USSR: THE GAS INDUSTRY THROUGH 1985

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00702A000100070007-6
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 24
• Document Creation Date: December 12, 2016
• Document Release Date: July 19, 2002
• Sequence Number: 7
• Publication Date: July 1, 1978
• Content Type: REPORT

'1A(W41a9 ioffffi lffff f
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An Intelligence Assessment
Confidential
ER 78-10416
July 1978
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CONFIDENTIAL
USSR: The Gas Industry
Through 1985
Central Intelligence Agency
National Foreign Assessment Center
Key Judgments
The USSR is unquestionably depending_upon natural gas to help carry it
past any difficulties caused in the next several years by stagnating or falling
oil production. The Soviets are intensifying their efforts to exploit their
extremely large gas reserves (referred to by the Soviet press as "blue gold")
and have good reason to emphasize the gas industry's rapid development:
? Unlike the Soviet oil industry, the gas industry has been extremely
successful in finding new reserves. Almost all of the giant hydrocarbon
discoveries announced by the Soviets since the early 1970s have been
gas, and proved reserves probably now equal at least 40 years of
production at the 1977 level of 346 billion cubic meters (cu m)
compared with only about 10 years for oil.
? Despite repeated failure to meet plan goals, the gas industry has grown
more than twice as fast as the,oil industry over the past two decades
and now provides nearly one-fourth of Soviet fuel supplies. Between
now and 1985, gas output will contribute most of the increments to
total Soviet fuel production, and by 1985 it could constitute more than
one-third of total Soviet fuel output.. Natural gas is already a major
industrial fuel in the USSR and the country's fastest growing source of
export receipts.
Although the Soviet gas industry has the potential to maintain substan-
tial production growth through the next decade, several major obstacles may
hold down its rate of expansion.
? Most of the country's gas production now occurs in the European
USSR and Central Asia, but these regions contain only about 30
percent of total reserves, and new discoveries have not kept pace with
output over the past decade. Production from many of these regions'
large fields is declining, and may be doing so at a faster pace than we
estimated earlier.
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? Future growth of the gas industry depends on rapid development of the
large deposits of northern West Siberia-both to offset declines in
other regions' output and to allow for substantial growth. Development
of this arctic area is unprecedented in the history of the world's oil and
gas industries and poses problems of field development and pipeline
and compressor station construction and operation not previously
encountered in either the USSR or the West. Even with further
imports of Western gas equipment (notably pipe and compressors), the
USSR may not avoid a substantial slowing of growth in West
Siberian-and thus Soviet-gas output.
Moscow appears to have grown more concerned since mid-1977 over the
face of West Siberian gas development.
? Articles in the Soviet press complaining of slow or inadequate con-
struction of pipeline and gasfield projects have become more frequent
and frank.
? Moscow has recently assigned more of the 1976-80 Five-Year Plan
budget to oil and gas development in West Siberia and has hurriedly
dispatched additional men and equipment to that region.
? Because vital infrastructure in northern Siberia is virtually nonexist-
ent, however, even a major stepped-up campaign to open the region's
gas deposits probably will produce through 1985 only marginally more
gas than that provided without additional efforts.
Gas will help ease the impending decline in Soviet oil production.
onetheless, it will not solve the country's emerging energy problems.
Gas will substitute for oil in several sectors of the economy, but not
rapidly or to the extent necessary to prevent potential tight energy
supplies.
? Gas by 1985 will become the leading earner of hard currency in trade
with the West, but it will probably not equal the receipts currently
being obtained by Soviet oil exports.
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Key Judgments ............................................ ............................................
Introduction ................................................................................................ 1
Gas in Perspective .................................................................................... 1
Tyumen': Pluses and Minuses ................................................................ 4
Tyumen' Development Problems .............................................................. 7
Inadequate Infrastructure .................................................................... 7
Field Preparation .................................................................................. 7
Pipeline and Compressor Station Construction .................................. 8
Development Encounters Unprecedented Problems ............................ 8
Supply of Pipe ........................................................................................ 9
Compressor Shortages .......................................................................... 9
The Role of Gas Domestically and in Foreign Trade ............................ 10
Domestic Consumption .......................................................................... 10
Foreign Trade ...................................................................................... 11
Prospects .................................................................................................... 12
Production Losses ................................................................................ 13
Siberian Bottlenecks .............................................................................. 13
Reliance on the West ............................................................................ 14
Rising Costs .......................................................................................... 14
Stepped-Up Campaign ........................................................................ 15
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Increments to Energy Production
Million B/D Oil Equivalent
3.0
M
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USSR: The Gas Industry Through 1985
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Introduction
Soviet natural gas production until recently
has drawn much less attention than Soviet pro-
duction of oil, which currently constitutes 45
percent of domestic fuel output versus 24 percent
for gas and 28 percent for coal. Natural gas,
however, is the most dynamic sector of Soviet
fuel production. Despite its repeated failure to
meet plan goals, the Soviet gas industry has
grown rapidly, becoming second only to that of
the United States. Its impressive capacity for
continued expansion suggests that its importance
to both foreign and domestic consumers will
eventually approach that of oil. The purpose of
this paper is to provide an analysis of the prob-
lems and prospects facing the Soviet gas industry
for the next few years.
Gas in Perspective
Soviet natural gas production has ended a
boom phase in its development and is entering an
era of slower growth. This is occurring, some-
what paradoxically, as the Soviets begin exploit-
ing their largest gasfields. The concentration of
the USSR's major gas reserves in a single,
remote region-West Siberia-will increasingly
hamper gas extraction now that other large
sources of regional growth are gone. Resulting
bottlenecks in production will not prevent gas
from increasing its importance in total Soviet
energy supplies, but they could lead to occasional
interruptions.
The importance of gas to the Soviet energy
balance and to hard-currency trade is steadily
increasing. Gas already constitutes 24 percent of
Soviet fuel production, against 45 percent for oil.
Its export level to the West since 1970 has risen
to one-fifth of that for oil (in caloric equivalent).
More important to Soviet planners, the growth
potential for gas remains significant while oil
production will begin its decline by the early
1980s. During 1971-75, gas added about one-
half as much energy to Soviet supplies as did oil;
during 1976-80, gas will probably add more than
oil-2.2 million barrels per day (b/d) oil equiv-
alent compared with about 1.7 million b/d.
During 1981-85, prospective increases in gas
supplies (2.1 million b/d oil equivalent) probably
will more than offset declines in oil production
(see figure 1).
The USSR may have up to 28 trillion cu m in
proved, probable, and possible reserves, at least
four times as much as equivalent US reserves.'
West Siberia's northern Tyumen' Oblast con-
tains several of the world's largest known gas
deposits, and the trunkline system being built to
link them with consumers in the European
USSR and farther west is unprecedented in its
length and potential throughput capacity.
Gas production in 1977 grew by 8 percent
compared with 1976 production and was 4 billion
' It is possible that the Soviets have recently revised downward
their gas reserve estimate. Although Soviet data released in 1976
and 1977 indicated that reserves of 28 trillion cu in had been
reached, recent Soviet statements have failed to give a current
reserve estimate and suggest that the figure may be lower, perhaps
around 23 trillion cu in. This report, however, will use the estimate
of 28 trillion cu in.
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cu m above planned production, reaching 346
billion cu m~ (33 billion cubic feet per day)-the
industry's second consecutive overfulfillment of
an annual plan. Output since 1970 has grown at
an impressi a 8.3-percent annual rate. Maintain-
ing such gr wth, however, will prove to be much
more difficult in the future. Growth will likely
drop well b low the current 8-percent average
annual rate; gas output in 1980 is likely to reach
about the middle of the target for 400 billion to
435 billion c m in the 1980 plan. It is unlikely to
do better th n reach the bottom of the range of
560 billion to 600 billion cu m projected for
1985. Gas nevertheless will provide by far the
largest incr ments of any major fuel in total
Soviet ener y production during 1976-85. By
1985 gas could account for approximately 40
percent of total fuel output. It could also replace
oil as the leading commodity in Soviet exports by
1985.
The impending slowdown in gas production
growth stems from two developments of the late
1970s:
? Significant growth potential is now more
concentrated in a single region than at any
time since the mid-1960s when the Soviet
gas industry began to grow rapidly. West
Siberia's northern Tyumen' Oblast (see the
map) possesses most of the major untapped
Soviet reserves feasibly exploitable in the
next decade (see table 1). Yet the cost and
physical difficulty of developing these depos-
its and piping the gas 3,000 to 5,000 kilo-
meters (km) for domestic consumption and
export poses unprecedented problems for So-
viet energy ministries.'
? Simultaneously, combined production from
the country's other gas regions will decline.
This will force West Siberia to cover increas-
ingly large losses in national output before
actually making net additions to total gas
supply (see figure 2). Trion-West Siberian
Tyumen' Oblast Gas Industry'
Reserves
(A + B + C,)- Production Reserves/
(Billion Cubic Percent of (Billion Cubic Percent of Production
Meters) USSR Reserves Meters) USSR Output Ral:io
1960............ 50.2 2.2 0 0
1,1961 ............ 50.2 2.0 0 0
11962 ........... 70.1 2.5 0 0
!1963............ 130.1 4.2 0 0
1964............ 200.3 6.2 0 0
11965........... 300.3 8.4 0 0
1,966........... 400.8 11.2 0.6 0.4 668
1,1967............ 895.8 20.4 5.2 3.3 172
1968............ 4,030.6 42.8 8.2 4.8 492
1969 ............. 4,914.3 40.7 9.1 5.0 540
1970............ 6,834.9 56.5 9.2 4.6 743
1971............ 9,252.3 58.7 9.3 4.4 995
1972 ........... 10,608.7 58.9 11.4 5.1 931
973........... 11,797.4 60.4 15.8 6.7 747
974............ 13,749.5 61.3 21.8 8.4 631
1975............ 15,490.0 63.0 36.8 12.7 421
976............ 17,000.0 61.0 44.0 13.7 386
977............ NA NA 67.9 19.6 NA
I Soviet and Western oil and gas reserve concepts differ, and Soviet reserve estimates are nc
-eliable. Nonetheless, Soviet A reserves plus some portion of adjacent B reserves correspond t(
I proved reserves" category. The remainder of B reserves and some fraction of the C, reserves fall
JS "Drobable" classification. Most of the remainder of the C. reserves fqll into the IN "noq.qib1P- i
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lone ro LC lion O atura as
rs
sA: - -rla
Oblast
` trr Asiaa
aucass
576486 7-78
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i
gas pr duct(on peaked in 1977 and will
decline or the first time in 1978 (see table
2). Extraction rates are falling at major, but
old, fields of the Ukraine, Uzbekistan, and
the Nor h Caucasus, and recent information
indicate that the decline may be accelerat-
ing faster than we had previously expected.
Certainly by the early 1980s these regions
will constitute a severe drag on overall gas
industry growth. Moreover, output may have
peaked or Central Asia, until last year the
leading source of production growth. By
1980, extraction may begin declining in the
region's prolific Turkmen SSR and in the
Komi A SR, also a source of recent growth.'
Tyumen': Pluses and Minuses
The large gas deposits of northern Tyumen'
present both opportunities and serious challenges
to the Soviet gas industry. More than 80 percent
of the region's reserves of 17 trillion to 19 trillion
cu m are inl eight large fields (Urengoy, Yam-
burg, Zapol'arny, Medvezh'ye, Kharsavei, Bo-
vanenko, S Imakov, and Neitinsk), which will
facilitate de loyment of industry resources to-
ward both fi Id development and construction of
' For a detail discussion of the decline in output from older
producing region, see USSR: Development of the Gas Industry,
op. cit.
USSR: GroLvth in West Siberian Gas Production
Billion Cubic Meters
pipelines linking those fields. However, all of
those deposits straddle the Arctic Circle and are
under permafrost many tens of meters thick. Of
greater concern to Soviet planners, the fields are
great distances from the major industrial and
urban consuming centers in the European
USSR, necessitating construction of transmis-
sion pipelines thousands of kilometers long. Dur-
ing this five-year plan alone, the USSR plans to
add 35,400 km of large-diameter gas transmis-
sion lines and great numbers of compressors,
mainly to link these reserves with the consuming
regions in the European 1USSR.4 Only the
United States has ever added more major gas
trunkline during any five-year period.
The magnitude of West Siberia's potential
output and its prospective problems has been
reflected in the gas industry's rapidly growing
investment in the region. Development of the
huge Medvezh'ye deposit in the early and mid-
1970s increased the northern Tyumen' share of
annual industry investment to well over 30 per-
cent (see table 3). Medvezh'ye is now the Sovi-
ets' largest operating gasfield and the only sig-
nificant northern Tyumen' deposit fully
developed so far. Its jump in output from 44
billion cu m in 1976 to over 66 billion in 1977
accounted for almost all gas industry growth last
year. The field's gas has been transported to the
European USSR through the Nadym-Punga-
Nizhny Tagil-Gor'kiy (now the Urengoy-Cen-
ter) pipeline and apparently, in the past two
`Together with planned additions of 18,000 km of large-diame-
ter oil pipelines, this represents the equivalent of one Alaska
pipeline every six weeks-much of it under environmental condi-
tions even more severe than those encountered on the Prudhoe-to-
Valdez route.
1970..........
2
188.7
0.1
16.7
1971..........
3
203.1
0.1
14.4
Annual Capital Investment in Northern Region Gas
1972.......... 11
.4
210.0
2.1
6.9
Projects as Percent of Total Gas Industry Investment'
1973.......... 1$
.8
220.5
4.4
10.5
1974..........
238.8
6.0
18.3
1975..........
252.5
15.0
13.7
1976..........
276.6
7.2
24.1
1977' ...... 61
.9
278.1
23.9
1.5
19782 ...... 90
.0
271.0
31.1
-7.1
' Not all projects accounted for here strictly involved Tyumen'
Oblast gas. However, most investment, particularly in the later years
' Estimated. 11
shown, was most likely tied to that region's gas industry. Source:
' Plan
Ekonomika gazovoy promyshlennostt, no. 8 (1977), p. 36.
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years, through a linkup with the Northern Lights
trunkline.
Tyumen' gas development during 1976-80 will
prove much more expensive than in 1971-75. In
pouring roughly 15 billion rubles-80 percent of
the Ministry of the Gas Industry total-into the
region in that period (equal to about 4 percent of
total industry investment for that period), Mos-
cow plans to raise West Siberian output in 1980
to 155 billion cu m. 5 That increase would pro-
vide more than 80 percent of the gas industry's
growth while raising the northern Tyumen' share
of Soviet gas output to well over one-third.
The key to growth in the next few years is the
Urengoy deposit, which with 5 trillion cu m of
reserves (equal to total US gas reserves in the 48
conterminous states) is probably the world's larg-
est gasfield. The Soviets apparently are planning
to hike Urengoy's output rapidly from 15 billion
cu m in 1978, when it will come on stream, to 58
billion to 60 billion cu m in 1980. The nearby
Vyngapur deposit also is being drilled to produce
almost 5 billion cu m in 1978 and up to 15
billion in 1980. Development of the Komso-
mol'sk, Yubilenoy, and Gubkin fields has also
begun. Facilities to process up to 16 billion cu m
of associated gas from Samotlor and other oil-
fields in southern Tyumen' are also planned to
reach full capacity in 1980.
More than 500 extraction gas wells are sched-
uled for drilling during 1976-80-the largest
number of gas wells ever completed in any one
Soviet region during a five-year plan. Included
are 229 wells at Urengoy and 148 additional
wells at Medvezh'ye, which is to peak at approxi-
mately 65 billion cu m this year.
Three pipeline systems will move 139-billion-
cu m output in northern Tyumen' to Soviet and
European consumers (see the map). Medvezh'ye
and Urengoy gas will be handled by an expanded
Northern Lights system running to the western
Soviet border and by the Urengoy-Center sys-
tem, also with expanded capacity. Construction
S Northern Tyumen' Oblast would produce 139 billion cu m,
while associated gas from the southern Tyumen' oil region would
account for the remainder.
has begun of a third system (Urengoy-Vyngapur-
Chelyabinsk) which will move a limited amount
of gas from Urengoy and the smaller neighboring
fields by the decade's end. A pipeline moving
associated gas to the Kuzbass region should
reach full capacity by 1980. In all, the Soviets
plan to install 9,500 km of large-diameter
pipet-much of it 1,420-mm (56-inch)-and
more than 60 compressor stations, each with
several turbine units. The Tyumen' trunkline
system would thus become the largest single
pipeline system in the world. This system
will be several times greater than the pro-
posed $10 billion US-Canadian gas pipeline
from the North Slope to western markets.
Development plans beyond 1980 are not defi-
nite. During 1981-85, however, Moscow will
certainly try to bring Urengoy to its possible
peak capacity of 100 billion cu m. The target
date is 1982-83, and could require at least
another 250 wells. The Soviet press has recently
suggested the possibility of raising Urengoy's
peak output to more than 200 billion cu m. No
firm plans to achieve such an unprecedented
production level, however, have been announced.
Full development of Vyngapur, Gubkin, Komso-
mol'sk, and Yubilyenoy probably is also planned.
Uncertain are the plans for other giant Tyumen'
fields. The leading candidates for 1981-85 devel-
opment would seem to be Zapolyarny and Yam-
burg. Although confirmatory step-out drilling' is
under way at both deposits, the Gas Ministry
reportedly may be undecided as to whether or
how extensively the two should be developed in
the early 1980s. A possible debate over whether
to increase Urengoy's production substantially
above 100 billion cu m could be contributing to
the uncertainty, as could the Gas Ministry's
competition with the Oil Ministry for financial
resources for the 1981-85 five-year plan period.
Given a Soviet desire for continued, significant
growth in gas output, however, both deposits
probably will experience partial development.
6 In this paper, large-diameter pipe includes diameters of 1,020
millimeters (mm) and larger. The Soviet definition often includes
pipe of 530-mm diameter and larger. The largest gas pipe currently
in widespread world use is 1,420-mm.
' Drilling intended to gain further knowledge of a deposit's size.
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West Siberian: Gas Fields
and Gas Pipelines
? Na ural gag field
Pipeline in operation
- - Pipeline planned or
under construction
0; Kilos n te,p 300
' Kharsavey
7 Neitinsk
Semakov
Yamburg~
Novy,
' ,Zapolyarny
Urengoy
Yubilroy
Gubkin
576506
6
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This in turn will require new trunklines connect-
ing the new fields with existing pipeline sys-
tems-Zapolyarny linking up with the Urengoy-
Chelyabinsk system and Yamburg with the
Urengoy-Nadym trunkline.
production. As development spreads to other
deposits in the early 1980s, logistics problems
undoubtedly will increase.
Field Preparation
Tyumen' Development Problems
West Siberia's massive gas reserves present
massive exploitation problems. The location of
the giant gasfields in West Siberia has posed
significant difficulties for almost every phase of
the gas industry's development. Although the
Medvezh'ye field's development has provided
valuable experience for work on other deposits, it
also suggests that several problems will persist
well into the 1980s.
Inadequate Infrastructure
Northern Tyumen' lacks an efficient network
of all-weather roads and railways to link the
region to support industries. It also requires
production support facilities-such as interfield
and intrafield roads, supply depots, airfields,
repair facilities, communications, and power sup-
ply-all of which must be built from scratch.
The same is true for housing and basic social
services for the growing labor force. In Med-
vezh'ye's development, investment in infrastruc-
ture and wages for a large number of support
personnel has cost over 1 billion rubles. Until
adequate surface transport systems are built,
moreover, materials supply will continue to rely
heavily on air transport, which added 50 percent
to Medvezh'ye's development cost.
Progress on building infrastructure has proved
slow. Construction of railways and hard-surface
roads has lagged substantially behind plan dur-
ing the past five years and probably will do
likewise during 1976-80. Tyumen' will remain
unable to supply most of its own construction
materials! Such support industries will continue
to lag because of poor organization. Development
priorities are not closely coordinated among the
20 agencies involved in West Siberian oil and gas
Northern Tyumen' plants supply only 50 percent of reinforced
concrete, 15 percent of crushed rock, 25 percent of gravel, and 20
percent of wood products needed for gas industry installations.
Northern Tyumen' gas deposits do not yet pose
the problem of great depths that have raised
drilling costs elsewhere in the USSR. Nonethe-
less, field development will prove difficult. Be-
sides the delays caused by supply and infrastruc-
ture shortcomings, harsh arctic conditions
interrupt drilling and construction for several
months each year. The Soviets apparently are
trying to reduce winter-idle-time in Urengoy's
development, but the weather is probably con-
tinuing to slow operations. Thick permafrost
hampers drilling and extraction; the melting and
refreezing of permafrost around wells has fre-
quently caused collapse of well casings and se-
vere wellhead settlement, halting drilling and
production. Improved casing materials, drill pipe,
drilling fluid, and well refrigeration techniques
are required.
Field preparation should be speeded by the
Soviets' recent adoption of cluster drilling-
generally the sinking of four wells from one
platform. The Soviets publicly claim no signifi-
cant problems. However, they have encountered
severe difficulties in drilling through permafrost
with their standard turbodrill and are unable to
sink directional wells-a more efficient extrac-
tion method-because of the danger of melting
the permafrost. These problems may persist into
the 1980s, when the Soviets develop deposits
further north under even thicker permafrost.
Gas processing will also challenge Soviet tech-
nology into the next decade. Drilling of large-
diameter wells9 will enable greater exploitation of
the giant fields' initially high-pressure reserves.
Pressure at many fields will drop within a few
years after production begins, however, necessi-
tating additional compressor stations both at the
field and along the pipeline. Condensate, hy-
' Currently, this category in the Soviet gas industry includes
wells of 146- to 168-mm diameters. The Soviets are also consider-
ing a large number of wells of 219- to 273-mm diameters.
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drates,10 an(
extraction t
high-capacit
Soviet plant
and automa
mum efficie.
use. Until
gaslines ma;
partly by cc
Pipeline a
ble-plagued
pipeline tra
were discov
massive net
lines was b
75, 31,000
installation
Soviet gas
135,000 km
production,
greater dist
by gas in 19
917 km in 1
I water seepage will become major
problems in a few years, requiring
y processing facilities. Yet most
are many years behind the West's,
ted processing units ensuring maxi-
ncy are not likely to find widespread
processing is improved, Tyumen'
y occasionally suffer breaks caused
rrosive impurities in the gas."
id Compressor Station Construction
est, most ambitious, and most trou-
sector of the Soviet gas industry is
risport. As substantial gas deposits
;red outside the Urals-Volga region,
ral Asia and then in West Siberia, a
work of cross-country transmission
wilt to link the remote fields with
d foreign consumers. During 1971-
km of trunklines were laid. The
of an additional 35,400 km by
ly in West Siberia-will expand the
trunkline network to more than
With the growth of West Siberian
gas is moving over increasingly
nces. The average distance traveled
15 was 1,294 km compared with only
970. The average may rise to 1,900
Development Encounters Unprecedented Problems
Several methods of pipeline construction have
been tried experimentally over the last dozen
years with varying degrees of success: elevated
pipelines have been known to fall off their sup-
ports, apparently because of wind-induced vibra-
tion and thermal expansion. In some cases, the
supports themselves have failed because of ther-
mal erosion of the permafrost. Berm construc-
tion " Z has its limitations because sand rather
than gravel (which would have to be flown in)
must be used for the berm. The pipeline berm is
sometimes eroded by wind and water, leaving the
pipe unrestrained and exposed to extreme winter
temperatures, and metal failure usually results.
The most successful approach has involved ditch-
buried construction. However, heat from the gas
within the pipe and thermal radiation causes the
permafrost to thaw to depths of 6 meters. Pipe
settlement results, producing stresses on the pipe.
The Urengoy-Medvezh'ye line will be the first
major trunk system crossing continuous perma-
frost and will probably require the use of a
chilled gasline to prevent serious thermokarst
damage.13 The USSR has no experience with
chilled gasline construction and has delayed
building the Urengoy-Medvezh'ye line for over a
year in order to study US techniques used in the
Alyeska oil pipeline and the planned arctic: gas
pipeline. Chilled gas pipelines, though most de-
sirable from a construction standpoint, have
large power requirements for the refrigeration
equipment.
The tundra presents even larger construction
problems than does the permafrost. Whereas
only about 130 km of permafrost construction is
planned by 1980, more than 20,000 km of swamp
construction must be carried out.14 Under such
km by 19801.
The Sovi~
extensively i
country to it
a major seal
is have used large-diameter pipes
luring the 1970s, becoming the first
troduce 1,420-mm (56-inch) pipe on
;. Average pipeline diameter of long-
distance lines increased from 815 mm in 1970 to
1,012 mm in 1975. By 1980 this figure may
reach 1,082 mm. Compressor power on most
lines is inadequate, holding down pipeline
throughput to suboptimum levels. The Soviets
must rely o imports of Western pipe and com-
pressors to come even close to meeting their
pipeline construction goals.
I
? Hydrates re~ ult from the cooling of warm gas as it flows to the
surface. The condensation causes water vapors to collect at the top
of the well and d wn hole near perforations in the well casing. The
water freezes, trapping the gas in hydrate form. The hydrates tend
to plug the flow apertures in both areas, and at low surface
temperatures may cause valves to stick or split.
11 Soviet gas rocessing is discussed in more detail in USSR:
Development of he Gas Industry, op. cit., appendix D.
" A pipeline berm is an aboveground structure usually formed
by a gravel pad atop which the pipe is layed. An earthen mound
then covers the pipe. The gravel base provides protection against
heaving action caused by repeated freezing and thawing of the
ground. The earth covering insulates the pipe from destructive
effects of the weather.
"Thermokarst is the formation of irregular land surfaces in a
permafrost region caused by a melting of ground ice. In northern
Siberia the soil contains 50 to 70 percent ice by volume and
thermokarst depressions up to 40 meters deep have been noted.
" Tundra is a treeless plain characteristic of arctic and subarctic
regions, usually with a marshy surface, underlain by a dark mucky
soil and permafrost.
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conditions, most pipeline construction can be
done only in the winter on frozen ground, the
only time access roads and construction pads can
be built. Depending on the method of construc-
tion, access roads can cost anywhere from
500,000 to 1 million rubles per kilometer.
Swamp construction also requires numerous
screw anchors and saddle weights to secure the
pipeline to the mineral soil below.
Besides construction problems there are often
unexplained structural failures in the pipe itself.
One of the 1,420-mm lines between Nadym and
Punga experiences an average of 10 breaks a
year. Typically, the pipe splits open at the top
over a distance of 50 to 70 meters. In other
instances, ruptures 600 to 700 meters long have
occurred. Some failures can apparently be traced
to poor welds, laxity of inspection work, and
imperfections in the pipe itself; others to inad-
equate pipeline maintenance and improper gas
treatment processes. Failure to remove most of
the sulphur and moisture content of the natural
gas at the field before pipelining it can cause
severe internal corrosion and a weakening of the
pipe walls.
Supply of Pipe
The USSR is the world's largest producer of
large-diameter steel pipe. Nonetheless, it is un-
able to manufacture all the large-diameter, high-
quality pipe it needs for its gas and oil pipelines
and depends heavily on imports from West Ger-
many, Italy, France, and Japan. The Soviets
during 1971-75 may have produced about 8
million metric tons of large-diameter welded
pipe. Total Soviet demand for such pipe, how-
ever, was approximately 14 million tons, requir-
ing imports of almost 6 million tons. During
1976-80, planned construction of 54,000 km of
new oil and gas pipelines will require roughly 17
million tons of large-diameter pipe. Known
Soviet purchases and orders indicate that imports
in 1976-80 will reach 8 million to 10 million tons.
That in turn suggests that Soviet domestic manu-
facture will not increase much above its 1971-75
level.
Goals for gas pipeline construction in 1981-85
may not prove as ambitious as the current five-
year plan's. The major systems linking Tyumen'
gasfields and the European USSR have been
started in this plan period. Moreover, the de-
mand for additional oil trunklines will decline.
However, the need to lay additional lines on all
gas pipeline systems-plus the necessity of link-
ing them with the Zapolyarny and Yamburg
fields if those two deposits begin development in
that period-will probably still require much
more pipe than the Soviets can produce. Two
new pipe mills" are to be added to the existing
five. Their combined output could increase large-
diameter pipe manufacture by 2 million tons.
Neither plant will reach full capacity, however,
until the early 1980s. Another plant-a turnkey
facility with a capacity of 250,000 to 300,000
tons-is still under negotiation with West Ger-
man, French, and Japanese firms. It, too, would
not begin peak operation until well after 1980.
Existing plants will probably increase their out-
put of large-diameter pipe in the next few years,
but not substantially. Thus even though Soviet
demand for large-diameter pipe may fall in
1981-85 by several million tons, a few million
tons will probably have to be imported to cover
pipe requirements for the period. Most imports
would probably be made through gas-for-pipe
compensation agreements, in which West Euro-
pean countries receive gas shipments over a fixed
period of years in exchange for selling the Soviets
large-diameter pipe on credit.
Compressor Shortages
The major problem presently facing the gas
industry is an inability to provide the compressor
capacity necessary for economical pipeline opera-
tion. Only 50 to 70 percent of the compressor
stations planned for installation are actually
being commissioned. The current five-year plan
calls for 60 new stations per year, whereas only
40 to 45 are being built. Because of this, Soviet
gas pipelines often operate at 50 percent of
design capacity. The fault lies primarily with the
machine building sector, which is responsible for
turbine and compressor production, and with the
15 A plant to manufacture roughly 1 million tons of pipe of up to
1,220 mm is being built at Vyksa in Gor'kiy Oblast. A second plant
being constructed in West Siberia will produce 1,420-mm pipe and
will have a capacity of I million tons.
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CONFIDENTIAL
associations
the lines."
Soviet ga:
10 to 15 yea
aircraft gas 1
built in 19'
compressor (
use of aircra
1959. The n
pressor units
um-capacity
The first 10
and, by 197:
tion. Severe
GTK16, GT
been built b'
Because it
ficient, the
obtain many
the last fou
more than
compressors
nearly 4,000
158 compres
tracts since(
firms totale(
cember 197
Canadian cc
ploying Avo
Urengoy-Chi
Of possibl:
chases are
stations usin
engines such
GE LM-25(
aircraft. Su(
power of fii
responsible for installing them on
pipeline compressor technology is
rs behind that of the West. The first
turbine compressor in the USSR was
74 at the Sumy plant for heavy
;onstruction. In the West, industrial
ft gas turbines took place as early as
iajority of Soviet gas pipeline com-
being produced are small- to medi-
units of 4 to 6 megawatts (MW):
-MW unit was introduced in 1972
5, only 88 such units were in opera-
Ll larger compressor models-the
K25, GTK50, and GTK100-have
at are only in the testing stage.
s own manufacturing ability is insuf-
USSR has come to the West to
of its gas pipeline compressors. In
r years the Soviets have imported
-1.5 billion worth of high-capacity
from the West with a total power of
MW. The largest purchase involved
sors for the Orenburg pipeline. Con-
I with West German and Italian
I more than $700 million. In De-
the USSR purchased from a UK-
,nsortium 42 compressor units em-
n Rolls Royce jet engines for the
-lyabinsk pipeline.
y greater significance than past pur-
ngoing negotiations for compressor
g second-generation, lightweight jet
as the Rolls-Royce RB-211 and the
)0, developed for wide-bodied jet
:h engines offer almost double the
st-generation engines and provide
fuel savings Of 15 to 20 percent (per horsepower
per hour) with an increase of only 50 percent in
initial cost.
gines relate
involve only
Current negotiations for these en-
to a pilot project and probably
a few compressors. However, if the
decided to eventually use this de-
sign on a 1
significant. /
"Most gas a
Construction of (
rge. scale, fuel savings could be
lthough pipeline applications of ad-
d oil pipelines are built by the Ministry for
it and' Gas Industry Enterprises.
vanced second-generation gas turbines such as
the RB-211 are relatively new-they were first
installed in Canada in 1975--such uses are likely
to prove successful. In that event, this technology
could assist the USSR in further developing its
gas pipeline trunk network in order to meet its
growing demands for piping natural gas in the
1980s.
The Role of Gas Domestically and in Foreiign
Trade
Domestic Consumption
The share of natural gas in the Soviet energy
balance may approach or exceed that of crude oil
in caloric terms by 1985." Gas by that time,
however, will only substitute for oil domestically
in some uses. Most opportunities for easy substi-
tution of gas for oil have already been exploited.
Additional gas production will go for use in
industrial boilers and to industrial sectors which
are already large gas consumers and in which gas
is being substituted for fuels other than oil. Gas
consumption will continue to increase in the
chemical and metallurgical industries, where it
has been replacing coal and coke. Household use
will also increase but will not involve gas-for-oil
substitution, because oil has not generally been
used directly for heating purposes.
Significant substitution of gas for oil before
1985 probably will occur in electric power gen-
eration, where oil-burning thermal power plants
can switch more readily to gas than to coal,. No
such shift is apparently planned for 1976-80,
since the Soviets actually intend to reduce the
share of gas in total thermal power plant fuel
consumption during this period. Several oil-burn-
ing plants in the European USSR could make
the switch in the 1980s if a domestic oil shortage
required it. However, gas storage capacity near
these plants would have to undergo substantial
expansion to avoid winter gas supply shortages.`$
" Oil production in 1985 probably will be about 8 million to 10
million b/d. Output of natural gas probably will be 560 billion to
600 billion cu m, equivalent to about 9.4 million to 10.1 million b/d
of oil.
" Development of Soviet gas storage capacity is outlined. in
USSR: Development of the Gas Industry, op. cit., appendix E.
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Additional industrial sectors can also switch to
greater gas consumption in the 1980s. Given
declining Soviet oil output and a Soviet intent to
minimize reliance on foreign energy sources,
Moscow undoubtedly will attempt to use gas
more widely through more efficient gas utiliza-
tion by existing gas consumers and conversion of
other industries to gas-burning power sources.
The Soviets currently show no signs of initiat-
ing the large-scale conversion campaign that
would be required. The nature of significant
substitution within individual industrial sectors is
not clear, and further research is needed to
determine the amount of gas-for-oil substitution
possible for each industry within a period of five
or 10 years. If the historically long Soviet lead-
times characterize such an effort, a widespread
shift to gas could be delayed until the late 1980s.
What is unknown is the budget priorities that the
Soviets would be willing to assign to a major
conversion effort and the technical difficulties
that they would face.
Foreign Trade
Natural gas eventually will vie with oil as the
Soviets' chief foreign exchange earner. Total gas
exports will increase from 26 billion cu in in 1976
to roughly 78 billion in 1985 (see table 4). Net
exports-assuming moderate increases in Soviet
gas imports from Iran and Afghanistan-will
rise in that period from 14 billion cu in to 47
billion. In particular, rising gas exports to West-
ern Europe-and constraints on Soviet oil pro-
duction and exports-should permit gas export
earnings to equal and surpass hard-currency
receipts from exports of oil. Under gas trade
contracts already signed-most of them ex-
changing gas for large-diameter pipe and ancil-
lary equipment on credit-Soviet gas exports to
Western Europe19 should rise from 12.4 billion cu
in in 1976 to 25 billion cu m in 1980. By 1985,
exports will probably increase to 35 billion cu in.
" West Germany, France, Austria, and Italy. Exports also go to
Finland, for which hard currency is not paid.
USSR: Projected Trade in Natural Gas,' by Country
Exports ........................................ 25.8
Eastern Europe ...................... 13.4
Bulgaria .............................. 2.2
Czechoslovakia .................. 4.3
East Germany .................... 3.4
Hungary .............................. 1.0
Poland ................................ 2.5
Romania .............................. 0
Yugoslavia .......................... 0
Western Europe .................... 12.4
Austria .................................. 2.8
Finland .............................. 0.9
France ................................ 1.0
Italy .................................... 3.7
West Germany .................. 4.0
Imports ...................................... 11.8
Afghanistan ........................ 2.5
Iran ...................................... 9.3
Net Trade ................................ 14.0
32.7
37.3
45.3
55.5
196.6
77.8
16.0
17.5
24.0
30.6
101.5
43.1
3.5
4.0
5.0
6.3
21.0
8.5
4.5
5.0
5.5
6.3
25.6
10.0
4.0
4.0
5.5
6.5
23.4
7.0
1.0
1.0
2.5
4.0
9.5
5.4
3.0
3.5
4.5
6.0
19.5
8.1
0
0
1.0
1.5
2.5
2.1
0
0
0
0
0
2.0
16.7
19.8
21.3
24.9
95.1
34.7
2.8
2.8
2.8
2.8
14.0
4.0
0.9
1.0
1.0
1.4
5.2
1.0
1.5
2.0
2.0
4.7
11.2
7.7
6.5
7.0
7.0
7.0
31.2
7.0
5.0
7.0
8.5
9.0
33.5
15.0
12.9
12.9
13.0
14.6
65.2
31.0
2.9
2.9
3.0
4.0
15.3
4.0
10.0
10.0
10.0
10.6
49.9
27.0
19.8
24.4
32.3
40.9
131.4
46.8
' Actual for 1976. Source: Vneshnyaya torgovipa SSSR 1976, Moscow (1977). Trade estimates for the
years 1977-80 and 1985 are based on (a) known Soviet - West Europe trade agreements; (b) for Eastern
Europe, the trade arrangement under Orenburg pipeline agreement and assumed annual increments in gas
deliveries to certain CEMA customers; (c) scheduled increases in imports from Iran under the "trilateral
switch" deal and assumed slight increases in imports from Afghanistan.
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CONFIDENTIIAL
Much of the 1981-85 jump will involve exports of
Iranian gas to West Germany, France, and
Austria via the Soviet Union .2' The Soviet share
of Western Europe's total gas supply by 1985
will probab y not exceed 12 percent.
Even if g owth in gas production slows toward
the mid-19 Os, the Soviets are likely to honor
existing ha d-currency contracts. Although they
may not al ays fulfill annual commitments-
ey will strive
to supply u imately all the gas ca led for over the
contract pe iod. Foreign currency earnings from
gas of $1 1 illion in 1980 (in 1977 prices) will
surpass neit er the $4.5 billion obtained in 1976
from exports of oil nor_the potential earnings of
$2.7 billion from oil exports in 1980. By 1985,
however, gas will have emerged as the leading
foreign exchange earner, with gross hard curren-
cy receipts f $2 billion (in 1977 prices), while
the Soviets may have become net importers of
oil. LNG exports could also provide substantial
revenues for Soviet gas. The proposed LNG
project mos likely to produce exports is a joint
Soviet-US-Japanese venture to bring East Siberi-
an gas from the Vilyuy field to the Soviet Pacific
coast for li uefaction. No LNG exports, how-
ever, are lik ly before the very late 1980s at the
earliest, and
ciently lark
States and
gas to Sovie
very least, g
of the pure
rising costs
ogy and equ
tion in the
Gas expo
will remain
tuting rougl
.Signed in
transmitting of
gas-poor Soviet
their own Siberil
will import 17
billion, keeping
will receive 3.6
European consol
into effect in sty
begin later.
will only be forthcoming if a suffi-
e market develops in the United
Japan. Meanwhile the importance of
t trade will prove substantial. At the
as will provide an increasing portion
hasing power needed to cover the
If Soviet imports of Western technol-
ipment that expansion of gas produc-
1980s will require.
ts to Eastern Europe through 1985
arger than those to the West, consti-
lly 55 percent of total gas exports in
1975, the "trilateral switch" deal will entail the
as from Iran's Kangan field to the increasingly
Caucasus. The Soviets in turn will export gas from
n and Urals fields to Western Europe. The Soviets
)illion cu m annually from Iran and reexport 15
2 billion cu in as a "transit fee." Czechoslovakia
billion cu m of the reexported gas, the West
-tium taking 11.4 billion. The agreement is to go
ages, beginning in 1981, although it probably will
that period. By 1980 the USSR should be sup-
plying almost 100 percent of Eastern, Europe's
gas imports. Soviet shipments to CEMA lnem-
bers 21 will rise from 13 billion cu m in 1976 to 31
billion in 1980 and to about 41 billion cu ni in
1985. Much of the increase through the early
1980s will come from gas transmitted via the
Orenburg pipeline," which should begin sending
some gas in early 1979. How much the Soviets
will actually export to Eastern Europe by the
mid-1980s is uncertain. With CEMA still heav-
ily dependent on Soviet energy supplies, Moscow
may significantly increase gas shipments if So-
viet ability to export oil declines. The Soviets
have recently indicated that such an action is a
distinct possibility. In that case, the Soviets may
avoid agreements with Western Europe for hard
currency gas deliveries additional to those al-
ready contracted for. Moscow would hestitate to
do this because its ability to import large-diame-
ter pipe via gas-for-pipe compensation deals
would be reduced. Soviet flexibility in raising gas
exports beyond 1980 to both Eastern and West-
ern Europe will thus depend on how rap idly
output is increased.
Prospects
Soviet natural gas production will increase
substantially through 1985. The 1980 plan goal
of 435 billion cu m is not likely to be met, but
1985 output should reach 560 billion to 600
billion cu m, an annual growth rate during 1981-
851 of roughly 6.0 to 7.5 percent (see table 5).
However, if certain difficulties facing the gas
industry are not reduced within the next few
years, not even West Siberia's large gas reserves
21 The Council for Mutual Economic Assistance. Members
receiving Soviet gas are Bulgaria, East Germany, Czechoslovakia,
Hungary, Poland, and Romania. Yugoslavia, not a CEMA mem-
ber, may begin receiving gas shipment:; after 1980.
]2 The Orenburg pipeline is a joint CEMA project for construc-
tion of a 2,750-km trunkline from the Orenburg field, in the Urals,
to the Czechoslovak border. Bulgaria, Czechoslovakia, East Ger-
many, Hungary, Poland, and Romania were to contribute men or
capital to the project, in return for 2.8 billion cu m annually to each
(1.5 billion cu m to Romania). Most CEMA members have fallen
behind on their commitments of men, and Soviet crews have wound
up building most of the line. Although the line itself may be
completed slightly beyond the late-1978 deadline, a slow buildup of
compressor capacity on the line could delay full deliveries of gas to
the CEMA recipients.
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Projected' Gas Production
Billion Cubic Meters
Average
Annual Percent Growth
1975
................
289
1980
................
415-420
7.5-7.81
1985
................
560-600
5.9-7.79
1976-85 ........
6.8-7.61
' CIA projections.
Five-year period.
8 Ten-year period.
will be able to guarantee constant production
growth beyond 1985. The Soviets themselves,
with unusual frankness, recently suggested that
gas output might even level off "sometime" in
the 1980s.23 Two basic problems underlie that
concern: (a) rapidly falling production at older
gasfields and (b) persistent bottlenecks-par-
ticularly pipeline construction and operation-
hindering expansion of Siberian gas output.
Gas production at older fields in the European
USSR and in Central Asia may be falling much
more quickly than anticipated. Moscow has
planned for a certain loss in output from these
fields during 1976-80 while investing heavily
since 1970 to minimize that loss. North Cauca-
sus gas production began its decline in the 1960s;
the more important producing regions of the
Uzbek SSR and the Ukraine began a slow
downturn in the early 1970s. The intensive and
sometimes wasteful exploitation methods prac-
ticed to achieve rapid growth in the late 1960s
may have led to a dramatic fall-off in capacity at
most major Ukrainian and Uzbek fields. The
giant deposits of Shebelinka (Ukraine) and Gazli
(Uzbek) are falling sharply, and no significant
deposits have been found to replace them.24 An
unprecedented Soviet failure during 1977 to
report regional gas production figures-com-
bined with recent Soviet statements-suggests
that output in the Ukraine and Uzbek is falling
faster than planned. A precise projection of the
amount of output loss is difficult. An aggregate
Ukrainian gas production plan for 1976-80, how-
ever, indirectly indicated that output there could
drop to roughly 50 billion cu m by 1980 rather
than the 59 billion cu m earlier planned."
Lagging pipeline and compressor station con-
struction probably will prevent Tyumen' gas
production from fulfilling its 1980 plan of 155
billion cu m. That problem, plus difficulties in
developing giant gasfields located above the Arc-
tic Circle, will also limit growth during the
1980s. Inadequate compressor capacity on the
three trunklines scheduled to move gas from
northern Tyumen' to the European USSR will
prove a major constraint on growth through
1980. Medvezh'ye, Urengoy, and smaller neigh-
boring fields probably will reach their planned
aggregate capacity of 139 billion cu m by 1980. 26
Moreover, the three pipeline systems-Urengoy-
Center, Northern Lights, and perhaps the first
two lines of Urengoy-Chelyabinsk-are likely to
have been laid by that time. However, Soviet
delays in negotiating imports of Western tur-
Z' A 1976-80 aggregate production goal for the Ukraine of 265
billion cu m (Neftyanaya i gazovaya promyshlennost' no.l (Janu-
ary-March 1977), p. 2) suggested an annual average output of 53
billion cu m for the period. Since Ukrainian production in 1976,
1977, and perhaps 1978 and 1979 will be higher than that, 1980
output should be considerably lower than 53 billion.
" The remainder of the 155 billion cu m planned for Tyumen'
Oblast will come primarily from associated gas production at the
region's major oilfields. That output will move southward via the
Nizhnevartovsk-Kuzbass line, to be completed in late 1978 or early
1979, which should reach full capacity by 1980.
25X1
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CONFIDENTIAL
bines and compressors, long leadtimes for those
units' manufacture and delivery, and slow Soviet
installation ~f the units will allow perhaps only
120 billion to 125 billion cu m to be moved-15
billion to 20 billion cu in below plan. Serious
pipeline failures, such as pipe settlement into
permafrost i nd pipe ruptures, could also easily
prevent Tyuoen' fields from meeting their goals.
The Soviets I themselves have indicated concern
with these problems by having long retained the
range of 40: billion to 435 billion cu m in the
1980 plan, 4my recently setting a firm goal of
435 billion u m.
Reliance o the West
Soviet gas production will remain dependent
on imports of Western equipment well into the
next decade. Both large-diameter pipe and com-
pressors will continue to be produced in insuffi-
cient quanti~y and quality to meet the gas indus-
try's needs. The Soviets will attempt to increase
their manuf cture of those two vital inputs, as
well as of other pipeline and field-related equip-
ment. Howe er, the necessity of developing new
and even more remote Siberian deposits will
overtax Sovi t industrial and construction capac-
ity, particularly since the oil industry will also
claim many of those same resources. Should
Moscow try I to mount a crash campaign to
develop seve al giant gas deposits simultaneous-
ly, reliance n Western equipment will further
increase. ~
Besides pig a and compressors, the Soviets can
use assistan a in several areas. Gas Ministry
officials have admitted weaknesses in many
phases of d filling in permafrost, including pre-
vention of melting permafrost, cementing of
wells, use of special packer fluid and drilling
fluid, use o improved drill pipe and bits, and
overall well design. They have also had problems
in determining the optimal spacing of production
wells, drilling pads, and related support bases
and in dec ding the optimal arrangement of
gathering lines and gas processing installations-
particularly facilities to cool gas before transmis-
sion by tru kline. Most Soviet gas-processing
plants and ripeline testing techniques are years
behind the West. Leakages in production well
tubing is emerging as a widespread problem, and
the Ministry is looking to the West for improved
tubing products. Many of the above problems
may require Western technical assistance as well
as equipment imports.
The ability of Western assistance to signifi-
cantly increase growth of Tyumen' gas produc-
tion is severely constrained. Although the West's
capacity to supply pipe, turbines, and other
equipment should pose no problem, Moscow's
hard currency reserves may prove inadequate to
purchase all needed items. Pipe and related
imports for 1976-80 have apparently been ob-
tained with few difficulties. As Soviet oil ex-
ports-and oil foreign exchange earnings--de-
cline in the early 1980s, however, natural gas
exports will probably not cover the entire revenue
loss. Consequently more of the hard currency
earnings of gas may go toward other types of
imports. If the oil industry maintains substantial
equipment imports, foreign exchange available
for gas-related purchases will. be further limited.
In this situation, a shortage of large-diameter
pipe could become the most critical bottleneck
facing the gas industry's expansion. Moreover,
what equipment or direct Western involvement
Moscow is able and willing to purchase may not
solve all the problems of Tyumen' development.
Western technology may prove not much more
successful at rapidly overcoming permafrost dif-
ficulties than the Soviets, who have had consider-
ably longer experience in that field. More likely,
Western assistance will not remove the major
bottlenecks created by Soviet organizational and
industrial shortcomings. If basic infrastructure-
particularly pipeline capacity-in northern Tyu-
men' remains woefully inadequate, Soviet invest-
ment in Western technical expertise will not
produce satisfactory returns.
Rising Costs
Costs of Soviet gas production since the early
1970s have risen faster than those for any other
major energy sector (see table 6). Although gas
will remain less expensive to produce than oil or
coal, its costs will continue to rise significantly.
Investment in further drilling in the older gas-
fields of the Ukraine, northern Caucasus, and
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Change in Production Costs in Constant Prices'
Percent
1970 Over
1975 Over
1965
1970
Oil extraction
-3.0
12.6
Gas production
8.5
45.9
Coal production
5.6
6.8
Electric power
0.1
2.4
' CIA estimates. 25X1
2 Does not include pipeline transport or storage.
Central Asia will constitute a progressively
smaller share of total gas industry outlays, but as
those regions' output falls more sharply beyond
1980, returns on that investment will plummet.
Delays in bringing Tyumen' Oblast's gasfields
and pipelines to full capacity, however, will prove
the major source of higher costs. Development of
the Urengoy, Yamburg, and Zapolyarny fields
will require unprecedented outlays for infrastruc-
ture and for production and pipeline equipment,
hiking total gas industry investment in 1981-85
well beyond the 19 billion rubles initially allocat-
ed for 1976-80. However, the Soviets' likely
failure to construct an adequate infrastructure
before 1985 will drag out field development
while maintaining high costs for transport of
supplies. Buildup of pipeline capacity will prob-
ably remain behind schedule, preventing existing
production capacity from being fully used and
thus lowering investment returns.
Stepped-Up Campaign
Moscow's concern over the pace of Tyumen'
gas development appears to have grown in recent
months. Correspondingly, the Soviets have
shown signs of stepping up their campaign to
open the region's giant gas deposits. Since mid-
1977, Soviet press articles criticizing slow or
sloppy handling of pipeline and field construction
projects have increased in number and frankness.
Major stories in Pravda, Izvestia, Sotsialisti-
cheskaya industria, and Trud have aired com-
plaints regarding those problems as well as the
basic lack of infrastructure needed for industry
As a result, budgetary allocations to the gas
industry reportedly have been increased-along
with those for oil-beyond the 19 billion rubles
originally provided to the Gas Ministry for 1976-
80. In effect, Moscow appears to be shifting
resources from older gas-producing areas to
West Siberia, where it calculates that returns on
investment will prove higher. Additional men
and equipment have already been transferred to
Tyumen' oil and gas regions. However, the lack
of infrastructure, particularly in areas surround-
ing large gas deposits as yet undeveloped, plus
the persistent problem of building up pipeline
capacity will probably prevent these extra re-
sources from producing much more gas over the
next several years than would be produced with-
out them. Moreover, transfer of resources from
older gasfields, especially those in the Ukraine,
will ultimately force output there to drop even
faster, undercutting part of the additional incre-
ment in Tyumen' output that the stepped-up
campaign will induce.
25X1
25X1
Approved For Release 2002/08/12 : CIA-RDP80T00702A000100070007-6
 Approved For Release 2002/08/12 : CIA-RDP80T00702A000100070007-6
Minsk
`horn
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Central
Center
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Deposits
Major Soviet Natural Gas and Pipeline Systems
lKharsavey
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Central Asia-Center 12700/1680
'Pipe#rtein n operation ---
Diameter Capacity
(KmJMi.) (Mm.) (Billion cu. m.l year)
Approved For Release 2002/08/12 : CIA-RDP80T00702A000100070007-6
1220-1420 56
1220-1420 40
1420 30
1020-1420 90
East Siberian
Lowland
Vilyuy
Yakutsk
pt r4s itIYaai r
 'onfidential
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,007 000 00070007-6
 Approved For Release 2002/08/12 : CIA-RDP80T00702A000100070007-6
Approved For Release 2002/08/12 : CIA-RDP80T00702A000100070007-6