(SANITIZED)REVIEW OF 1962 OIL AND GAS INDUSTRY AND TRANSPORTATION (PRODUCTION OF CRUDE OIL AND NATURAL GAS, PIPELINE CONSTRUCTION. GOVERNMENT POLICY TOWARDS MINING AND POWER.)(SANITIZED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00246A021200260001-7
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 24
• Document Creation Date: December 23, 2016
• Document Release Date: July 22, 2013
• Sequence Number: 1
• Publication Date: April 17, 1963
• Content Type: REPORT

. / t
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INFORMATION REPORT LNFORiN
CENTRAL INTELLIGENCE AGENC
This material contains information affecting the National Defense of the United States within the meaning of the Espionage Laws, Title
18, U.S.C. Sec. 793 and 794, the transmission or revelation of which in any manner to an unauthorized person is prohibited by law.
C-O-N-F-I-D-E-N-T-I-A-L
50X1 -HUM'
COUNTRY USSR
SUBJECT Review of 1962 Oil and Gas Industry
and Transportation
DATE OF
INFO.
PLACE &
DATE ACC
REPORT
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DATE DISTR.
NO. PAGES
REFERENCES
1
17 Apr 63
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a 22 page document entitled. "USSR Review of 1962
Oil and Gas Industry and Transportation."
The subject study is organized as follows: 50X1 -HUM
I. INTRODUCTION
A. General
B. Fuel and Energy Industry
C. Communist,PAxty-Wembership
D. 1963 National Budget
II, EXPLORATION FOR OIL AND GAS
A. Ural-Volga
B. Ukraine
C. Baku
D. Turkestan, S W
E. Western Siberia
F. Central Siberia
G. North East and Far East Siberia
III. DRILLING AND EQUIPMENT
IV. CRUDE OIL PRODUCTION
V. NATURAL GAS PRODUCTION
VI. CRUDE OIL AND PRODUCTS PIPF LINES
VII. NATURAL GAS PIPE LINES
VIII. REFINERY RUNS
- end -
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I ARMY
I NAVY
AIR BI 'AK
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INFORMATION REPORT INFORMATION REPORT
CONTROLLED NO DISSEM ABROAD
DISSEM: The dissemination of this document is limited to civilian employees and active duty military personnel within the intelligence components
of the USIB member agencies, and to those senior officials of the member agencies who must act upon the information. However, unless specifically controlled
in accordance with paragraph 8 of DCID 1/7, it may be released to those components of the departments and agencies of the U. S. Government directly
participating in the production of National Intelligence, fl SHALL NOT BE DISSEMINATED TO CONTRACTORS. It shall not be disseminated to organisa-
tions or pers i
onnel, ncluding consultants, under a contractod_relationship to the U.S. Government without the written permission of the originator.
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_
REVIEW OF 1962 OIL
AND GAS INDUSTRY AND TRANSPORTATION
INTRODUCTION
January, 1963, statistics, released by the Soviet Union, disclosed
the following basic data of 1962 operations.
I. GENERAL
1. Population as of 1-1-63 223. 0 million
2. Working force 68. 4 '
3. Gross National Income 165. 5 billion rubles
4. 1962 Capital Expenditures:
By Central Government 30. 5 billion rubles
By Local Government 4. 0 billion rubles
5. Retail trade, up 6. 1% 86. 3 billion rubles
6. Foreign trade, up 11.5% 11. 8 billion rubles
7. National Income
National Expenditures
II, FUEL AND ENERGY INDUSTRY
1. Crude oil production,
Bbls. /day
2. Natural gas production,
Billion cu. ft. /day
FOR OFFICIAL VSE ONLY
1961 1962 1963
(Billions of rubles)
78.1 84.7 87.7
76.3 82.7 86.2
1963
1962 over 1961 Targets
3, 720, 000 12 4, 100, 000
7.1 24 8.9
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UrOW1-\L?
. % ? - 1963
1962
over 1961
Targets
3.
Coal, million tons 517.0
4
522. 0
4.
Electric Power, billions kwh 369. 0
13
407.9
III.
COMMUNIST PARTY MEMBERSHIP
1.
Total party membership
10, 000,
000
2.
In Industry, Transportation, Construction
3, 655,
000
3.
Agriculture and Farms
2, 000,
000
4.
Others
4, 395,
000
Discussions and comments on industrial operations in Soviet press,
trade and technical publications lead one to believe that Russian industries
have many difficulties because of bureaucracy, planning troubles, poor
equipment and machinery, delays in receiving equipment and materials
on site, shortages of spare parts, etc. In spite of these, though, the
Soviet economy, on average, has progressed somewhat better than planned
for the first four years of the 1959-1965 plan. Industries like oil, steel,
and cement did better than planned, while others like agriculture, chemical,
construction and machinery have lagged behind the planned targets. The
faster growth of population in the Soviet Union is evidently contributing
to the difficulties as it has been reported that as of January 1, 1962, the
population of the Soviet Union was 4, 000, 000 over the estimate for that
date, and as a result of this all production targets are being revised upward.
To improve planning, management, and efficiency of industrial
operations, the Soviet Government in late fifties has delegated management
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km VI-1MM up= wua
? of its industries to regional entities (sovnarhoz), but have retained
budget and planning control in Moscow, including research, inter-regional
investigations and 15 to 20 percent of construction. This delegation of
authority while improving industrial efficiency and progress, has also
created new problems in management of national economy. First, the
Central Government has found that regional management was interested
mainly in local and regional problems and showed only a general interest
in national problems and aspirations. They were more interested, for
instance, in building homes, school, hospitals, clubs, etc., rather than
increasing output of products, equipment, or materials needed elsewhere
in the Soviet Union or for export trade. As a result, the money budgeted
for enlargement of plants was often diverted to social and cultural improve-
ments, thus delaying the completion of needed industrial plants which in
turn forced other delays and dislocations in the total economy.
The situation apparently became so serious by 1962 that the Soviet
Government was forced to make changes in its industrial setup. The new
order organized the country into 47 economic regions in place of 67 old
regions. This was then followed by placing the responsibility of planning
and execution of planning on the Communist Party for a more effective
control of National Economy. The Party was organized into separate
agricultural and industrial commissions. Following that the Central
Government announced the following organizational changes:
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1. It delegated to Gosstroy control and execution of all construction
in the Soviet Union. Previously, Gosstroy accounted for only 15-20 per
cent of construction. With this the Government placed all design institutes
and design offices and organizations under Gosstroy with a view of increasing
efficiency and elimination of duplication. It has been indicated that there
were some 400 construction design institutes and over 1, 000 design offices,
contributing to duplication.
2. It organized the Central State Industrial Commission to co-ordinate
technology. This Commission is an authority on all new machinery.
3. It issued guide lines for industry and agriculture. The more
important of which were:
a. Organize optimum operations plantwise as well as country-
wise. This was aimed at elimination of unprofitable plants
and operations.
b. Remove from management those who either don't understand
economics or don't pay any attention to it.
c. Place greater responsibility on working units and organize
collective management of plants.
d. Organize production plant committees to be cperated by
the Communist Party. Duties of this committee are advisory
on projections and plans.
e. Give directors right to lay off any employee except chief
engineer, chief comptroller and chief economist. The latter
:
three are to be appointed by higher organization.
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f. Management has to be practical, technical and political.
g. Divert greater funds to agriculture. 1963 budget up 18
percent over 1962.
h. Increase spending in chemical industry in 1963 by 36 percent
over 1962. The increase is because of the failure of indus-
try to meet planned targets in the first four years of the
present plan. The 1963 effort is to be concentrated on
completion of unfinished plants. The following figures are
illustrative of delayed construction in chemical industry:
1960 - completed 78% of planned targets
1961 - completed 82% of planned targets
1962 - Completed 68% of planned targets
IV. 1963 NATIONAL BUDGET
The Soviet national budget for 1963 by categories is as follows:
Industry and agriculture
Social and cultural (health,
tion, etc.)
Defense
Government expense
Unidentified
educa-
34.5 billion rubles
31.0 billion rubles
13.9 billion rubles
1. 1 billion rubles
5.7 billion rubles
86.2 billion rubles
EXPLORATION FOR OIL AND GAS
The 1962 exploration target moneywise was 11 percent higher than
those of 1961. The budget funds were provided for increased activities
in geological and geophysical, core drilling and exploration drilling. The
1961 exploration budget was underspent by 6.9 percent and the drilling
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run La
was about 83. 3 percent of the planned target. In view of the industry's
inability to increase drilling efficiency in the first three years of the plan
and gradual increases in drilling depth, it is reasonable to assume that
the Soviet oil industry was hard pressed to make its drilling target in 1962.
There have been indications that the Soviet exploration effort in
the last year or two has been reaching a point where crude oil production
has been catching up with discovery rate. This evidence has been con-
firmed by an official in the December, 1962, issue of Geology of Oil and
Gas stating that the relation of reserves to crude oil production has been
lowered below safe point of 20 to 1, a ratio that has been used by Soviet
planners in projecting its oil industry growth. There also have been
complaints by geologists that the exploration effort was not on par with
projected targets.
In the first three years of the plan (1959-1961) the oil industry
has exceeded crude oil discovery targets by about 5 percent. In 1961,
however, additions to oil reserves were only 98. 6 percent of the target
in categories AB and 83 percent in categories ABC. It has also been
reported that in the first four years the success of finding large oil fields
and the efficiency of exploration drilling in general had fallen below the
previous years. During the four years, 1959-1962, industry drilled a
total of 5, 179 wells (wildcat and delineation), resulting in 2, 652 oil and
gas wells. or 51.2 percent of the total. By compariso4 in 1961 the industry
drilled only 1, 447 wells, of which only 554 or 38.3 percent were productive
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wells. It would be noted that the number of exploration wells drilled
in 1961 was below the 1, 728 wells average for the three years. It also
has been stated that in a number of oil and gas producing regions there
is insufficient reserve of ready-to-drill structures. With geophysics as
a prime method of structure finding in the Soviet Union, the seismic
equipment, its manufacture, and its use in the field has been receiving
critical treatment. It would appear that the quality of seismic equipment
presently in use is very unsatisfactory in search of less pronounced
anomolies, or deep seated structures. The complaint is that the seismic
equipment coming from the production lines has no magnetic recording or
automatic processing means and that research to develop new and better
equipment is poorly organized. Likewise, exploration drilling rigs, drill
pipe, mud pumps and well testing equipment were critized as causes for
an apparent failure for not meeting the planned exploration targets.
To date industry has not released annual information on 1962
exploration work and discoveries. During the year, however, the press
and technical publications have provided the following bits of information
on 1962 accomplishments.
URAL-VOLGA. In this area a large share of exploration effort
was devoted to discovery and proof of discoveries in the Orenburg Region
(south of Urals and southeast of Kuybyshev). This area is considered
to be as good as the neighboring Kuybyshev area. Here industry is
operating 32 seismic parties and in 1962 drilled 600, 000 ft. of exploration
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hole. Perm is another area that received greater attention in 1962 than
in prior years. There were discoveries south of Perm in 1961, and this
year's work is a follow-up of last year's success.
Geological and geophysical investigation of Moscow syncline has
disclosed that the crystalline basement has a core of 3, 000 to 3, 500 meters
and is prospective for oil and gas. In 1962 it received more intensive
geological and drilling attention.
UKRAINE, Exploration effort in this area is failing to find sufficient
gas reserves that are necessary to maintain a 20 to 1 reserve production
ratio. In 1961 industry found only 39 percent of gas reserves planned for
discovery during the year. Geologists are suggesting an increase in
seismic parties from 57 in 1962 to 80 in 1963 and to a minimum of 110 in
1965.
BAKU. Oil and gas prospect of this area are either at great depths
or offshore. To date offshore operations have been concentrated in develop-
ment of Neftiania Kamni oil field, which is producing in the order of 21, 000
bbls. /day. In addition to this the Soviets have new discoveries at (a) South
Bank, (b) live island, and (c) Muddy Sopka. Thus far the Soviets have no
stationary platforms or floating structures for deep offshore drilling. They
have presently in design stages one floating and one stationary platform
for drilling in depths up to 190 ft. One gas distillate discovery was reported
in 1962 for the Baku area.
TURKESTAN, S. W. Turkestan is proving to be an important base
for future oil supplies. Here Soviets have reported an oil discovery that
tested in the order of 1, 460 bbls. /day.
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FU n urriwm. uoL
South Mangyshlack, where two large discoveries were reported
previously, remains active, but geologists have been complaining that
insufficient budget funds have been allotted for exploration of this highly
prospective area.
WESTERN SIBERIA. A 1962 gas discovery of 35.0 million cu.
ft. /day was reported near the mouth of the River Taz. In the northern
part of Western Siberia there are two ridges. North Ridge is south of
Obskaya Guba and Taz Ridge which runs parallel to the Taz River. The
basement here is deeper and the Taz discovery may lead to developing
this area into an oil and gas province. But because of the location and
poor transportation facilities, the development of this region would come
after the prospective areas of Ishim-Berezovo trend and of middle Ob
region have been prospected and developed.
In May, 1962, an oil discovery was announced 120 kms. north of
Barabinsk (location not known).
1962 plans have provided for drilling of 757, 000 feet of exploration
hole in Western Siberia, and by 1965 exploration drilling is scheduled to
rise to 1, 463, 000 ft.
In April, 1962, oil was discovered at Kamennoi some 180 km. to
the north of Shaim, the first discovery of Western Siberia, with the well
testing 3, 650 bbls. /day. Numerous structures were reported on the Shaim-
Berezovo trend, and the area is scheduled to go on production by the end
of 1965.
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svtru... U1114.4,
CENTRAL SIBERIA. Oil and gas investigations of this area, often
referred to as Eastern Siberia or Irkutsk amphitheatre, have been restricted
in early years to the southern portion of the Central Siberian platform and
to the west of the Angarsky Ridge trending in north-south direction. After
unsuccessful results in the west, exploration effort was switched to the
east side of the ridge where it led to the discovery in March of 1962 at
Markovo, on the Lena River some 600 kms. to the north of the city of
Irkutsk. The Markovo #1 produced 1, 569 bbls/day on 16 mm bean and
back pressure of 600 lbs. /sq. in. Markovo structure has been reported
to be 25 km. long and 2.5 to 6 kms. wide. Original reservoir pressure
was 3, 175 lbs., gravity of oil 38.5 API, and a sulphur content of 0. 8%.
NORTH EAST AND FAR EAST SIBERIA. With small exploration
effort going on in the middle of the Lena River, on Kamchatka and Sakhalin
Islands, oil industry made no reports on discoveries in those areas. It
would appear from reports that exploration for oil and gas on Kamchatka
is about to be discontinued and efforts will be concentrated on drilling
for steam. On Sakhalin Island, most of the shallow structure has 'been
tested, and industry is trying to find and test deep-seated structures.
Seismic reflections from deep horizons on the island are poor and there-
fore, efforts of finding deep structures thus far have not been very successful.
DRILLING AND EQUIPMENT
Drilling target for 1962 included 16.9 million ft. of exploration
drilling and 13. 6 million ft. of development drilling, or a total of 30.5
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million feet. Footage drillinnOrfielacaDA147. 3 million ft., or in the
order of 95 percent of the planned target. The 1962 figures have not
been released. On the basis of past performance, however, it is doubt-
ful that the 1962 drilling target will be met.
The 1962 technical drilling reports continued to indicate that
drilling equipment and drilling technology problems are far from being
resolved and, in fact, are becoming more complicated and difficult. In
areas of easy drilling to moderate depths, up to 2, 000 mtrs. --which
includes Ural-Volga-operations?the Soviets apparently are making slight
progress in improving drilling efficiency. But in areas of deeper drilling
(North Caucasus, Old Baku, Middle Asia and parts of Siberia) drilling
crews have difficulties due to lack of good drilling rigs, poor drill pipe
and bits, and lack of suitable transportation and road building equipment.
The principal source of difficulties in deep drilling is industry's
dependence on turbo-drill technique. Soviet experience of drilling deep
wells in old Baku area disclosed to them that high rotating turbodrills
are very ineffective in drilling of deep formations. Industry has tried
to develop sloW-speed turbodrills, but research thus far has failed to
provide one for the industry. Use of rotary technique below 2, 000 meters
indicated the possibility of reducing drilling time by 50 percent. Appli-
cation of rotary drilling technique brought on drill pipe troubles. This
is exemplified by increasing number of fishing jobs in the 1959-1961 years.
Drilling rigs in this period had some 3, 000 fishing jobs which were estimated
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? ? ??? 777. 777 "777" 7.7
to cost 54.3 million rubles. In 1961 fishing costs were in the order of
19. 1 million rubles. The best quality of Soviet drill pipe is similar to
N-80 of U. S. From reports it would appear that industry is not getting
heavy rigs scheduled for delivery under the 7-year plan. Models of the
new rigs are still being tested and are not available in any quantity. The
same is true of large size mud pumps and high pressure blow-out preventers.
Meanwhile, reports indicate discovery of large reserves of oil
at depths of 1, 700 to 3, 000 meters in Ural-Volga, North Caucasus,
Azerbadjan and S. W. Turkestan. Existing heavy rigs are good at best
for 2, 000 to 2, 500 meters drilling and below that depth become inefficient.
From 1956 to 1961 the Soviet oil industry drilled a total of 851 deep wells
below 3, 000 meters, and of these only 115 were drilled below 3, 500 meters.
The 1963 drilling program provides for the use of diamond bits in 200
wells, and this gives an indication of the number of deep wells to be drilled
during the coming year. The depth record in the Soviet Union is 5, 041
meters.
CRUDE OIL PRODUCTION
In 1962, the Soviet oil industry produced 186, 000, 000 tons, or at
the rate of 3, 720, 000 bbls. /day. Of the above total the Russial Federated
Republics (except Ukraine, Baku and Middle Asia) produced 152, 000, 000
tons, or approximately 80.8 percent. Improvements in productive
capacities of North Caucasus and of S. W. Turkestan have contributed
to the attainment of the 1962 production targets. S. W. Turkestan is now
N
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expected to produce in 1965 in the order of 10.0 million tons vs. 7.5
million initially scheduled. North Caucasus is now expected to produce
in 1964 at the 1965 rate. Oil fields of Ukraine also were doing better
than planned with this region producing in 1962 some 1, 000, 000 tons
over the target.
In 1959-1962 period, or the first four years of the plan, the oil
industry produced in the order of 14, 000, 000 tons over the planned quan-
tities. In this connection it may be well to note that during these four
years the oil industry has failed to meet drilling footage targets to the
extent of several million feet. On the other hand, industry apparently
did well in exploitation of oil fields by application of stimulation techniques
of fracking, acidizing and water injection. The success of the industry
to exceed its production targets, in the first four years of the plan, can
be attributed largely to the intensity and application of modern petroleum
technology in the newly developed fields of Ural-Volga region.
Crude oil reserves of the Soviet Union as of January 1, 1963, are
estimated to be in the order of 26.2 billion barrels, having a ratio of
reserves to annual production of 19 to 1 (1962 rates). This ratio was
derived from January 1, 1961, base of 20 to 1 and reported deficiency
of discoveries in 1961 and 1962.
During the last year industry released information which gives the
following estimate of oil wells in operation in 1961.
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Number Bbls./w/day
Flowing Wells 6, 570 375
Pumping (Electricand Rod) 26, 150 30
Gas Lift 1, 335 62
34, 055 97 (average)
The 1963 crude oil production target has been set at 205.0 million
tons or at a rate of 4, 100, 000 bbls. /day.
NATURAL GAS PRODUCTION
Natural gas production in 1962 rose to 75.2 billion cu. meters,
up 16.2 billion from 58.98 billion cu. meters in 1961. The 1963 natural
gas production target is set at 90.0 billion cu. meters.
Manufactured gas production for 1962 has been estimated at 1, 955. 7
million cu. meters, which is an approximate average rate during the last
three years.
The 1961 gas consumption by users in the Soviet Union was reported
as follows:
Community heating 11. 1%
Industrial 58. 3%
Electric power 27. 4%
Transportation
Agricultural . 1%
Pipe line and losses 2.9%
100. 0%
Natural gas production and its demand are being attributed to
cheapness cif gas in comparison to other fuels. The following average
price of fuels, for instance, was cited to indicate advantages of gas in
the White Russian Republic.
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YCHI Uttiti
Average price of standard ton
An average
for Republic
of fuel (7,000 kk), Local
at Polotsk at Minsk
at Vitebsk
(Given in Rubles per Ton)
Natural gas
5.69
9.73
3.72
7.25
Heavy fuel oigMazoot)
8.9
8.79
9.01
8.59
Donetz coal
16.28
16.61
16.45
16.40
Carpathian coal
21.36
21.86
21.23
21.90
Torf
15.96
20.43
16.37
14.77
In the course of discussion it was stated that the average whole-
sale price of gas to the industries in 1962 has been in the order of 12.1
rubles per 1,000 cu. meters. Wholesale prices of gas have been under
study and a new price structure is about to be adopted and announced. The
recommended prices are as follows:
Class I
Class II
Class III
Class IV
Class V
Gas producing regions 9. 5 rubles/1,000 Cu. mtrs.
Areas along main gas lines 11.0
Ukraine, Cheliabinsk, Sverdlovsk 12.0
Moscow, White Russia, Lithuania 13.0
Areas of high fuel cost, such as
Leningrad, Central and East
Siberia 15.0
In contrast to the above wholesale prices the following average
cost of finding, producing and transporting was reported for the year of
1961:
Average finding cost .40 rubles/1,000 cu. mtrs.
Average producing cost .53
Average transportation cost 2.07
3.00
Natural gas reserves of the Soviet Union as of January 1, 1962,
in AB categories, were reported to be 72.0 trillion cu. ft., and in ABC
categories, in the order of 86. 6 trillion cu. ft. Three largest gas fields
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--(North Stavropol, Shebelinka and Gazli) hole 42 percent of gas reserves.
Gas reserves of the 12 other large fields amounted to 20 percent of gas
reserves. Thus, 15 of the largest gas fields of the country back up 62
percent of the reserves of the entire Soviet Union.
At present the gas industry has in operation 250 gas fields including
gas-cap fields. In the first three years of the plan the Soviets found 83
gas fields with a reserve of 42.8 trillion cu. ft., or 6.7 percent more
than the planned target. This good showing was due to an unusually
successful rate of discovery in the year 1959, as 1960 additions to gas
reserves in AB categories were only 70 percent of the target figures for
the year, and in 1961 only 66. 6 percent. Of the 16 exploration regions,
only 6 have met their gas discovery targets. Saratov-Volgograd, Ukraine,
Turkestan and Azerbaidjan have failed to make planned additions to gas
reserves in each of the first three years. The feeling is that 1962 will
be another year of deficiency in all (ABC) categories. Presently, Ukraine
gas reserves are in the order of 14.5 trillion cu. ft., and at the 1963
production rate the gas reserves amount to only 14 years of supply vs.
an accepted standard rate of 20 to 1.
Fourteen gas fields of Western Siberia have a gas reserve of 2.5
trillion Cu. ft. Pipe line to move this gas to Serov in Urals is in an initial
stage of construction.
CRUDE OIL AND PRODUCTS PIPE LINES
Planned construction of crude and product pipe lines have lagged
behind the targets in the first four years of the plan. In the period
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- 1959_1961 construction amounted to only 90 percent of the planned targets.
Work in 1962 was also behind the plans. Consequently, 1963-1965 pipe
line transportation loads have been reduced by 73.0 billion ton-kms. and
this load was shifted to RR transport. Delays have occurred in European
portions of Russia as well as in Siberia. In Siberia completion of the
Krasnoyarsk-Irkutsk portion will be delayed and Irkutsk refinery is to
be supplied by tank cars. The same is true of Novo-Yaroslavl refinery.
Delays also occurred on Nickolaev-Bryansk line.
Tichoretsk-Tuapse line (240 kms. of 20 inch) was to be completed
in 1962. No mention of completion has been made as yet. Tichoretsk-
Novorossiisk 20-inch pipe line has been scheduled for completion in 1963.
Prorva-Koraton (61 kms. of 20-inch) was completed and placed
into ope-ration in 1962.
Construction of Drujba pipe line is taking a major portion of
Soviet effort. In 1962 it was planned to lay 1, 000 kms. on Kuybyshev-
Penza and Mozyr-Brody sections. Almetevsk-Kuybyshev section (273
kms.) has been completed and placed into operation. The Kuybyshev-
Penza portion of the line was to be placed into operation in the last quarter
of 1962. Kuybyshev-Cizran part of the latter section was placed into
operation. No information is available on progress in construction on
remaining portion of Kuybyshev-Penza or Mozyr-Brody sections. It has
been announced that three fields that are to feed the Drujba pipe line
are Romashkino, Muhanovo and Kuleshevski.
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By the end of 1961 the oviet Union had in'operation 17, 705 kms.
of crude and products lines. In this total 10, 861 kms. were in sizes
larger than 20 inches.
In February, 1963, Provda reported that the Czecks were working
on their Bratislava-Zaluji (450 kms.) pipe line. The first stage is to
begin on Morovian Plato and proceed west to Zaluji (near the town of
Most) in western part of Czeckoslavakia. To date 60 kms. were laid on
Praha-Zaluji portion and 30 kms. in southern Slovakia. By 1966 all
Czeck refineries will be connected to the pipe line.
NATURAL GAS PIPE LINES
During the four years 1959-1962 the gas industry has placed into
operation 15, 695 kms. of trunk pipe lines. An average rate of additions
in the last three years was in the order of 4, 370 kms. per year and at
this rate of construction the industry is in the position to meet the originally
planned target of 39, 300 kms. by the end of 1965.
The work on Ural-Gazli line is continuing, and the latest statement
by the gas industry indicates confidence that the first string to Cheliabinsk
will be completed by the end of 1963. This appears to be on the optimistic
side in view of the poor deliveries of 40-inch line, compressors and turbines.
In July, 1962, the Soviets reported laying of 476 kms. of this line
in the first six months of the year. Since the 1962 planned target was
900 kms. it is possible that by the end of the year construction crews
reached the Chalkar, their target point by the end of the year. This then
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? would leave 1,100 kms. for completion in 1963. The delays in completion
of this line could come from shortages of 40" pipe and inability to get on
time FT-700-5 turbine-compressor units.
Presently the Soviets have three pipe mills making 40" line pipe.
One of these is at Jzdanov's works producing spiral weld pipe. Here,
the plans are to have third production lines by the end of 1963, and con-.
struction is lagging behind the scheduled time. The second mill is at
Novo-Moscow works which is producing a longitudinal weld pipe. Here,
production is insufficient to meet the demand. The mill is behind on
deliveries and the quality of pipe is poor. The third mill is in the process
of installation at Cheliabinsk works. This mill is to go into operation in
the first quarter of 1963, but thus far is not operating. Its output is to
be 10,000 tons in 1963 and it is being rushed to start operations in April,
1963.
The first string of Cheliabinsk-Gazli line is designed for installation
of 7 stations of 5 FT-700-5 units or a total of 35 compressor-turbine units.
Only 25 of these units are scheduled for delivery late in 1963. Thus, it
would seem that scheduling is very tight and the Soviets would be very
lucky to make only partial deliveries of gas through the line in 1964.
In other construction the industry was scheduled to complete, in
1962, the Vilno-Riga, Shebelinka-Poltava, Kohta-Yarva to Tallin (second
line), Krivoy Rog to Kherson, Mannibaevo to Zainsk and Belsk to Sumi
pipe lines.
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REFINERY RUNS
An article in Oil Economy, issue of December, 1962, on refining
stated that if the oil industry is to meet demands of the Soviet economy in
oil products, and particularly in light products, the average annual addi-
tions to refining capacity in 1963-1965 must exceed average refining
additions for 1959-1962 by a factor of 2. 1. At the same time catalitic
refining, hydrofining, de-paraffination of diesel fuel, additives and
catalysts must also be stepped up. During this same period installations
of thermal cracking units were to be discontinued.
With increases in refining runs for 1959-1962 being on average
in the order of 12, 500, 000 tons per year it would mean that 1963-1965
additions would have to be in the order of 26, 500, 000 tons per year. As
it is extremely doubtful that the industry can meet this problem in the
next three years, the Free World must expect an increase in Soviet
crude oil exports and possible decrease in products.
Recent press releases on Polotsk refinery indicated that installation
at atmospheric-vacuum unit, thermal cracking unit and electric plant
have been completed and that the cracking unit will become operational
in March or April of this year. Press releases also stated that Massovetz
refinery at Plotsk, Poland, and Scwedt refinery of East Germany will
have final capabilities of 2, 000, 000 tons per year.
In studying the available information on 1962 operations of the
Soviet oil industry one gets the following impressions:
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. vii UI FIljII1L uoc. WILT
1. A rapid and sustained increase in crude oil production of
Soviet Union in the last four years was a result of discovery of a number
of large fields in Ural-Volga region in late fifties and intensive exploitation
of these fields through pressure maintenance by injection of large quantities
of water during the first four years of the seven year plan.
2. In the last four. years industry was unable to make the planned
discovery targets of oil and gas reserve additions.
3. Annual production reserves ratio in the last year or two have
been lowered below 20 to 1 which is considered by the Soviet Union to be
safe operating ratio and had been used in their planning of industry
operations.
4. In the last four years the Soviet oil industry has not been able
to increase efficiency of drilling rigs. In fact, it seems that industry
strained itself to maintain it at a point reached by 1959.
5. New deep drilling equipment including mud pumps, electrodrills,
etc., that were scheduled for deliveries in the first four years of the
present plan have not reached production lines as yet. Only a few of
such rigs were manufactured and are now undergoing field tests.
6.,. The two pipe mills that can make 40-inch line pipe are in
operation, but a third one, after delays, is now scheduled to go on
production in March or April of this year. Two presently operating mills
are behind on deliveries and there are shortages of 40-inch pipe which
is badly needed in completion of Gazli-Cheliabinsk and Drujba pipe lines.
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UUI UPPIUIAL USL UNLT
7. In drilling below 2, 000 meters the industry needs better drill
? pipe and bits. In the manufacture of drill pipe the industry uses steel
which has physical properties only slightly better than that used in the
U. S. in manufacture of N-80 pipe. In deep drilling with turbodrill the
industry is trying to use diamond bits.
8. To improve management of industries the Soviet Government
re-organized the country into smaller number of economic districts,
centralized all construction under one ministry in Moscow and made
the Communist Party (central and local) responsible for planning and
realization of planned production.
9. In preparation of production targets for 1959-1965 the population
of the Soviet Union was underestimated. As of January 1, 1963, popula-
tion of the Soviet Union was 4.0 million over the estimate, and it has been
stated that changes in some production targets are to be made accordingly.
10. Drujba pipe line was originally scheduled for operation by
the end of 1963. Recent press releases on this pipe line give no indica-
tion of this possibility or of the present thinking on the completion date.
It would appear that, with indicated shortages of 40-inch line pipe,
Kuybyshev-Mozyr section cannot be completed this year. At best, this
line can be placed into operation in the last half of 1964.
11. The Soviet oil industry has a crude oil production target of
205.0 million barrels for 1963, or a rate of 4, 100, 000 bbl. /day. It now
appears that the industry can easily achieve its 1965 planned target of
4, 800, 000 bbls. /day. In fact, 1965 crude oil production could be in the
order of 5, 000, 000 bbls. /day.
March 25, 1963
Ivan S. Salnikov
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