ABSTRACT
In the long history of petroleum production in Russia and the Commonwealth of Independent States (CIS), a normal development progression has occurred in which several prolific petroleum provinces have been discovered in sequence, have become dominant producers and then declined. The present drop in oil output from this vast region is partially the result of the natural decline of many of its large older fields, but also is due to recently reduced capital investments and to the reliance on outdated and inefficient exploration and development technology. Financial and technical problems can be remedied by joint ventures with foreign oil companies. Despite these limitations, the former Soviet Union led the world in oil production every year since 1974, often by a considerable margin. 462In the process, the oil resource base has been “high graded” with much of the “easy” oil having been discovered and produced.
The exploration for and development of the remaining oil will be technically more difficult, since the new fields are likely to be smaller and in more unfavorable environments than those exploited in the past. In the short term, Russian and CIS oil output is expected to decline significantly. Political and economic instability, labor unrest, and ethnic strife are contributing to the decline, a problem not amenable to solution by foreign oil companies. Eventually, with outside technical and financial assistance, oil output may recover, but not necessarily to previous peak levels.
Russian and CIS natural gas production, which also leads the world, declined slightly last year for the first time since World War II, despite a huge gas resource base. Gas supply problems are related to the current economic and political instability, the ethnic unrest, and the disintegrating gas infrastructure, rather than to a lack of gas reserves or resources.
Oil and gas production is critical to the CIS, both for internal use and for exports to earn hard currency.
