20,000 SOVIET WELLS REPORTED TO BE IDLE

An estimated 20,000 productive wells in the Soviet Union are idle for lack of equipment or lack of reliability of existing equipment, says a report on the Soviet oil and gas industry and opportunities for Scottish industry. The report by Scottish Enterprise, Glasgow, said during the past 3 years the Soviet government allowed investment in consumer goods manufacturing to take priority over any other sector, including oil and gas.

July 29, 1991

2 min read

The report by Scottish Enterprise, Glasgow, said during the past 3 years the Soviet government allowed investment in consumer goods manufacturing to take priority over any other sector, including oil and gas.

The result was a decline in oil production from a high of 12.48 million b/d in 1987 to 11.4 million b/d in 1990. An 8% drop is expected in 1991 to 10.52 million b/d, Scottish Enterprise said.

Exports also have been gradually declining from 2.28 million b/d in 1987 to 1.5 million b/d last year.

Scottish Enterprise said loss of oil export earnings and failure to meet the needs of the domestic petroleum industry combined to transform a trade surplus of 7.5 billion rubles to a deficit of 10 billion rubles in 1990. The report voiced fears that if production continues to fall at the present rate, the world's largest oil producer could become a net importer by the end of 1992.

Increased gas exports have acted as a buffer to the economy. Gas output hit a record 28.7 tcf in 1990, up 2.4% from the previous year.

The decline in revenues can be reversed by intervention of western technology in a Soviet import market valued at more than $3.28 billion in 1989. But Scottish Enterprise says Scottish and other U.K. oil field companies are failing to capitalize on opportunities and have only about 1% of the available market. They are losing out to companies from the U.S., France, and Germany.

Soviet imports of oil field and other energy equipment declined by 30% in 1989, compared with 1988. During this period U.S. companies more than doubled their shipments of drilling and exploration equipment to the U.S.S.R. France and Germany also increased such trade.

A further 40% decline in the U.S.S.R.'s equipment imports is likely when final figures are in for 1990.