil industry has fallen into such dire straits that even massive foreign aid and huge domestic Impending hikes can't do more than slow the crude production decline before the late 1990s.

May 10, 1993

2 min read

Writing in the Moscow newspaper Delovoi Mir (Business World), Viktor Voloshin noted all of Russia's large, highly productive oil fields have been abandoned, and the ratio of fields with low productivity and complex reservoirs has jumped sharply. In western Siberia's Tyumen province, average production from new oil wells fell 1,007 b/d in 1985 to 88-95 b/d in 1992. Voloshin added that no large, highly productive fields have recently been found. From 1975 through 1991, average size of reserves in new western Siberian fields fell fivefold.

REDUCED SPENDING

"Prospects for improvement in western Siberia's output over the near term have been dimmed by a 30% reduction since 1989 in funds allocated for exploration," Voloshin said.

"In 1992, the overall Russian oil industry investment was 25-30% less than in 1991. Investment funds from the central government . . . plunged more than 40%. The sharp reduction in centralized capital investment, the shortage of freely convertible currency available to petroleum industry enterprises, and the destruction of economic ties with other republics in the former Soviet Union have led to a big drop in deliveries of oil field equipment and materials. Just to maintain Russia's oil flow at the present level would require the nation to add 118 million metric tons/year of productive capacity. to do this, it is necessary to drill more than 203 million ft/year of development hole."

Russia development drilling totaled only 90.55 million ft in 1991 and about 69 million ft in 1992.