PETROLEUM IN THE USSR

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• Original Classification: S
• Document Page Count: 78
• Document Creation Date: December 23, 2016
• Document Release Date: May 6, 2013
• Sequence Number: 2
• Publication Date: December 19, 1955
• Content Type: REPORT

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ECONOMIC INTELLIGENCE REPORT
PETROLEUM IN THE USSR
CIA/RR 66
19 December 1955
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
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WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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ECONCMIC INTELLIGENCE REPORT
YETROTRUM IN TBE USSR
CIA/RR 66
(ORR Project 25.472)
_
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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FOREWORD
The major purpose of this report is to present, by means of an
integrated analysis of the postwar petroleum economy of the USSR,
an over-all petroleum supply and demand balance for the 1951-54
period. Derivation of a petroleum balance for the postwar years
before 1951 is impossible because certain pertinent data -- par-
ticularly on intra-Bloc trade in petroleum -- are not available.
As the documentation of this report indicates, most of the
estimates that provide the basic data were developed in other
reports, either published or being prepared for publication, which
deal with specific aspects of the petroleum economy of the USSR.
For reasons specified in these reports, some of the basic data are
subject to rather wide ranges of error. Those ranges of error, of
necessity, have been carried over into this report. The over-all
petroleum supply and demand balance should be accepted, then, with
qualifications -- it is accurate only to the extent that the basic
data from which it was derived are accurate, and it is subject to
revision as more complete and more reliable data become available.
The cost data in this report -- average production costs of
crude oil and natural gas liquids (natural gas is not discussed in
this report) and average prices of the principal petroleum products --
have been computed in terms of 1951 rubles.
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CONTENTS
Summary
Page
1
I.
Exploration
3
A.
Distribution of Petroleum Resources
3
B.
Current Activities
6
C.
Technology
6
II.
Drilling and Producing Operations
6
A.
Drilling
6
1. Turbine Drilling
6
2. Use of Water as a Drilling Fluid
7
3. Dual-Well Drilling
7
4. Comparison of US and Soviet Drilling Speeds .
7
III.
B. Production
C. Reserves
Refining and Processing
8
11
13
A.
Natural Crude Oil Refineries
13
B.
Synthetic and Shale Oil Facilities
17
C.
Quality of Soviet Petroleum Products
21
IV.
Distribution and Storage
23
A.
Transportation Systems
23
B.
Storage of Petroleum
25
V.
Trade
27
A.
Imports of Petroleum
27
B.
Exports of Petroleum
28
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Page
VI. Civil Demands 32
VII. Over-All Supply and Demand of Petroleum 34
VIII. Prices of Petroleum in the USSR 38
A. Crude Oil and Natural Gas Liquids 38
B. Petroleum Products 39
C. Turnover Tax 46
IX. Capabilities, Vulnerabilities, and Intentions . . 47
Appendixes
Appendix A. Organization of the Petroleum Industry
in the USSR
Appendix B. Methodology
51
55
Tables
1. Areas in the USSR Containing Known Oil Deposits,
1954
4
2. Estimated Production of Crude Oil and Natural Gas
Liquids in the USSR, 1937-40 and 1946-54 10
3. Estimated Production of Crude Oil in the USSR,
by Economic Region, 1937 and 1946-54 11
).4. Petroleum Refineries in the USSR, 1950 and 1953 . . 14
5. Estimated Output of Petroleum Products from the Re-
fining of Crude Oil in the USSR, 1937 and 1946-54
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Page
6. Major Synthetic and Shale Oil Facilities
in the USSR, 1953 18
7. Estimated Output of Synthetic Oil Products
in the USSR, 1946-54 21
8. Estimated Storage Capacity for Petroleum Products
in the USSR, by Economic Region, 1 January 1955 . 26
9. Estimated Imports of Petroleum by the USSR, by Type
of Product, 1951-54 28
10. Estimated Imports of Petroleum by the USSR, by Country
of Origin, 1951-54 29
11. Estimated Exports of Petroleum from the USSR,
1951-54 31
12. Estimated Exports of Petroleum from the USSR,
by Type of Product, 1951-54
13. Estimated Civil Demands for Petroleum Products
in the USSR, by Economic Sector, 1946-54 33
14. Estimated Civil Demands for Petroleum Products
in the USSR, by Type of Product, 1946-54 35
15. Estimated Over-All Petroleum Supply and Demand
Balance in the USSR, 1951-54 36
16. Estimated Resources of Crude Oil in the USSR,
1 January 1955 55
17. Distribution of Proved Reserves of Petroleum in the US,
by Components, 31 December 1946 56
18. Estimated Balance of Petroleum Products in the USSR,
1951-54 61
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Illustrations
Following Page
Figure 1. USSR: Petroleum Resources, 1954
(Map) 4
Figure 2. USSR: Crude Oil Refineries (1953)
and Principal Petroleum Pipelines
(1954) (Map) 16
Figure 3. USSR: Major Synthetic and Shale Oil
Plants, 1953 (Map) 20
Figure 4. USSR: Organization of the Petroleum
Industry, 1954 (Chart) 52
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CIA/RR 66 S-E-C-R-E-T
(CRR Project 25.472)
PETROLEUM IN THE USSR*
Summary
The production of crude petroleum*Ain the USSR increased steadily
during the 1951-54 period, and the demand for petroleum products in-
creased at an even greater rate. To meet this demand, a part of which
was created by rising exports to the West, the USSR supplemented
domestic production with imports from the European Satellites. Count-
ing the petroleum received as reparations and indemnities, the USSR
has been a net importer of petroleum throughout the postwar period.
Production of crude petroleum in the USSR in 1954 is estimated to
have reached an all-time high of 57.6 million metric tons, XXX 53.6
million tons of crude oil and 4 million tons of natural gas liquids.
Soviet production of crude petroleum in 1954 was about 8 percent of
total world production. Only the US and Venezuela produced greater
portions of the world supply. In addition to crude petroleum the
USSR produces synthetic oils from oil shale and from coal. The out-
put of these synthetic oils is as yet relatively unimportant; in 1954
the output of about 500,000 tons was equal to less than 1 percent of
the production of crude petroleum.
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As of 1 January 1955, estimated proved reserves and undiscovered
resources of crude oil and natural gas liquids in the USSR were nearly
22 billion tons, about 30 percent of the total of such resources re-
maining in the world. Soviet exploration has discovered, however,
only about one-tenth of the potential resources, which indicates the
magnitude of the task for exploration. Such exploration is being
actively pursued, and Soviet knowledge of such aids to petroleum ex-
ploration as geophysics and geochemistry is on a par with that of
the Free World.
* The estimates and conclusions contained in this report represent
the best judgment of ORR as of 1 August 1955.
** In this report the term crude petroleum is usea to incluae only
crude oil and natural gas liquids. Unless otherwise indicated by
context, the term petroleum is used generically and may include both
crude petroleum and petroleum products.
*** Tonnages throughout this report are given in metric tons.
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After World War II, Soviet production of crude petroleum increased
steadily at a moderate rate. In the course of the Fifth Five Year
Plan (1951-55), production was to increase 85 percent over the 1950
output, which is claimed by the USSR to have reached 37.6 million tons.
These data indicate a 1955 production of nearly 70 million tons. If
Soviet reports of production during the first half of 1955 are ac-
curate, and if the implied production rate is maintained throughout
the year, the 70-million-ton goal probably will be reached.
Currently and potentially the most important single producing
region in the USSR is the large Ural-Volga Basin, frequently called
the "Second Baku" because of its importance as a source of petroleum.
Historically, the Baku fields have been the main producers of the
country, but in 1952 leadership was acquired by the Ural-Volga fields.
In 1954, production from the Ural-Volga fields accounted for about
42 percent of total Soviet output, and the Baku fields accounted for
about 33 percent. Production of crude petroleum in the USSR has thus
become more secure strategically.
Throughout the postwar period, refining capacity in the USSR has
been adequate to handle the available quantities of crude oil. The
Soviet refinery yield pattern differs considerably from that of the
US. In particular, the Soviet yield of gasoline is less than that
of the US relative to amounts of crude oil refined. In the USSR, more
emphasis is placed on intermediate distillates -- earlier on kerosine
and currently on diesel fuel. The difference in yield pattern is
logical in view of the fact that in the US the large gasoline demand
of the 50 million passenger cars is the dominant consideration. On
the whole, the quality of refined petroleum products in the USSR is
high and is well adapted to the needs of the Soviet economy.
Of all the various aspects of petroleum in the USSR, distribution
is the least developed. Territorial expanse, widespread location of
consumers, and severe winter shipping conditions combine to make
distribution a complex problem. This problem has led to the construc-
tion of an exceptionally large storage capacity for petroleum prod-
ucts, but storage and distribution facilities apparently are not yet
sufficient at all stages of the distribution process. Railroad and
water transport, with their inherent shortcomings in handling liquid
products efficiently, are relied on most heavily to move crude petro-
leum and petroleum products. The USSR, however, is fully cognizant
of the superior efficiency of pipelines for moving liquids and is
gradually increasing the pipeline network.
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Under the Soviet pricing system, crude oil and natural gas liquids
appear to be priced at wholesale on the basis of industry-wide average
unit costs of products, plus a planned profit of 3 to 5 percent. In
setting prices for petroleum products, a basing point system probably
is used, with Baku as the likely basing point. Estimated 1951 prices
are 70 rubles per ton for crude oil and natural gas liquids and an
average of 432 rubles per ton for petroleum products. Prices of
petroleum products in the USSR thus were more than six times the raw
material price. In the US, average prices of principal petroleum
products exceed raw material prices by only 30 to 35 percent. Only
part of the wide price differential in the USSR can be ascribed to
refining costs. The bulk of the difference is accounted for by a
high turnover tax, which is included in the average price cited.
The high turnover tax is the device used by the USSR to promote econ-
omy in the use of petroleum fuels relative to other fuels.
Immediate postwar planning by the USSR gave evidence of a more
rapid rate of production contemplated for coal than for petroleum.
Recent developments in the USSR suggest that this policy may be
changed in the immediate future and that the share of petroleum
fuels in the Soviet fuel energy balance can be expected to increase.
I. Exploration.
A. Distribution of Petroleum Resources.
Those areas in the USSR which are geologically favorable for
the occurrence of petroleum and contain known deposits cover about
1.7 million square miles, nearly one-fifth of the total Soviet land
and inland sea area of 8.4 million square miles. The petroleum
areas include those in which petroleum is being produced and those
in which deposits are known but not yet developed. Areas in the
USSR containing known oil deposits, as of 1954, are shown in Table 1*
and on the map, Figure 1.**
* Table 1 follows on p. 4.
** Following p. 4.
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Table 1
Areas in the USSR Containing Known Oil Deposits a/
1954
Thousand Square Miles
Area
Inland
Offshore
Total
Pechora River Basin
257
114
371
Ural-Volga
433
0
433
Emba River Basin
198
28
226
Western Ukraine
19
0
19
Moldavia - Southern Ukraine
37
0
37
Eastern Ukraine
96
0
96
Northern Caucasus
122
27
149
Baku - Kura River Basin
22
9
31
Nebit-Dag - Southern Turkmen
18
15
33
Turkmen (Kara-Kum)
172
0
172
Ferghana Valley
14
0
14
Chu River Basin
38
0
38
Sakhalin Island
9
26
35
Total
l,#35
219
1,65)4
a. Determined by planimeter measurements of areas shown on the map,
Figure 1, following p. 4.
In addition to the areas in the USSR containing known oil
deposits, there are about 2.3 million square miles of areas of pos-
sible petroleum deposits wherein limited production may eventually
be developed. The remainder of the country, about 4.4 million square
miles, is geologically unfavorable for the occurrence of petroleum
deposits.
Except for a limited area producing small quantities of petro-
leum near Nordvik (Kozhevnikovo) in the Arctic, there is no confirmed
petroleum production in those areas of the USSR shown on the map,
Figure 1, as areas of possible petroleum deposits. There are, however,
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0 20 30 40 50 60 70 60 90 100 110 120 130 140 150 160 170
USSR: PE4R/01/_EoM liE\SelRe 19A
Figure 1
150 170
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