OIL SUPPLY FIT WILL GROW TIGHTER FOR SOVIET UNION AND CUSTOMERS

The oil supply situation in the Soviet Union, the world's No. 1 producer, is rapidly going from bad to worse, with more bad news on the way.

That spells a still tighter fit between supply/demand in the U.S.S.R. and its oil export customers.

Salomon Bros. is among the latest analysts to assess the Soviet oil outlook.

The New York investment firm believes Soviet oil flow may fall to 10 million b/d in 1994 and 1995 from an estimated 11.4 million b/d in 1990 and 10.9 million b/d in 1991.

Following meetings in Moscow on the U.S.S.R. 's deteriorating energy picture Salomon Bros. representatives also estimated Soviet oil exports could drop to 1.7 million b/d in 1994 and 1995 from an estimated 3.3 million b/d in 1990 and 2.7 million b/d in 1991. Domestic oil consumption in 1993-95 is estimated at 8.6 million b/d, up from 8.4 million b/d in 1990.

Soviet 1990 drilling is expected to decline by 11 million ft from 1989.

Salomon Bros. said productivity of new Soviet oil wells is only 128 b/d in 1990 vs. 1,313 b/d in 1975.

Soviet refineries plan to increase wholesale prices for their products Jan. 1, when the price of crude and natural gas paid to U.S.S.R. producers will about double.

The Mazheikiai refinery in Lithuania said it will increase product prices 100-150%. Lithuania also announced higher prices for natural gas, coal, and electricity for the new year.

TRADE WITH CZECHOSLOVAKIA

Desperate for oil, Czechoslovakia is trying to work out a trade with the U.S.S.R. calling for shipments of more Soviet crude to Czechoslovakia in exchange for oil field equipment even if it means Prague must buy some of the equipment from third countries.

Moscow substantially cut crude exports to Czechoslovakia in 1990. Prague officials say the Czech economy is "critically dependent" on energy imports from the U.S.S.R.

Czechoslovakia hopes to obtain 11-13 million metric tons of crude from the U.S.S.R. in 1991, down from 15-16 million tons received in previous years. This would enable Czechoslovakia to "struggle along" toward economic reform, according to Prague reports.

However, Czechoslovakia is preparing for an even deeper and "catastrophic" cut in Soviet oil deliveries, along with reduced natural gas imports from the U.S.S.R. This possibility, regarded as fatal to Prague's plans for economic reform, has forced Czechoslovakia to try to obtain oil and gas from other countries, including Algeria, Tunisia, Venezuela, Iran, and western European nations.

OTHER CUSTOMERS

Among other customers for Soviet exports, Hungary will import 2 million tons of crude oil and 5.19 billion cu m of natural gas from the U.S.S.R. in 1991, the official MTI News Agency reported.

The account on the deal will be settled in U.S. dollars in accordance with world prices, MTI said. Beginning in 1991, the ruble will not be used in trade among Comecon member nations.

Hungary's purchases from the Soviet Union in 1990 were 6.29 billion cu m of gas and 4.5 million tons of crude oil, nearly 2 million tons less than a trade agreement provided for.

To make up the shortage, Hungary spent $400 million (U.S.) to import 1.5 million tons of oil from other countries. Hungary is expected to consume 6-6.5 million tons of oil in 1991, only one third of it obtained from the Soviet Union.

Elsewhere, Polish News Agency reported Poland will import only 4.5 million tons of crude from the U.S.S.R. in 1991, or about 40% less than it received in 1990. Polish demand is pegged at 15-16 million tons for 1991.

Bulgaria's fuel shortage has become so severe the government barred access by private vehicles to gasoline pumps for 1 week in mid-December. Rationing was imposed in October, limiting private motorists to 40 l./month.

The Soviet Union sharply reduced crude deliveries to Bulgaria during 1990.