SOVIET NEEDS FOR WESTERN PETROLEUM TECHNOLOGY AND EQUIPMENT

• Document Type: CREST
• Collection: General CIA Records
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• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 44
• Document Creation Date: December 22, 2016
• Document Release Date: April 1, 2011
• Sequence Number: 2
• Publication Date: April 1, 1986
• Content Type: REPORT

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,.?f Directorate of
Intelligence
Secret
Soviet Needs for
Western Petroleum Technology
and Equipment
SOV 86-10013
April 1986
Copy 4 9 7
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Directorate of Secret
Intelligence
and Equipment
Soviet Needs for
Western Petroleum Technology
This paper was prepared by Office
of Soviet Analysis. Comments and queries are
welcome and may be directed to the Chief,
Economic Performance Division, SOVAF--
Secret
SOV 86-10013
April 1986
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Soviet Needs for
Western Petroleum Technology
and Equipment
Key Judgments The exploration and development of new oil and gas deposits in the USSR
Information available during the 1986-2000 period will pose increasingly complex technical
as of 31 December 1985 challenges. Because Soviet industry will remain unable to supply the
was used in this report.
technology and high-quality equipment required for critical applications,
the importance of Western equipment to the Soviet effort will increase
markedly. In particular, deeper drilling in offshore and onshore exploration
and development, as well as the exploitation of corrosive ("sour") oil and
gas deposits, will require Western technology and equipment.
Moscow will find it increasingly difficult to fund the purchase of Western
technology and equipment. Hard currency earnings are shrinking rapidly
due to the fall in world oil prices and declining oil output in the USSR.
Proposals for the purchase of Western oil and gas equipment, moreover,
will be competing with requirements of the high-priority industrial mod-
ernization program as well as with equipment needs critical to the coal and
natural gas development programs.
Gorbachev's regime is effectively caught up in a "catch-22" situation; until
the Soviets achieve greater interfuel substitution and energy conservation,
oil (which accounted for over 35 percent of primary energy output in 1985)
will remain the USSR's prime energy product and a major source of hard
currency. This dual primacy creates tremendous pressure to sustain oil
output, even at very high cost, possibly including the expenditure of scarce
foreign exchange resources.
While Western technology and equipment could reduce some bottlenecks,
from a technological standpoint they are not critical for most current
Soviet oilfield operations. For these, improvement in the quality and
availability of domestically produced oil country tubular goods (that is, well
casing, tubing, drillpipe, drill collars, and linepipe) and equipment-
particularly if higher quality-control standards are applied in metallurgy
and in fabrication of equipment-could boost productivity. But the record
of the Soviet oil and gas equipment industry suggests that, even with added
investment and high-level emphasis on productivity and quality, substantial
improvement could take many years
The degree to which Moscow is willing to increase reliance on the West for
oil and gas equipment is not clear. For some time, Moscow has been
sending mixed signals concerning its intentions with respect to the
importation of Western petroleum technology and equipment. Soviet
iii Secret
SOV 86-10013
April 1986
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officials have made inquiries to Western suppliers concerning a broad
range of equipment, and the Soviet press has stressed the need for better
technology and higher quality equipment in all phases of petroleum-
industry operations. Imports, however, have been concentrated largely on a
few projects such as gas-pipeline construction and exploitation of sour oil
and gas deposits. Moreover, the themes of several of General Secretary
Gorbachev's speeches suggest that revitalization of domestic industry
through investment in civilian machine building and intensified application
of science and technology are the key to improving the general supply and
quality of standard oil and gas equipment.
The drastic fall in world oil market prices over the past year has slashed
Soviet hard currency revenues, forcing Soviet officials to reevaluate plans
to import technology. Oil Minister Dinkov reportedly said in January 1986
that most planned purchases of oil and gas equipment would be postponed
or canceled because of hard currency shortages.
many negotiations are progressing, including a major
equipment contract for the Karachaganak sour gas project.
Moscow is also seeking to ease the hard currency pinch by exerting
pressure on Western suppliers to change payment terms from cash to
credit. Some of the Soviets' negative comments about the prospect for
imports may reflect a desire to motivate Western suppliers to accede to re-
quests for credit or for more favorable credit terms than were offered in the
past.
While the future course of Soviet reliance on the West to redress current
production problems and face new challenges in exploration and develop-
ment is yet to be determined, we expect that the Soviets will continue to
purchase from the West the more sophisticated and highly specialized
equipment for critical operations. As exploration and development move
increasingly to deeper onshore and offshore fields, the demand for these
purchases is likely to rise. Specifically, indigenous technology and equip-
ment will become increasingly inefficient and uneconomic relative to the
more demanding technical requirements of the late 1980s-particularly in
deep drilling and producing. Moreover, skilled manpower and technical
services to cope with those requirements will remain in short supply. Unless
Moscow turns to the West for more equipment and technical services, the
decline in oil production will accelerate.
25X1
25X1
25X1
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Major purchases are now being negotiated, primarily with French and
West German firms, for the specialized corrosion-resistant equipment and
processing plants essential to exploitation of the deep, high-sulfur oil and
gas fields of the Pre-Caspian Depression. As exploration and development
activity shifts increasingly to offshore fields (especially if in the arctic seas),
the Soviets will need more Western technology and equipment. Moscow,
moreover, has been negotiating for the purchase of plants to manufacture
oil country tubular goods, wellhead equipment, and drilling rigs for onshore
and offshore service.
Although the Soviets are beginning to manufacture large-diameter high-
pressure pipe, they are likely to continue purchasing large quantities of
Western pipe for gas pipeline construction at least until 1990. These
purchases will result not only from technical requirements for gas pipeline
construction but also from Moscow's interest in engaging the support of
West European steel producers for additional West European purchases of
Soviet gas.
Moscow will also probably continue to purchase from the West a wide
range of other items-from drilling, producing, and processing equipment
to heavy-duty pipelayers and pipeline valves and control systems. Kremlin
planners can choose among many sources for needed oil and gas equip-
ment. A global network of suppliers can provide the varying levels of
technology and inventories of equipment appropriate to the range of
operating requirements in the USSR. West European suppliers for North
Sea offshore operations are eager to sell to the USSR. The Japanese are
marketing a list of items that continues to grow. Third World countries
(Brazil, Argentina, South Korea, and Singapore) are also competing for
sales, especially in tubular steel products. Nonaligned countries (Finland,
Austria, and India) are demonstrating growing capability and capacity.
Each year, as more state-owned or subsidized industry comes on line, the
network becomes larger and the competition stiffer.
Some of the Western oil and gas technology and equipment likely to be
sought by the USSR has potential military and naval applications. For
example, much of that used in geophysical exploration for petroleum
involves image and signal-data processing with realtime analysis-tech-
niques that have applicability in command, control, communications, and
intelligence operations. The technologies ;hat are used in making produc-
tion equipment corrosion resistant and capable of operation at high
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pressure and high temperature are applicable to development of conven-
tional and nuclear weapons, particularly nuclear propulsion systems for
submarines and other naval vessels and jet engines for aircraft and rockets.
The metallurgy used in many oilfield goods has wide application in defense
engineering and production activities. Integration technology-the func-
tional coordination of finished hardware components, increasingly by
means of sophisticated computer software-could also help Soviet military
research.
If the United States and the other COCOM countries were to expand
substantially the list of dual-use items denied to the USSR, the Soviets
would probably find ways to maintain gas production, but oil output would
slip more rapidly after a year or so. Although an effective embargo would
halt sour gas development, the Soviets could obtain additional gas from the
Tyumen' deposits at lower production cost, despite the difficulties inherent
in arctic development and the somewhat higher cost of transporting the gas
a greater distance. With respect to oil, however, the situation is more
complex. For the development of relatively shallow deposits.of noncorrosive
oil and gas condensate, the Soviets can, at greater resource costs, use their
own less efficient equipment. Also, more-than-adequate alternatives are
available outside COCOM-for some items, even from less-developed
countries in Asia and Latin America. However, for the extensive, rapid,
efficient exploration and the greatly expanded development of deep
deposits that would be necessary to substantially reduce the rate of decline
in Soviet oil output in the decade ahead, the Soviets need state-of-the-art
technology and equipment. This technology and equipment is, with few
exceptions, frequently available only from US firms or their affiliates and
licensees in COCOM countries.
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Trends in Energy Production
1
Factors Affecting the Outlook for Primary Energy Production
1
Coping With Needs-Domestic Versus Imported Technology
and Equipment
8
Gorbachev in Tyumen': No Hint of a Westward Tack
8
Major Requirements for Oil and Gas Technology and Equipment
10
Needs for Specific Categories of Foreign Technology and Equipment
15
Pipeline-Construction Technology, Materials, and Equipment
20
Oil-Refining and Gas-Processing Technology and Equipment
21
Synthetic Fuel From Coal To Supplement the Liquid-Fuel Supply
23
Potential Military Applications for Desired Technology and Equipment
23
Soviet Purchasing From the West
25
The Impact of Export Controls
26
1.
USSR: Energy Investment in Relation to Total
Industrial Investment
2.
Main Factors Affecting Energy Development
3.
Soviet Imports of Oil and Gas Equipment From COCOM
Countries, 1980-84, by Type of Equipment and Country of Origin
6
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4.
Quality and Availability of Oil and Gas Equipment, by Major
Area of Origin
11
5.
Soviet Needs for Western Oil and Gas Equipment and Technology
for Key Projects, 1985-2000
16
6.
Status of US Oil and Gas/Other High-Technology Proposals
in COCOM
27
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Soviet Needs for
Western Petroleum Technology
and Equipment
Trends in Energy Production
Since 1960, output of primary energy-crude oil,
natural gas, coal, hydroelectric power, nuclear power,
and minor fuels-has tripled, but growth has been
uneven among the major fuels:
Factors Affecting the Outlook for
Primary Energy Production
Soviet energy production is affected by the quantity
and quality of exploitable resources, the quality and
availability of equipment and technology, and the
supply and utilization of skilled management and
labor (table 2).
? Coal was the main fuel for the national economy
before the mid-1960s; by 1985, however, its share of
primary energy production was only 21 percent (see
figure 2).
? Oil output soared from 2.95 million barrels per day
(b/d) in 1960 to 12.33 million b/d in 1983, before
declining to 12.22 million b/d in 1984 and 11.90
million b/d in 1985. Oil's share in primary energy is
over 35 percent.
? Natural gas output has grown even more rapidly-
from 45 billion cubic meters (m') in 1960 to 643
billion m', or 33 percent of primary energy, in 1985.
Expanding energy production has required an ever-
increasing share of industrial investment-up from 28
percent in 1975 to 35 percent in 1984 (table 1).
Because of the continuing emphasis on oil production,
nearly half of energy investment has been allocated to
the oil industry since 1981. This emphasis has cut into
the resources available for the coal and electric power
industries, thereby contributing to the stagnation of
coal production and the marginal inadequacy of elec-
tric power supply. The burdensome nature of oil
production is illustrated by the relationship of changes
in investment and output between 1975 and 1984. Oil
investment rose by some 135 percent while oil output
increased 25 percent. The gas industry, in contrast,
presented a remarkable success story: investment up
75 percent and output doubled.
The most urgent problems center on oil production,
largely because of oil's preeminence as an export
commodity and source of hard currency. Although
Western experts have estimated Soviet oil reserves at
roughly 50-70 billion barrels, Moscow's effort to
sustain oil output at a high level is encountering
serious difficulties and increasing costs that reflect:
? Emphasis on production at the expense of
exploration.
? Effects of years of excessive rates of production at
giant fields.
? Increasing reliance on development of smaller fields
that have lower new-well flow rates.
? Increasing amount of water in output of older wells.
? Severe operating conditions in subarctic West
Siberia.
? Endemic problems with the supply and quality of
domestic equipment.
The age and size distribution of developed reserves in
West Siberia also contributes to Moscow's difficulties
in maintaining high oil output. The new fields tapped
there since 1979 have been smaller by an order of
magnitude and have lower flow rates than those
brought on line in the previous decade. Moreover, the
older, larger fields are already declining in produc-
tion. Attempts to sustain output by drilling a large
number of wells in the smaller, less productive fields
lead to a steep rise in investment.
The USSR's reserves of natural gas-estimated at
some 34 trillion m'-comprise about 40 percent of the
world's proven reserves and are relatively accessible,
in the Soviets' view, for rapid development. However,
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Figure 1
Major Petroleum Basins and Pipelines
nburg
hanazhol
1 ~tj11 Asia
v
QUrengoy
y
West
011 Sibfia
i`
Soviet Union
East
Siberia
Petroleum basin
Sour oil/gas deposits
Sour gas/condensate deposits
the arctic conditions under which the clean and
relatively shallow Tyumen' gas deposits must be
worked are difficult, and the extraction and process-
ing of the toxic and corrosive sour gas from the deep
deposits of the Pre-Caspian Depression entail severe
dangers and technical problems.'
Much of the long-term substitution of other fuels for
oil, which is intended to reduce oil consumption in the
domestic economy, depends on substantial increases
in the availability of coal. Soviet coal reserves are
huge (about 170 billion tons in standard fuel equiva-
lent) but coal production has been held back by the
depletion of the better quality reserves in the western
USSR, the low energy content and remoteness of coal
eVnsUe
O COr-.""'?_ f @
' Yamburg
Kam
str khan
Gas pipeline
Oil pipeline
Gasfield
Oilfield
supplies from Kazakhstan and East Siberia, and
investment policies that for many years have favored
oil.
The Past Role of Western Technology and Equipment
The USSR has achieved its present status as the
world's leading producer of oil and natural gas largely
through the use of domestically manufactured equip-
ment. It has turned to the West for selected technol-
ogy and high-quality, state-of-the-art equipment to
obtain higher operating performance and more reli-
able service, as well as to overcome shortages of key
items and to supply projects for which Soviet equip-
ment is inadequate (for example, sour-gas develop-
ment). Last year, the Soviets undertook a program to
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France, Italy, and West Germany).
Figure 2
USSR: Primary Energy Productiona
1960
Total: 716 million tons
Otherb 6.8
Nuclear 0.1-
Hydroelectric 3.5
1970
Total: 1,305 million tons
Hydroelectric 3.0
Coal 2 1.1
1985`
Total: 2,304 million tons
Otherb 3.7
Nuclear 2.0
enhance both the quality and quantity of equipment
manufactured domestically, and this effort will con-
tinue into the 1990s. Thus far, however, the inefficien-
cies of the Soviet economic system have hindered both
the production of high-quality oil and gas equipment
and the assimilation of advanced techniques and
equipment acquired from the West.
During the 1970s the USSR purchased some $5
billion worth of Western oil and gas equipment. The
impact of these imports was far greater than their
share in the total oil and gas equipment supply would
suggest, because they were used to cover shortages
and to cope with particularly difficult technical prob-
lems. Especially important among these acquisitions
were:
? A turnkey plant to produce high-quality drill bits
(from the United States).
? Gas-lift equipment for two major oilfields in West
Siberia (from France, with most of the critical
valves, mandrels, and wireline operating tools pro-
vided by a US firm from an offshore plant).
? Assembly yards for producing offshore drilling plat-
forms (from France).
? Large-diameter line pipe, pipelayers, and turbine-
compressor sets for the gas pipeline network (from
West Germany, Italy, France, Japan, and the Unit-
ed States).
? Equipment and chemical plants for enhanced oil
recovery (EOR) projects (from the United States,
Purchases of Western oil and gas equipment (includ-
ing pipe) have roughly doubled since 1980 (table 3).
Most expenditures were for pipe and for exploration
and development equipment; oil refining equipment
has accounted for only a very small percentage of
imports from the West.' According to Soviet trade
journals, purchases of Western gas pipeline equip-
ment and linepipe rose sharply in 1982 and accounted
for about 85 percent of total purchases of oil and gas
equipment in 1982 and 1983.
I The foreign-trade category "pipe" includes large-diameter pipe
and oil country tubular goods (drillpipe, drillcollars, wellcasing,
5Standard fuel equivalent
b Includes peat, oil shale, fuelwood, geothermal, and solar.
e Values for 1985 estimated.
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Table 1
USSR: Energy Investment in Relation to
Total Industrial Investment a
Total Total Oil
Industry Energy
Gas Coal Electric
Power
Energy Investment as a Energy Sector Investment as a
Share of Industrial Investment Share of Total Energy Investment b
a Excluding investment in natural gas pipelines, oil refining, and
minor fuels production.
b Shares may not add to 100, because of rounding.
Soviet purchases of Western oil and gas equipment
dropped when supply contracts for the Siberia-
to-Western Europe gas pipeline were fulfilled. These
contracts had sharply increased exports of oil and gas
equipment (excluding pipe and refining equipment)
from several COCOM countries to the USSR. The
principal Western suppliers also changed: West Ger-
many, France, Italy, and Japan gained contracts; the
United States lost contracts. More recently, four sour
oil and gas development projects in the Pre-Caspian
Depression (although not so large individually as the
export pipeline project) collectively are offering the
prospect of contracts to Western (mainly French and
West German) suppliers totalling well over $5 billion
through 1990. Over $1.5 billion of these contracts
have already been signed for installations at Astrak-
han', Karachaganak, and Tengiz.
Soviet Energy Plans and Challenges: 1986-2000
The USSR's Long-Term Energy Program sets forth
several major changes in the national energy balance:
? Natural gas is to provide nearly all of the increment
in total primary energy production into the mid-
1990s.
? Coal, after intensive investment in production, pro-
cessing, and consuming facilities in the 1990s, is to
become the dominant fuel in the USSR after 2000.
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Table 2
Main Factors Affecting Energy Development
Energy Quality of Reserves
Source
Oil Although West Siberian, Komi,
Kazakhstan, and offshore reserves
could maintain recent production
levels, problems with quality exist.
Middle Ob' (West Siberia) develop-
ment is affected by the increasing
depth of reservoirs, as well as by
lower porosity, less permeability,
heavier oil, and lower flow rates.
Komi development is limited by the
arctic environment and heavy, par-
affinic oils.
Kazakh oils have various draw-
backs: some are highly paraffinic;
some, heavy; and some, high sulfur
and CO2 content.
Potential offshore reserves (Barents
and Kara Seas, offshore Sakhalin,
and deeper Caspian Sea may be
substantial but are in the early
stages of exploration, and their de-
velopment would involve leadtimes
of five to seven years.
Natural gas Most reserves are of high quality;
average wellflow rates among the
highest in the world.
Sour gas deposits in the southern
USSR offer tradeoff: more accessi-
ble location versus more difficult
exploration.
Coal Depleted reserves west of the
Urals.
Large but poor-quality reserves
east of the Urals.
Shallow deposits east of the Urals
can be surface-mined.
Nuclear Uranium reserves sufficient for
energy and short-to-medium term; ambitious
hydroelectri- breeder reactor construction plans
city assure long-term nuclear fuel
supply.
Heavy and waxy oils are difficult to
extract without steam generators; cor-
rosive deposits will require substantial
amounts of Western corrosion-
resistant equipment.
Development of Western-designed
arctic drilling equipment, which is ca-
pable of operation at greater depths, to
produce oil and to inject water.
Lighter, modular designs are easier to
transport.
Enhanced oil recovery technology,
steam-generating equipment, and
chemicals to boost recovery of heavy
oils.
Corrosion-resistant producing equip-
ment; enhanced oil-recovery equip-
ment to boost recovery of heavy oils.
Geophysical equipment for offshore
exploration and offshore arctic drilling
and production platforms and produc-
tion systems.
Large-diameter linepipe, pipelayers,
more efficient turbines and compres-
sors, and gas-processing plants for sour
gas.
Leak-proof, corrosion-resistant equip-
ment for drilling, well completion and
gathering systems, and processing nat-
ural gas.
Specialized equipment to mine thin
seams; underground transportation
equipment.
Coal-cleaning and enrichment plants
and synfuels technology and plants.
Major management difficulties: short-
ages of skilled labor, high labor turn-
over, multiple projects requiring coor-
dination and phasing.
Remote production sites subject to arc-
tic conditions; transportation and basic
services problematic; scarce housing.
Projects are labor- and capital-
intensive; many logistic problems.
Projects are labor- and capital-
intensive, but logistic problems are less
severe than in West Siberia and Komi.
Shortage of highly skilled management
and labor to operate complex
equipment.
Largest reserves located in uninhabited
Arctic Circle region of West Siberia.
Difficulties in production, transporta-
tion, and labor recruitment and reten-
tion; scarce housing.
Management and labor skills inade-
quate; poorly developed infrastructure.
High wages needed to attract and re-
tain miners.
Harsh Siberian environment, little in-
frastructure, high labor turnover, labor
shortages.
Off-road trucks, high-volume rotary
and dragline excavators.
Nuclear power plant components:
pipes, valves, pumps, and control
instrumentation.
Program expansion planned for 1980s
requires many new hires and training;
most important component assembly
plant, Atommash, must raise produc-
tivity. Expansion of hydroplants in
East Siberia and Far East is linked to
exploitation of untapped raw materials.
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Table 3
Soviet Imports of Oil and Gas Equipment From
COCOM Countries, 1980-84, by Type of Equipment
and Country of Origin
Total
Machinery and equipment
for geological drilling, well
operation, and pipeline
operation
All COCOM Countries
1,639.4
1,658.4
1,909.7
3,137.9
3,449.7
2,734.4
Great Britain
2.0
26.6
31.0
88.7
120.3
113.9
Canada
2.9
4.1
3.0
8.9
24.1
6.6
United States
49.4
57.5
7.7
26.9
6.5
6.8
France
23.6
90.2
54.5
57.5
260.8
205.0
Federal Republic
of Germany
48.0
Federal Republic
of Germany
589.9
Federal Republic
of Germany
energy in the 1990s and beyond.
During the 1986-2000 period, the Soviets expect the
share of natural gas in the primary energy balance to
expand rapidly; we estimate that it could exceed 40
percent after 1990, while oil's share could shrink to
about 30 percent. Natural gas has already replaced oil
as the chief incremental source of energy, and we
believe that the Soviets can continue to boost gas
output using, for the most part, existing domestic
equipment and technology. Oil's share in the primary
energy balance will decline as a result of gas-for-oil
substitution and likely further slippage in oil produc-
tion.
The conditions of oil and gas production in the coming
decades will inevitably be more rigorous, and they will
pose dual challenges: availability and application of
technology and equipment. First, the Soviets need to
vastly improve the quality and availability of domesti-
cally produced oil country tubular goods and equip-
ment, which will, in turn, make most noncritical
operations more efficient. Substantial gains in the
productivity of oil and gas operations could result if
the Soviets applied higher quality-control standards in
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Changing Technological Requirements
for Oil, Gas, and Coal Production
Oil. Through 2000, the Soviets expect major energy
supply problems to arise in the oil industry, where
current long-range plans for maintaining high levels
of output are in jeopardy. Exploration and develop-
ment will focus on deeper onshore and offshore
deposits, which are more complicated to exploit.
Onshore, exploration and development will involve
drilling deeper wells in more complex geologic forma-
tions. This requires greatly improved seismic, drill-
ing, and production equipment and technology. The
Soviets will need state-of-the-art high-pressure, high-
temperature, corrosion-resistant equipment for the
deep formations in the Pre-Caspian Depression. Off-
shore, Soviet equipment is inadequate to develop
oilftelds in deep water and arctic environments. With-
out a rapid infusion of state-of-the=art offshore explo-
ration and production technology and equipment,
Soviet oil output could face a more rapid decline in
the 1990s than would otherwise occur.
Gas. The Soviets expect gas output in West Siberia to
rise steadily through 2000 with few problems. They
will probably continue to rely (albeit to a slowly
decreasing degree) on some imports of Western line-
pipe, valves, and controls for expansion of the natural
gas pipeline network and for realization of plans to
substitute gas for fuel oil. The rapid growth of gas
output will require ongoing investment in gas treat-
ment plants and in gas transmission pipelines. The
operational efficiency of these facilities would be
substantially enhanced by the use of Western equip-
ment. To develop the sour gas fields and recover
natural gas liquids at Astrakhan' and Karachaganak,
the USSR will import corrosion-resistant, high-pres-
sure-and-temperature production, processing, and
transport equipment. For example, a batch of high-
chrome stainless steel tubing was recently ordered
from a West German firm for use at Karachaganak.
Coal. Coal output has remained essentially un-
changed since 1978. To maintain output, the Soviets
will need to increase production from the eastern coal
basins to offset declining output at mines in the
European USSR.
Achieving a dramatic boost in coal production will be
difficult. To make transport of coal more efficient,
the Soviets could build slurry pipelines or plants to
convert coal into gas and liquid fuel. Press reports
indicate that the Soviets are currently studying the
feasibility of long-distance, high-capacity coal-slurry
pipelines for transporting Siberian coal to the Ural
region and the European USSR.
The Soviets' long-range goal of a major expansion in
coal production is unlikely to be accomplished with-
out some Western assistance. Imported equipment
and technology will probably play a key role in
meeting goals for the construction of slurry pipelines,
the rapid expansion of surface mining, and the pro-
duction of synthetic fuels from coal. The Soviets
already are negotiating with Western firms on tech-
nology and equipment for these applications. Moscow
recently has signed a contract with an Italian firm to
provide process technology and engineering services
for a prototype 250-km slurry pipeline to transport 3
million tons of Siberian coal annually. 0
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metallurgy and fabrication of equipment. Second,
they need a substantially increased supply of more
advanced technology and equipment to deal with
increasingly hostile operating conditions both above
and below ground. Meeting this need under the
anticipated conditions of stringency in availability of
both investment and hard currency will be made even
more difficult because the coal industry also has a
pressing need for Western advanced technology and
equipment.
Coping With Needs-Domestic Versus
Imported Technology and Equipment
For some time Moscow has been sending mixed
signals concerning its intentions with respect to the
importation of Western petroleum technology and
equipment. Many recent articles have stressed the
need for better technology and high-quality equip-
ment comparable to those obtainable from the West.
However, leadership statements have been ambivalent
or have leaned toward a domestic solution. Soviet
trade and industry officials have talked with many
Western suppliers to elicit technical data and propos-
als for supply of a wide range of advanced technology
and equipment. The actual imports in recent years
have comprised mainly pipe and equipment for gas-
pipeline construction and development of sour oil and
gas deposits (see table 3).
Some events suggest that Soviet decisions not to
follow through and order a larger amount of Western
equipment reflect, in part, conflicting views within the
Soviet bureaucracy about technical alternatives and
the choice of supplier: domestic or Western. In 1983,
for example, the Soviets negotiated for the purchase
of some $40 million of US high-capacity electric
submersible pumps, and an export license was ap-
proved in January 1984-but the purchase was not
completed. Changes in the operating condition of the
wells for which these pumps had been planned may
have played a part; but, on the basis of indirect and
fragmentary evidence, we believe the decision not to
purchase was probably influenced by ongoing bureau-
cratic squabbles over the relative merits of gas-lift
systems and high-capacity electric submersible
pumps, the allocation of hard currency, and depen-
dency on the West.
Gorbachev in Tyumen- No Hint of a Westward Tack.
General Secretary Gorbachev's early September
speech to oil workers and party cadres in Tyumen'
leaves unclear the outlook for Soviet acquisition of
Western oil and gas technology and equipment. His
remarks neither addressed the role of Western equip-
ment nor clearly delineated how Soviet industry can
be made to achieve timely delivery of the improved
equipment he recognizes as needed for the increasing-
ly difficult production conditions (especially for oil) in
West Siberia. Yet the decline in oil production and
the associated increase in water encroachment in
major oilfields underscore the criticality of timely
acquisition, either from domestic or foreign suppliers,
of high-quality production equipment (especially
pumps) and exploration equipment.
As in his other speeches, Gorbachev stressed heavy
reliance on raising efficiency and on accelerating
scientific and technological innovation. At Tyumen'
he stated that the technological solutions for making
work more efficient in the oil and gas fields are
available, but that their application is still in the
initial stages. He also said that there is no need for
further study-the task is to apply greater compe-
tence, skill, and knowledge gained from experience,
making use of new equipment and processes.
Gorbachev's remarks suggest that he has grasped the
scope and complexity of the problems facing the oil
and gas industries: the search for additional oil re-
serves, poor housing and social conditions for the work
force in West Siberia, supply of oilfield equipment
and electricity, improvements in oil refining technol-
ogy, and accelerated efforts in energy conservation.
But his prescription-changed attitudes, improved
efficiency, and greater application of science and
technology-may not be sufficient to bring about the
desired results.
Much of the Soviet-made oil and gas equipment,
though far from being state of the art, would be
adequate for routine service. It would make a greatly
increased contribution to output if it met higher
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quality-control standards and if it were available in
sufficient quantity. However, the civilian sector of the
Soviet industry has consistently failed to meet these
conditions. Whether the measures Gorbachev has
publicly advocated will substantially ameliorate these
and other problems facing the Soviet oil and gas
industries is doubtful.
Implications for Purchasing From the West. From
the tenor of Gorbachev's remarks, we judge that the
Soviets will seek to improve the general supply of
equipment to the oil and gas fields mainly by improv-
ing the efficiency and technical level of domestic
industry. Nonetheless, the Soviets will continue to buy
much specialty equipment in the West and may
increase some purchases.
Some near-term gains in the supply of domestic
equipment may result from Gorbachev's campaign to
improve worker morale and productivity. Planning
and organizational changes may ultimately lead to
better planning, better product supply and quality,
and prompt deliveries. However, accomplishing such a
revolution within the bounds of the Soviet economic
system-indeed, even laying the necessary organiza-
tional foundations-would require not only many
years but also, according to some Western observers,
a greater modification of the USSR's economic fabric
than would in the end be acceptable to the regime.
A domestic solution to the equipment problem is,
however, unlikely to be sufficient to offset the rapidly
advancing depletion of existing oil deposits. A decision
by Moscow to solve its oil production problems by a
much greater reliance on Western technology and
equipment would require large imports of rotary
drilling rigs, oil country tubular goods, and pumping
equipment. During 1984-85, the Soviets were negoti-
ating with Western firms for a wide variety of oilfield
equipment. Some of the talks probably aimed at
obtaining technical information, but some undoubted-
ly represented serious intent to purchase. The recent
collapse of oil prices, with the consequent negative
effect on Soviet hard currency earnings, has brought
many of these negotiations to a standstill.
Last year, Soviet hard currency exports fell by over
20 percent, in part reflecting the effect of a $3-4
billion drop in oil sales to the West. This caused
Moscow to step up borrowing, increase gold sales,
and reduce imports by an estimated $3 billion. In
1986, the drop in hard currency earnings from oil
sales to the West may be even steeper. A further
decline of 100,000 to 200,000 barrels per day in oil
exports to the West, combined with an average price
of $17 per barrel (which many market analysts
consider optimistic), would cost the USSR some $5
billion.
Hard currency scarcity is forcing Soviet officials to
reevaluate plans to import technology. In January
1986, Oil Minister Dinkov said that most planned
purchases of oil and gas equipment would be post-
poned or canceled because of hard currency shortages,
The Minister
also indicated that most such imported equipment
would come from CEMA suppliers during 1986-90.
Some Soviet trade officials have indicated that
planned purchases of oilfield technology and equip-
ment may be scaled back in proportion to the loss of
oil revenues.
=negotiations are continuing on equipment for the
Karachaganak sour gas project, and in February 1986
the Soviets made inquiries concerning Western arctic-
capable drilling rigs.
Moscow probably will continue purchasing items for
which there are no suitable domestic or East Europe-
an substitutes (for example, corrosion-resistant pipe
and equipment for sour oil and gas operations, large-
diameter pipe for high-pressure gas transmission ser-
vice, and heavy-duty pipelayers). But the purchase of
other Western oil and gas equipment will be carefully
scrutinized and weighed in the balance against com-
peting requirements of the high-priority industrial
modernization program, as well as against equipment
needs critical to the coal and natural gas development
programs.
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In addition to reconsidering the amount of oil and gas
equipment to be imported, Moscow is trying to ease
the hard currency pinch by exerting pressure on
Western suppliers to change payment terms from cash
to credit. Some of the Soviets' negative comments
about the prospect for imports may reflect a desire to
motivate Western suppliers to accede to requests for
credit or for more favorable credit terms than were
offered in the past.
A reduction in imports of oil and gas equipment will
not have significant adverse effects on Soviet oil
production over the next year or two, but import
cuts-particularly if they affect offshore, deep drill-
ing, and sour oil and gas operations-will make it
increasingly difficult over the longer term for Moscow
to cope with more complex and challenging problems
in exploration and development as it seeks to sustain
oil production.
By 1990, the discrepancy between Soviet needs for
and ability to supply state-of-the-art petroleum equip-
ment will have acute consequences for oil output
(unless the need is attenuated by the immediate
discovery of favorably located, easy-to-develop giant
oilfields). Indigenous technology and equipment is
becoming less efficient and economic relative to the
increasingly demanding technical requirements of oil
exploration and development-in part because of a
limited supply of skilled manpower and technical
support. Consequently, the decline in oil production
will accelerate unless Moscow turns to the West for
more equipment and technical services.
Major Requirements for Oil and Gas Technology and
Equipment
At present most of the petroleum technology and
equipment used in the USSR is obtained domestically
or with some help from the East European countries
that are members of the Council for Mutual Econom-
ic Assistance (CEMA). As shown in table 4, however,
the quality and technical characteristics of CEMA
output of nearly all of the items needed for critical
applications rate only low to adequate when we
compare them against Western standards. Changing
operating conditions-deeper drilling onshore and off-
shore, higher pressures and temperatures, corrosive
producing environments, and increasing percentages
of associated water production-have rendered most
of those items obsolete for an increasing share of
operations.
Several key oil and gas projects scheduled for the
1986-90 period will require Western technology and
equipment if development is to proceed on schedule.
The first phase (1981-85) of development at Astrak-
han' and Karachaganak was based heavily on equip-
ment ordered from French and West German firms.
We expect that Moscow will place new orders to
Western firms during the second phase of develop-
ment (1986-90). All the major onshore projects in the
Pre-Caspian Depression-Astrakhan', Karacha-
ganak, Tengiz, and Zhanazhol-involve development
of deep sour oil and gas deposits. Because of similar
geologic conditions, the technology and equipment
packages for these projects will be almost identical.
Only the depths, pressures, temperatures, and ratios
of oil, gas, sulfur, and carbon dioxide are apt to vary.
The main high-pressure-and-temperature, corrosion-
resistant equipment items needed for these projects
are shown in the inset.
Continued exploration and development of West Sibe-
rian onshore oil and gas deposits will require generally
similar equipment for deep high-pressure-and-tem-
perature service, but without the special features for
coping with high concentrations of hydrogen sulfide
(H2S) and carbon dioxide (CO2). The need to improve
exploration efforts for deeper, harder-to-find petro-
leum deposits prompted the Politburo in April 1985 to
authorize the reequipping of Ministry of Geology field
parties with improved seismic and deep-well surveying
and drilling equipment. This authorization might
result in new orders for Western equipment and
plants to produce some of the equipment in the
USSR. The Soviets have expressed keen interest in
modularized, compact deep-drilling rigs modified for
air transport and arctic service, as well as in heavy-
duty land rigs for deep drilling at Karachaganak,
Astrakhan', Tengiz, and Zhanazhol.
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Table 4
Quality and Availability of Oil and Gas
Equipment, by Major Area of Origin a
CEMA USA COCOM b Non-COCOM Third World
Western Europe
Seismic survey vessels (equipment package excluding Lo Lo X A-Hi Lo O-Lo
hull and boat)
Acoustic/ ultrasonic sensors and geophysical
equipment:
Geophones for onshore and offshore seismic Lo Lo X 0-Hi 0
surveying
Monitoring equipment for drilling operations
(mud systems and drill-stem testing equipment)
Special steel tubes-casing, tubing, drill Lo Lo X 0-Hi 0-Hi 0-Hi
collars, drill pipe
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Table 4
Availability and Capability of Oil and Gas Technology and
Equipment, by Regions of Origin a (continued)
CEMA
USA
COCOM b
Non-COCOM Third World
Western Europe
High-pressure/temperature production equipment (all types)
Lo
Lo
X
Lo-Hi
O-Lo O-Lo
Christmas trees and blowout preventers
Lo
A
X
Lo-X
O-A O-Lo
Deep-well drilling rigs and tools (below 3,000-meter Lo Lo X Hi 0-Hi 0-Hi
depths onshore and offshore)
Heavy duty pipelayers (over 50-ton load capacity) A Lo x O-X 0 0
Footnotes appear at end of the table.
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Table 4
Availability and Capability of Oil and Gas Technology and
Equipment, by Regions of Origin a (continued)
a Analysis of data from Composite Catalog of Oil Field Equipment
and Services 1984-85, Gulf Publishing Company.
Key:
X = Highest or state-of-the-art capability.
Hi = More than adequate for needs.
A = Adequate for most needs.
Lo = Some capability, but inadequate for most needs.
O = No demonstrated capability.
Blank = Unknown.
Listing of more than one code in an entry (for example, Lo-Hi)
indicates that some country or countries in the group have the
higher capability, while the rest have at least the indicated lower
capability.
CEMA USA COCOM b Non-COCOM Third World
Western Europe
b The 22 items covered by US foreign policy controls and proposed
for COCOM control are subsumed in "Exploratory Technology and
Equipment" and "Drilling and Production Technology and Equip-
ment." Except for certain turbines, the items covered in "Pipeline
Construction Technology, Materials and Equipment" and "Proc-
essing and Oil Refining Technology and Equipment" are not
subject to US controls.
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A Shopping ;List of Western Equipment for
Exploration; and Development of Sour Oil
and Gas Deposits
State-of-the-art, computer-assisted geophysical
surveying equipment, especially seismic equipment.
Deep (6,000 meter) drilling-rig assemblies and
blowout preventers. The Soviets recently expressed
interest in acquiring 50 deep rigs for sour oil and
gas development.
Christmas. trees, wellheads, casing, tubing, drill
pipe, drill collars, and corrosion inhibitors designed
for severe hydrogen sulfide (HS) and carbon diox-
ide (COZ) service under high pressure and
temperature.
Well-workover rigs and tools for maintenance of
wells.
Field gathering systems .llowlines, manifold sys-
tems, pipelines, valves, monitoring equipment,
pump stations, tank farms, corrosion inhibitors.
Field processing equipment for pretreating and sta-
bilizing corrosive streams of water, oil, gas, conden-
sate (natural gas liquids) with H2S and CO.
contaminants.
Plants for processing sour gas and oil, that is, for
removing corrosive HS and CO2 from oil, conden-
sate, and natural gas streams before pipeline
shipment.
Among the major Soviet offshore projects scheduled
for the 1986-!90 period, the most difficult will be
geophysical surveying and drilling operations in the
Barents Sea, Kara Sea, and offshore Sakhalin. Effi-
cient conduct. of these operations will call for Western
technology, equipment, and training. Western off-
shore equipment that will be needed includes:
Compressors for pumping and gas injection opera-
tions, as well as electric power generation for
drilling and production equipment in remote areas.
Mobile drilling fluid laboratories to detect and
control on site any strong H2S gas surges during
well-drilling operations in overpressured strata.
Air control systems to monitor toxic gas levels of
the air currents around all inhabited communities
within a radius of about 50 kilometers of each sour
oil or gas field and plant.
Pipeline and flow-line cleaning equipment and tub-
ing inspection equipment, including related wireline
cleaning tools.
Plants for the production of drilling-rig assemblies
for onshore and offshore service.
Turnkey pipe mill for the production of oil country,
tubular goods, including drill pipe, casing, and
tubing.
A turnkey plant for the production of wellheads,
Christmas trees, blowout preventers, and produc-
tion manifold systems for onshore and seafloor
installation.
Offshore drilling rigs for platform, semi-submers- I
ible, and drillship applications such as dynamic
positioning, anchoring, and reentry systems; tele-
scopic riser and seafloor connection systems; sea-
floor wellheads and blowout preventer stacks with
remote hydraulic controls; mud-logging laborato-
ries; geophysical well-logging equipment; and drill-
ing monitoring equipment that has online capability.,
Geophysical surveying boats capable of conducting
simultaneous computerized seismic, magnetic,
gravimetric, and hydrocarbon seafloor sampling
surveys with online mapping capability.
Secret
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? Ice-resistant structural and/or hull design may be
required for the survey vessels and drillships for
service in the arctic seas.
? Offshore production platforms and seafloor produc-
tion systems (ice-resistant for many areas), such as
templates, production manifolds, wellheads and
Christmas trees, flow lines, gathering lines, and
pipelines.
There is no reason to believe that the Soviets can
modernize plants and produce all the new equipment
that they will need through the 1990s. In the USSR,
the introduction of new technology, or even minor
modification of an existing product, is usually a time-
consuming process involving research institutes, de-
sign bureaus, ministries, and, finally, the manufactur-
ing enterprise. Changes in production schedules,
improvements in metallurgy, and introduction of new
methods of metalworking for new or improved equip-
ment production at existing Soviet and East European
plants usually proceed at glacial speed. Gorbachev's
moves to streamline the ministerial system and better
coordinate the complex activities of research insti-
tutes, design bureaus, and production units are likely
to have only slight impact on these conditions for at
least several years. However, if some of the new
production is assigned to the defense industries, lead
times for production of many new or improved items
probably could be reduced materially.
Needs for Specific Categories of Foreign Technology
and Equipment
Soviet needs for high-quality technology and equip-
ment now available only from suppliers in the non-
Communist world are identified by specific projects
and major development regions in table 5. Consider-
ations relating to indigenous and Western capabilities
are discussed by major functional category in the
following paragraphs. The potential military applica-
tion of some Western equipment and Western efforts
to control transfer of the technology through export
control are discussed in the final sections of the paper.
Oil and Gas Exploration
Applications. Exploration for oil is more urgent than
exploration for natural gas. Gas production is facili-
tated by undeveloped arctic onshore reserves of natu-
ral gas that are huge and high in quality. Oil produc-
tion, in contrast, is adversely affected by the declining
average quality of reserves being tapped. Barring the
unlikely discovery of a new supergiant oilfield-a
second Samotlor-most future oil discoveries in the
USSR will probably be in deeper, smaller, geological-
ly more complex formations and, possibly, increasing-
ly offshore. Efficient exploration of these formations
calls for Western equipment, some of which embodies
high technology.
Indigenous Capability. Soviet exploration technology
and equipment are rated low by Western standards.
Although technically competent, Soviet petroleum
geologists use poor equipment, which limits accuracy
and hinders their progress. Hungary and Romania
produce some equipment that has slightly better
capabilities but they have only limited capacity for
production. Moreover, the Soviet Union lags behind
the West in state-of-the-art computer technology-an
essential component of any advanced exploration sys-
tem. Rapid improvement in Soviet capabilities to
supply needed exploration equipment is unlikely.
Western Availability. State-of-the-art exploration
technology is available in the United States, France,
and the United Kingdom; the other COCOM coun-
tries have high-level technology (table 5 and appendix
A).' Austria and several Latin American countries
have adequate technology. The United States has
state-of-the-art capability for producing most types of
exploration equipment, and Canada, France, and the
United Kingdom have high capability. The other
COCOM nations have production capabilities and
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Table 5
Soviet Needs for Western Oil and Gas
Equipment and Technology for Key Projects,
1985-2000
Barents Sakhalin Caspian Astrakhan' Tengiz Karachaganak Zhanazhol N. Tyumen'
Sea Sea Gas/ Oil/Gas Gas/ Oil/Gas Oil/Gas
Condensate Condensate
Seismic survey vessels (equipment package-
excluding hull and boat)
Acoustic/ ultrasonic sensors and geophysical
equipment:
Geophones for onshore and offshore
seismic surveying
Monitoring equipment for drilling
operations (mud systems and drill-stem
testing equipment)
Corrosion-resistant producing equipment
(all types) a
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Table 5
Soviet Needs for Western Oil and Gas
Equipment and Technology for Key Projects,
1985-2000 (continued)
Special steel tubes-casing, tubing, drill
collars, drill pipe
Deep submersible pumps (below 600-meter
depths)
High-pressure/temperature production
equipment (all types)
Deep submersible pumps (below 600-meter *
depths)
Deep-well drilling rigs and tools (below 3,000-
meter depths onshore and offshore)
Barents Sakhalin Caspian Astrakhan' Tengiz Karachaganak Zhanazhol N. Tyumen'
Sea Sea Gas/ Oil/Gas Gas/ Oil/Gas Oil/Gas
Condensate Condensate
Large-diameter pipe (1,020- to 1,420-mm-
diameter pipe)
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Table 5
Soviet Needs for Western Oil and Gas
Equipment and Technology for Key Projects,
1985-2000 (continued)
Large-diameter valves (1,020- to 1,420-mm-
bore)
Turbine drivers and compressors (aeroderivative;*
turbines)
Heavy duty pipelayers (over 50-ton load
capacity)
0o Equipment
Barents Sakhalin Caspian Astrakhan' Tengiz Karachaganak Zhanazhol N. Tyumen'
Sea Sea Gas/ Oil/Gas Gas/ Oil/Gas Oil/Gas
Condensate Condensate
a Corrosion-resistant equipment is essential for operations in the
sour oil and gas deposits of the Pre-Caspian Depression; elsewhere,
it would greatly reduce the need for frequent replacement of
downhole tubing and wellhead equipment.
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capacities that are adequate or less than adequate for
most of the surveys now being conducted, but they
probably would not be adequate for much of the work
that needs to be accomplished in new areas. Latin
American and non-COCOM Asian suppliers have no
demonstrated ability to produce advanced exploration
equipment.
Oil and Gas Drilling and Production
Applications. Most Soviet oil and gas drilling and
production projects are in the central and northern
reaches of West Siberia, where operations are diffi-
cult because of climate, terrain, and the lack of
adequate logistic support. From 1986 to 2000, operat-
ing problems in West Siberia will multiply as drilling
requirements spiral upward because of increasing well
depths and the greater number of wells required to
compensate for lower new-well flow rates. More
pumps will be required to cope with rising water
production, and the number of well repairs will rise
dramatically. The planned exploration and develop-
ment of sour oil and gas resources in the Pre-Caspian
Depression and Central Asia require drilling to sub-
stantially greater depths under much higher pressures
and temperatures than have been experienced in other
operating areas. Drillers tapping into these deposits
also have to cope with high-pressure flows of the toxic,
corrosive gases, HZS and CO, Offshore activity in the
Caspian Sea will require platforms and equipment
capable of operating in waters much deeper than
those explored in the last decade. If deposits are found
in the Barents and Kara Seas, arctic ice conditions
could pose challenges more severe than those encoun-
tered offshore Sakhalin.
Under these conditions, the quality of both the tech-
nology and equipment available becomes paramount.
As the length of the drill string, column of production
tubing, or casing increases, the importance of high-
strength steel and product quality control in the
fabrication of oil country tubular goods rises exponen-
tially. Corrosion-resistant, reliable tubing is essential
to the exploitation of sour oil and gas deposits, and
deep-drilling equipment has to withstand extreme
pressures of 10,000 psi or more. Adequate equipment
is unavailable in Eastern Europe and other CEMA
countries. When many of these requirements are
superimposed on the complicated task of operating
offshore in deep waters (perhaps with ice conditions),
other technical questions (such as the compatibility of
components in integrated systems) must be added to
those of quality and individual levels of technology.
Indigenous Capability. We rate Soviet drilling and
production technology, as well as the capability to
produce the equipment, low. Romania and Hungary
have slightly better capabilities, but neither can pro-
duce in sufficient volume to meet Soviet needs. None
of the CEMA countries has more than a low capabili-
ty for offshore operations or for deep sour oil and gas
development under operating conditions that require
resistance to high pressures and high temperatures.
By the mid-1990s, the Soviets may be able to improve
their capability somewhat, but they are unlikely in the
near term to attain substantial improvements in either
the design or supply of equipment. The lack of special
alloys, indifferent quality control, and unresponsive-
ness of equipment producers to the changing technical
needs of operators are likely to continue.
Western Availability. State-of-the-art drilling and
production technology is available in the United
States; most other COCOM countries-as well as
Austria, Brazil, Mexico, Venezuela, and Singapore-
can provide high-level technology. Norway has re-
cently advanced its offshore drilling capability
through the development of dynamic positioning sys-
tems and remote-control systems for operation of
subsea blowout preventer stacks and other wellhead
equipment. Mexico has acquired considerable experi-
ence in the production of deep sour oil, gas, and
condensate onshore and offshore. Brazil is a leader in
the emerging technology for seafloor completion of oil
and gas wells and related seafloor production systems.
Argentina, India, Peru, and Taiwan can provide
adequate technology. The United States can produce
in large volume the state-of-the-art high pressure-
temperature, corrosion-resistant drilling and produc-
ing equipment required for severe service (high pres-
sure and temperature, corrosive environment). Several
other COCOM countries have high capability to
produce some items in limited quantities. Elsewhere
in the West, the capability and capacity to produce
these items is quite low.
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Pipeline-Construction Technology, Materials,
and Equipment
Applications. Substantial replacement, but little ex-
pansion, of the USSR's oil pipeline system is likely
during 1985-2000. The long-distance gas transmission
pipeline system will continue to grow through 2000.
During 1986-90, the Soviets plan to build six new
1,420-mm-diameter pipelines averaging more than
3,000 kilometers in length and having a probable
75-atmosphere rating. In the construction of these
pipelines, problems associated with lower ambient
temperatures and more severe permafrost conditions
will be encountered as gas production moves farther
north from Urengoy to Yamburg and beyond. The
Soviets want to increase the efficiency of the gas
pipeline system by introducing electronic controls
requiring enhanced computer hardware and software
capabilities and by improving the reliability and
efficiency of the equipment used.
Indigenous Capability. Soviet arctic pipeline con-
struction technology is adequate for most current oil
and gas needs and superior to that available in
Eastern Europe. None of the CEMA countries has
demonstrated any capability to match Western off-
shore pipeline construction. Soviet materials and
equipment are adequate to meet the requirements for
most oil pipelines. In contrast, the Soviets have not
demonstrated a capability to produce significant
quantities of large-diameter pipe suitable for high-
pressure gas pipeline service, although they recently
have claimed some capacity. Eastern Europe has
almost no capability to produce pipe over 820 mm in
diameter.
Moscow, having had to import over 16 million tons of
large-diameter (1,020 to 1,420 mm) linepipe since
1970, is acutely aware of the problem of low-quality
domestic linepipe and is attempting to upgrade exist-
ing pipe-mill capacity. Limited production capability
has been achieved by using a spiral-weld, multilayer
manufacturing process and an alternative dual longi-
tudinal welding process, which joins two "U" shaped
sheets of steel plate to form the pipe. Although these
processes appear cumbersome and archaic to Western
industry experts, they can provide a usable product.
The unproven multiwall Soviet pipe will not, however,
be easy to work with; it is heavier, shorter in length,
and it will require 3 or 4 times as much welding in the
field as conventional Western linepipe.
Linepipe imported from the West accounts for nearly
all of the 23,000 kilometers of 1,420-mm-diameter
gas pipeline laid in the USSR during 1981-85. Japan,
West Germany, and Italy were the principal suppliers.
During 1986-90, the USSR is apt to depend even less
on the West for gas turbines than in the past, largely
because of increased domestic turbine production, a
leveling off in the pace of Soviet construction of large-
diameter gas pipelines, and availability of other power
sources. Faced with the prospect that the US Decem-
ber 1981-November 1982 embargo would delay deliv-
ery of the Western gas turbines ordered for the gas
export pipeline, the Soviets initiated a crash program
during 1982 and 1983 to produce 16-megawatt (MW)
and 25-MW industrial turbines. We estimate that
Soviet production of large industrial gas turbines has
increased sufficiently to meet nearly all needs of the
1986-90 pipeline construction program. This increase
appears to reflect primarily success of the 16-MW
aeroderivative turbine. West of the Urals, moreover,
several compressor stations are being equipped with
Soviet 12.5-MW electric motors.
The stepped-up program to produce turbines for
large-diameter pipeline service has entailed a shift
from heavy-duty industrial turbines toward aeroderi-
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factured from the gas generators of retired engines
from TU- 154 aircraft.
in 1984 the Soviets installed substantial numbers
of 16-MW aeroderivative gas turbines on major do-
mestic gas pipelines. We estimate that aeroderivatives
account for at least 40 percent of current Soviet
production of turbines suitable for use on large-
diameter gas pipelines.
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Other equipment and materials. The USSR, which
has purchased over 5,000 heavy-duty pipelayers from
the West since 1970, reportedly has had some success
in producing a prototype capable of handling 1,420-
mm-diameter pipe. This new pipelayer, however, may
not be suitable for use under arctic conditions nor is it
being mass produced, as far as we can tell. Poor
metallurgy and excessive tolerances of critical engine
parts, together with a shortage of proper low-tempera-
ture lubricants, result in rapid engine wear and
unreliable operation in extremely cold conditions.
Short engine life and high maintenance requirements
considerably exacerbate the problems of pipeline con-
struction and operation in the arctic. Ministry of Gas
officials have indicated that the USSR will probably
import about 2,000 pieces of heavy equipment for gas
pipeline construction (pipelayers, bulldozers, and trac-
tors) during 1986-90-somewhat less than during
1981-85. (During 1981 and 1982, the USSR imported
about 2,000 pieces of heavy equipment from a Japa-
nese firm.) To enhance the efficiency of the pipeline
system, the USSR has also purchased several pipeline
control systems, as well as large quantities of pipeline
valves and pipeline coating and wrapping materials.
Western Availability. State-of-the-art pipeline tech-
nology is available from the United States and Cana-
da; high-level technology, from other COCOM coun-
tries. Adequate technology is widely available outside
COCOM from Austria, Argentina, Brazil, Mexico,
Venezuela, India, and Singapore. State-of-the-art and
high-level pipeline equipment and linepipe are gener-
ally available from the larger COCOM countries;
Sweden and Switzerland also produce gas turbines for
pipeline and industrial service (see appendix A).
Specialized state-of-the-art pipeline materials and
equipment for arctic and offshore installation are
available from the United States and, for most items,
from Canada. Although several Latin American oil-
producing countries, India, and Singapore have some
technical capability, they produce little if any of the
materials and equipment.
West Germany, Italy, Japan, and France have export-
ed most of the large-diameter linepipe (Sweden has
sold some), turbine-compressors, valves, and pipeline
control systems purchased by the USSR. Both the
United States and Japan have supplied pipelayers, but
Japan has filled nearly all orders since 1979.
Oil-Refining and Gas-Processing Technology
and Equipment
Applications. Meeting the requirements for gasoline,
jet fuel, and diesel fuel during the 1986-2000 period
will require expansion of secondary refining capacity
so that more light products can be extracted from
each barrel of oil processed.' The crude oil supply is
likely to fall off while the domestic demand for light
products continues to rise. Moreover, the demand for
mazut (heavy fuel oils) is expected to decline as gas
and, ultimately, coal replace it as boiler fuel.
The prospects for expansion of secondary refining will
be influenced by several additional factors. The crude
oil supply available to domestic refiners includes an
increasing share of West Siberian oil, which yields a
larger portion of light products from primary distilla-
tion than do the crudes from the older oil regions.
Mazut not needed for domestic electric power and
industrial use because of interfuel substitution and
conservation may be exported as feedstock for West
European refineries, if the oil market is favorable. To
the extent that mazut exports can satisfy hard curren-
cy needs, crude oil that otherwise would be exported
can be processed through the primary refining stills to
yield added supplies of light products for the domestic
market. Moreover, the expected large increases in
Soviet natural gas production will boost the supply of
gas condensate, which can be commingled with the
crude oil stream piped to refineries to yield a some-
what lighter product mix after primary distillation.
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Although several factors suggest less near-term need
for added secondary refining capacity in the USSR,
the Soviet Long-Term Energy Program refers to the
use of methanol and synthetic fuel to help meet rising
demand for liquid fuels. This reference implies that
pressure will intensify for an increased supply of light
petroleum products after 1990 and, consequently, for
deeper refining of the available oil supply.
The continued rapid increase in natural gas produc-
tion will require construction of additional gas-pro-
cessing plants. The natural gas in northern Tyumen' is
relatively clean and dry, although the average natu-
ral-gas-liquid content will increase somewhat as deep-
er gas deposits are exploited. Gas-processing require-
ments in Tyumen' thus will probably remain
relatively simple. The technology and equipment re-
quired for processing sour gas from deposits in the
Pre-Caspian Depression and Central Asia are, howev-
er, much more complex because of the toxic and
corrosive properties of the gas being processed.
Indigenous Capability. The USSR, if we include its
imports from Eastern Europe, has generally been self-
sufficient in most of the primary and secondary
processing equipment installed in its oil refineries.
Soviet industry, however, has had serious difficulty in
producing hydrocracking equipment (for the process-
ing of heavy feedstocks into lighter hydrocarbon fuels)
and hydrogen-fluoride alkylation equipment (for the
production of high-octane gasoline). Hydrocracking
technology would allow the USSR to process larger
amounts of heavy fuel oil (otherwise suitable primarily
for use in power plants and heating boilers) into more
valuable light products such as gasoline, kerosene, and
diesel fuel. Under proper operating conditions, hydro-
cracking permits concentration on the output of any
one of the light products and provides greater flexibil-
ity in range of output than catalytic cracking.
The Soviets began construction of a commercial
hydrocracker in 1977, and it reportedly was complet-
ed in late summer of 1985. (In the West, such units
are usually finished within two years.) This hydro-
cracker is patterned after one installed at the Ufa
refinery by a French firm during 1974-75. Generally,
the Soviets use sulfuric acid alkylation to produce
alkylate for blending into high-octane motor gasoline.
However, hydrogen fluoride alkylation technology
would be more efficient.
The USSR has built fluid catalytic cracking (FCC)
units, but only two of the FCC units have been
installed since 1977. An accelerated pace of construc-
tion would probably require Western assistance.
On average, Soviet technology and equipment for gas
processing are rated low in relation to future needs.
The USSR has constructed plants that can process
relatively clean gas (specifically, that from the north-
ern Tyumen' deposits), but even there the Soviets have
had to use imported equipment for refrigeration and
other special needs. They have not had similar success
with domestic technology in developing the sour gas
deposits of Orenburg, the Pre-Caspian Depression,
and Central Asia. Their attempts in the late 1960s to
develop the Central Asian sour gas fields with domes-
tic equipment experienced major setbacks from acci-
dents involving HZS. In 1976 the Soviets finally
turned to the West for sulfur-removal technology and
for equipment that would enable them to produce and
process sour gas on a commercial basis at the Oren-
burg gas complex.
Western Availability. In the West, state-of-the-art oil
refining technology is available from all of the larger
COCOM countries; high-level, from Austria and Sin-
gapore; and an adequate level, from Latin American
and non-COCOM Asian countries. The larger
COCOM countries also offer state-of-the-art refinery
equipment, although not all countries produce all
types of equipment. Firms in Japan, France, West
Germany, the United Kingdom, and Canada can
provide the technology and equipment for the hydro-
cracking process. Canada and Western Europe have
some capability to manufacture equipment and to
install the hydrogen-fluoride alkylation process. Sin-
gapore has high overall capability for production of
refinery equipment, but the capability of most of the
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other Asian and Latin American sources is low,
except for Mexico and Venezuela, which have high
capability to produce fluid catalytic crackers.
The United States has state-of-the-art gas-processing
plants. Other COCOM countries-West Germany,
France, the Netherlands, Italy, and the United
States-can supply comparable high-level equipment;
Mexico and Venezuela, adequate equipment. The
Soviets have purchased technology and equipment for
the major sour oil and gas development projects in the
Pre-Caspian Depression mainly from French and
West German firms.
Synthetic Fuel From Coal To Supplement
the Liquid-Fuel Supply
Applications. Soviet long-range planning for the coal
industry is based on a major expansion of open-pit
operations. Much of the coal to be mined is poor in
heat content, and some cannot be shipped for long
distances because its high moisture content results in
spontaneous combustion. Consequently, new solutions
are needed to facilitate the long-distance transporta-
tion of energy from coal, including possibly the devel-
opment of a synfuels industry. The Soviets hope to be
largely self-sufficient in surface-mining equipment;
but, until the heavy equipment plant at Krasnoyarsk
goes into full production in the late 1980s, Moscow
will continue to purchase from East Germany and
from Western suppliers.
In recognition of the difficulty of supplying increasing
amounts of liquid fuels at a time when oil production
is faltering, the Soviet Long-Term Energy Program
included reference to development of synfuels produc-
tion from coal. Moscow has targeted "commercial-
scale" production for the mid-1990s; we believe that
this goal means several million tons of liquid fuel from
coal annually.
Indigenous Capability. The synfuels research pro-
gram has focused on development of two technologies
that yield synthetic liquid fuels: pyrolysis and direct
coal conversion. The Soviets probably will not need
substantial Western technical assistance to construct
World War II) has met with only limited success.
commercial-scale pyrolysis facilities; a demonstration
plant was completed in 1983. However, the Soviet
effort to improve the Bergius direct-conversion pro-
cess (a technology pirated from Germany at the end of
If the USSR decides to build a commer-
cial-scale direct-conversion facility during the 1990s,
we believe that substantial Western technology and
equipment would be required.
Western Availability. Most of the proven direct-
conversion technology for pilot plants with operating
capacities greater than 5 tons a day (coal) originated
in the United States. The West German firms Ruhr-
kohle and Veba operate the only significant direct-
conversion plants located outside the United States.
Ruhrkohle also has a financial interest in the so-called
EDS and H-Coal processes developed in the United
States and has rights to the technology. The USSR is
unlikely to purchase equipment for a synfuels industry
in the near term because it does not plan to build
commercial-scale liquefaction facilities until after
1990.
Potential Military Applications for Desired
Technology and Equipment
The greatest potential for benefit to Soviet military
development from diversion of Western petroleum
technology and equipment is in the category of state-
of-the-art, or "high-level," offshore hardware and
software. Much of present Western offshore technol-
ogy was derived from the explosion of new develop-
ments in microelectronics, computerization, and min-
iaturization of hardware for aerospace applications in
the 1960s. Western offshore naval and marine tech-
nologies have benefited from the US oil industry's
pioneering efforts in the development of motion-
compensation and dynamic-positioning systems for
offshore drilling and for the design, fabrication, and
installation of huge offshore production installations.
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Recent Western breakthroughs in offshore computer-
assisted geophysical exploration and the integration of
related hardware and software offer perhaps the
greatest potential for a wide array of military applica-
tions, especially in command, control, communica-
tions, and intelligence.
Much of the technology and equipment used in
geophysical exploration has broad military-naval ap-
plications. Computer processing of imagery and signal
data, together with real-time analysis, can be used for
strategic and tactical warfare applications (particular-
ly targeting, mapping, and locating). The advanced
geophysical devices for magnetic, acoustic, and ultra-
sonic sensing, together with state-of-the-art, comput-
er-assisted technology, have greatly improved West-
ern capability for strategic and tactical warfare.
Gravimeters are used for missile guidance; magneto-
telluric systems, for underground low-frequency mili-
tary communications; magnetometers, for upgraded
magnetic anomaly detection (MAD) systems (locating
and mapping areas with natural magnetic anomalies
on the seafloor that could be used to conceal subma-
rines); and magnetometers and acoustic sensors, for
locating, identifying, and tracking missile-launching
and conventional tactical submarines and for conduct-
ing ASW operations. For example, modern seismic
surveying vessels-which have equipment for hydro-
carbon analysis of water samples, in addition to
seismograph, gravimeter, magnetometer, and sub-
bottom profiling equipment-can detect organic
waste jettisoned by submarines. The minicomputers
used for well logging and mud logging and for
monitoring drilling operations were borrowed origi-
nally from military hardware; they are still designed
to meet military specifications for arctic, desert, and
naval use.
The metallurgical technologies embodied in corrosion-
resistant production equipment and in equipment for
high-pressure, high-temperature operating conditions
are applicable to conventional and nuclear weapons
development, nuclear propulsion systems for subma-
rines and other naval vessels, and military rocket and
jet engines. Casing and tubing (which use special
steels for high resistance to collapse in deep-well
service), packers, downhole subsurface safety valves,
and seals (which use high chromium-nickel steel and
diffusion coating for high-temperature and high-pres-
sure service) have application in underground nuclear
testing and weapons emplacement silos. The special-
ized metallurgical and metal-processing technology
has application for armor, gun barrels, cutting sur-
faces, and bearings
Most Western state-of-the-art and high-level drilling
and production equipment packages integrate sophis-
ticated hardware and software capable of perfor-
mance under severe operating conditions. The compo-
nents of these packages and their technologies could
be useful to Soviet military and defense-industry
research:
? Properties of the hardware, such as the tensile and
yield strengths of pipe and the integrity and sealing
of pipe connections under high pressure and
temperature.
? The cutting and bearing technology used to make
drill bits.
? Other metallurgy used to make drill bits and tung-
sten-carbide inserts, drill pipe, collars, casing, tub-
ing, and pump rods.
For example, US state-of-the-art technology for man-
ufacturing drill-string components-drill pipe and
drill collars and the connecting tool-joints for each-
employs precision rotary forging, a process that re-
sults in a refined grain structure for optimum heat-
treatment response. This process could be used to
manufacture various kinds of pipe and seamless tubes
(including gun barrels for artillery) that can withstand
severe torquing and other stressing, high pressure,
high temperature, and corrosion. Some could be used
in nuclear propulsion plants for submarines, for nucle-
ar research, in nuclear weapons plants, and possibly in
military rocket and jet engines.
Submersible pumps capable of operating at depths
greater than 600 meters can be used for recovery of
strategic petroleum reserves stored underground. US
pumps offer greater lift capacity and reliability than
Soviet pumps. The pipes, valves, and fittings used in
Western petroleum refinery equipment frequently
contain stainless steels in the American Iron and Steel
Institute (AISI) austenitic 300 series and ferritic 400
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series; those in nuclear power plants use grade 316
stainless steel pipes and valves. Thus, Western refin-
ery grade steel is often able to withstand higher
pressure and temperature than the steel used in some
Soviet nuclear plants.
Substantial changes have occurred in the pattern of
Soviet purchases of oil and gas equipment from the
COCOM countries. In the mid-1970s, Soviet produc-
tion of oil and gas was expanding rapidly, and the
United States was one of the USSR's principal suppli-
ers of machinery and equipment for petroleum explo-
ration, production, and pipeline operation. After 1979,
West Germany, Italy, and France became the
USSR's main suppliers. At least partly because of
increasingly restrictive US trade sanctions in response
to Soviet actions in Afghanistan and Poland, Soviet
imports of US petroleum equipment dropped sharply,
from about one-third of total imports in this category
to less than 1 percent in 1984. Japan has become the
USSR's principal supplier of pipeline construction
equipment (especially heavy-duty pipelayers) and
since 1982 it has been the largest supplier of large-
diameter linepipe.
The US embargo imposed in late 1981 on delivery of
oil and gas equipment and technology to the USSR
disrupted plans for supplying the Siberia-to-Western
Europe gas export pipeline project. However, the
embargo apparently spurred the Soviets to accelerate
pipeline construction and the development of domesti-
cally manufactured 16-MW and 25-MW gas tur-
bines. Moreover, because the sanctions were not fully
supported by the other COCOM countries, the Sovi-
ets obtained most of the equipment on order from
Western Europe and Japan after some delay. Large-
diameter linepipe was excluded from all embargo
discussions and negotiations.
All of Moscow's options for timely acquisition of
sophisticated petroleum equipment and technology
involve increased reliance on the West. Specifically,
the Soviets will need to continue purchasing Western
linepipe, pipelayers, pipeline valves and control sys-
tems, and drilling, producing, and processing equip-
ment. The major projects begun in the 1981-85
period-Astrakhan', Karachaganak, Tengiz, Zhanaz-
hol, along with Caspian and Barents Seas projects-
are still moving forward, albeit at a pace somewhat
slower than planned. We believe that a lull in negotia-
tions over the past year reflects domestic political
changes affecting planning.
The 1986-90 Five-Year Plan was redrafted at Gorba-
chev's instruction to include more ambitious growth
goals. The goal for oil production of 625-640 million
tons in 1990 appears to be thoroughly unrealistic,
while the goal for gas production of 835-850 billion
cubic meters is realistic-perhaps even conservative.
We cannot begin to project the number and scale of
new project orders until more information on invest-
ment priorities and allocations is published. However,
the Soviets have begun negotiations-primarily with
French and West German firms-for the sour-oil-
and-gas processing plants for the second phase of the
Astrakhan' and Karachaganak projects and for the
first phase of the Tengiz oil project. Because of the
leadtime involved, the Soviets have discussed process-
ing plants and have left negotiations on the field wells,
gathering lines, and manifolds until later.
To meet their broader oil and gas equipment needs in
coming years, Kremlin planners can choose among
many sources. A global network of suppliers can
provide the varying levels of technology and inven-
tories of equipment appropriate to the range of oper-
ating requirements in the USSR. West European
suppliers for North Sea offshore operations are eager
to sell to the USSR. The Japanese are marketing a list
of items that continues to grow. Third World coun-
tries (such as Brazil, Argentina, South Korea, and
Singapore) are also competing for sales, especially in
tubular steel products (oil well casing, tubing, drill
pipe, and drill collars). Nonaligned countries (such as
Finland, Austria, and India) are demonstrating grow-
ing capability and capacity. Each year, as more state-
owned or subsidized industry comes on line, the
network becomes larger and the competition stiffer.
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"Wide Spectrum" Embargoes. A multilateral US/
COCOM embargo of the 22 items of oil and gas
technology and equipment and other high technology
proposed by the United States could limit Soviet oil
and gas development to relatively shallow (less than
3,000 meters deep) onshore petroleum deposits for the
next four to five years (table 6). An embargo that
includes pipe sales (large-diameter linepipe, well cas-
ing, tubing, drill pipe, and drill collars) would have a
severe impact on both the oil and gas industries. The
Soviets' ability to substitute gas for oil, as planned,
would be impaired because of the lack of linepipe to
build gas pipelines. Moreover, Soviet oil production
would decline probably more rapidly over the next
decade if Western seamless tubular steel were not
available. An embargo that did not include pipe sales
would allow the gas industry to expand at about the
planned rate, but with slightly higher investment
costs. The extensive development of a number of
shallow gas pools would be more costly than intensive
development of the deeper zones of two or three large
gasfields. Because the Soviets usually carry at least a
year's inventory of equipment and spare parts, oil
output would suffer little immediate decline. After a
year or so, adverse consequences from lack of deep
drilling equipment, blowout preventers and other well-
head equipment, and artificial lift equipment would
have an increasingly negative impact on oil output.
The denial of advanced exploration equipment would
substantially reduce the potential for improvement in
the effectiveness of Soviet petroleum exploration.
Although certain natural gas projects are highly
vulnerable to denial of Western technology and equip-
ment, Soviet gas production as a whole is not vulner-
able. For example, shutting down the sour gas pro-
jects in the Pre-Caspian Depression and Central Asia
would lead to more rapid exploitation of the huge
reserves at Urengoy, Yamburg, and the Yamal Penin-
sula. The size and quality of the Tyumen' natural gas
reserves permit a relatively small number of gas wells
to produce a large amount of energy. Soviet equip-
ment and technology are adequate for the develop-
ment of gas reserves in northern Tyumen'. The USSR
thus probably can produce sufficient gas to accommo-
date planned domestic consumption and to offer
greater volumes for export through the 1985-2000
period. The outlook for additional discoveries of natu-
ral gas, possibly in the Barents and Kara Seas,
appears favorable; in addition, immeasurably large
reserves probably are trapped in the gas-hydrate
formations rimming the arctic seas to the east.
The USSR is rapidly becoming self-sufficient in most
of the components necessary for construction of long-
distance gas transmission pipelines. Some progress in
producing large-diameter pipe for high-pressure gas-
line service may be forthcoming, and development of
a heavy-duty pipelayer capable of handling large-
diameter pipe (though possibly not under arctic condi-
tions) could prove successful. Nevertheless, the USSR
still imports large tonnages of pipe and large numbers
of Japanese pipelayers. As a result of the accelerated
development of large (16-MW and 25-MW) gas tur-
bines during the 1981-82 US embargo, the USSR
now appears capable of supplying all or nearly all of
its basic needs for turbines and compressors for gas
transmission pipeline service. The Soviets still covet
Western turbines for their economy and reliability-
especially when favorable credit terms are available.
Although automated control systems, high-quality
pipe coating and wrapping, and state-of-the-art corro-
sion-prevention systems increase the efficiency and
longevity of pipelines, their absence does not prevent
effective operation.
Embargo limited to hardware for offshore develop-
ment. For the next several years at least, USSR
energy production would suffer little from a limited
US/COCOM embargo of Western technology and
equipment for offshore petroleum development. Most
of the impact of the embargo would fall on long-term
oil production-and only if the US/COCOM coun-
tries continued to cooperate in maintaining the em-
bargo. An embargo-if it included dynamic-position-
ing equipment, motion-compensation systems, sea-
floor blowout preventers, and marine Christmas
trees-would limit Soviet ability to expand offshore
exploration efforts such as those in the Barents Sea
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Table 6
Status of US Oil and Gas/Other
High-Technology Proposals in COCOM
Inventory of emerging tech- Ad Hoc Group agreed to recommend (2 countries Further consideration pending. Three items-ultra-
nologies (structure and mo- ad referendum). sensitive detectors using certain biopolymers, bio-
dalities are in place, await- technology industrial-processing programs, and pho-
ing additions of specific tochemical enhancement of ignition and combustion
technologies). processes in air-breathing engines-were added to
COCOM inventory list controls on 1 February 1985.
Categories of equipment and
technology proposed for
COCOM controls:
Deep submersible pumps Not accepted by the Ad Hoc Group No US control.
Seismic survey vessels Deferred for further definition (if needed). Individual items of concern require a US-validated
license for export. For example, crucial portions
covered as software are controlled by IL-1566 and
computer equipment and peripherals by IL-1565.
Installation of these items in a vessel does not remove
the need for an export license.
Satellite navigation equip- Accepted during the List Review. If aboard the satellite, it is controlled by the ITAR;
ment the ground portion that was controlled by COCOM
under IL-1510 on 1 February 1985, is not currently
unilaterally controlled.
Acoustic/ ultrasonic
underwater equipment
Geophones (certain Accepted during the List Review. Both underwater and land-use geophones at the
types) capability levels of concern were controlled by all
COCOM members under IL-1510 on 1 February
1985.
Other Deferred for further definition. Some items could be controlled, if they meet the
descriptions in the Commodity Control List (CCL)
items 6598F (oil exploration systems), 6191 F, or
6391 F (oil production use). Otherwise, US unilateral
controls apply.
Land gravimeters (certain Accepted during the List Review. United States does not have unilateral controls on
types) these items; certain items of concern controlled under
IL-1571 on 1 February 1985.
Corrosion-resistant oil and Withdrawn. Controlled unilaterally under CCL 6191 F and/or
gas equipment 6391 F.
High-pressure/temperature Withdrawn. Controlled unilaterally under CCL 6191 F and/or
oil and gas equipment 6391 F.
Deep-well drilling rigs Withdrawn. Controlled unilaterally under CCL 6191 F and/or
6391 F.
Magneto-telluric Magnetometer already covered under IL-1571; US control on exports to the USSR applies to
systems other crucial portions, such as software and portions of magneto-telluric systems other than the
Well-logging computer equipment and peripherals used in magnetometer under CCL 6598F.
equipment these systems and well- and mud-logging equip-
Mud-logging equipment ment are already covered by IL-1566 and 1565.
Feasibility studies Withdrawn; Ad Hoc Group recommended that US controls on technology of concern apply.
member governments take care to ensure that COCOM agreement covering tangible technology
embargoed technology is not transferred through and related programs involving embargoed technol-
such studies. ogy provided under service contracts was implement-
ed on 15 November 1985.
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Secret
Table 6
Status of US Oil and Gas/Other
High-Technology Proposals in COCOM (continued)
Technology for integration
of:
a. Magneto-telluric
systems
b. Seismic survey ves-
sels
c. Submersible vehicle
systems
d. Offshore positioning
and navigation sys-
tems
e. Deep-well drilling
rigs and systems
f. High-pressure/tem-
perature, corrosion-
resistant oil and gas
production equip-
ment
Technology for the design,
development and production
of:
g. Deep submersible
pumps
h. High-pressure/tem-
perature oil and gas
systems
i. Corrosion resistant
oil and gas systems
Deferred pending List Review results on software US technical-data regulations apply to items a
and on the West German technology list. through i; this technology is unilaterally controlled
under section 379 of the export administration
regulations.
Items b through e were deferred on the same
basis as a.
The United States is reconsidering, following
discussion on pump materials, which may already
be covered.
Items h and i are being reconsidered by the
United States on the same basis as g.
and offshore Sakhalin. An embargo lasting three to
four years would greatly impede Soviet efforts to find
and develop new offshore oil reserves. Soviet industry
would probably need at least five to 10 years to
develop functionally comparable offshore equipment.
The importance to the Soviets of offshore exploration
and development is underscored by the shrinking
number of accessible onshore alternatives remaining
to be developed. The true oil potential of the best of
those may not be realized in this century due to their
remote, inaccessible location and geologic depth. In
East Siberia, for example, much of the vast land area
has potential for oil accumulation but is virtually
unexplored-in part because of the forbidding terrain.
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Two options for embargoing technology. A US!
COCOM limited embargo on technology for manu-
facturing selected petroleum equipment might retard
the USSR's efforts to reduce its dependence on the
West over the long run if close multilateral coopera-
tion could be maintained. The Soviets' recent pur-
chases of plants to produce drill bits and tubular steel
and their acquisition of installations for constructing
offshore drilling platforms and production platforms
give them critical Western technology that could
materially contribute to the eventual development of
petroleum deposits onshore in Tyumen' and offshore
in the Caspian, Baltic, and Barents Seas. However,
additional Western help will be needed for these
areas' development, especially the deep, onshore sour
oil and gas deposits in the Pre-Caspian Depression.
An embargo on the necessary technology could force
Moscow to immediately reallocate domestic resources
for the development of the necessary technology.
The United States and COCOM might achieve a
more immediate impact on the Soviet oil and gas
industries by dropping the rubric of "oil and gas
equipment and technology" that has been used in past
proposals. This terminology in the 1983 US proposal
of 22 items proved unacceptable to some of the other
COCOM countries, because, they argued, it smacked
of "economic warfare." Selective raising and lowering
of criteria for COCOM control of electronic instru-
ments, computer technology, and the metallurgy and
metal-working processes that are used for producing
oil and gas equipment-but without specifying the
relationship to that equipment-might achieve better
cooperation by COCOM countries. Tighter controls
for electronics and metallurgy probably would cover
most of the items listed in the US proposal. If such a
COCOM initiative were carefully pursued, the effect
might be as broad as that of a product-specific
embargo, and it would slow the tempo of Soviet oil
and gas development.
Unilateral US embargo. A unilateral US embargo of
oil and gas technology and equipment to the USSR
and other Warsaw Pact countries probably would
achieve limited success for about one year. After that,
the effect would be diluted by the widespread avail-
ability and continuing development of hardware and
technology in Western Europe and Japan, and to a
lesser degree, in several Third World nations. Also, as
in the past, new production facilities would soon be
built overseas for most embargoed items. Thus, the
principal long-run effect of a unilateral US embargo
where strong foreign competition exists or threatens
would be abandonment of the world market to non-
US producers. For the United States, adverse conse-
quences of an embargo might extend beyond the
direct losses of sales and employment in US industry.
Subsequent to the relaxation or elimination of unilat-
eral US restrictions, the USSR and other CEMA
countries might continue moving toward new com-
mercial relationships with non-US suppliers as a
hedge against future restrictions. Moreover, they
would actively boycott US suppliers calling the Unit-
ed States an "unreliable supplier." Thus, even if the
Soviet oil and gas industries were to turn again to the
United States after the embargo was lifted, that trade
would probably not reach as high a level as in the
absence of the embargo.
A Full-Decontrol Scenario. If existing US/COCOM
controls were removed from all Western oil and gas
technology and equipment sought by the Soviet
Union, we would expect (barring major improvement
in US-Soviet relations) that:
? The Soviets would continue to exercise caution in
selecting US firms as prime contractors for major
development projects in the Barents Sea or the Pre-
Caspian Depression. They would also continue their
recent policy of limiting US participation to subcon-
tracting through overseas subsidiaries and licensees.
? The Soviets would probably press forward without
US help on all currently planned projects, seeking to
use West European and Japanese contractors and
equipment when possible. The lack of US help
would cause few significant slowdowns in develop-
ment, except in the Barents Sea.
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Secret
Even if US-Soviet relations were to improve substan-
tially, the Soviets might not turn immediately to US
firms, because West European and Japanese banks
offer better financial terms. Moscow is also likely to
look to supplier countries that are running trade
deficits with the USSR. Nevertheless, the Soviets
might seek US help for the Barents Sea project,
because of the magnitude of the financial and techni-
cal resources needed; US participation could as much
as halve the expected leadtime of eight to 10 years.
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Appendix A
Worldwide Availability of Oil and Gas
Technology and Equipment a
Secret
CEMA
North America and Western Europe:
COCOM Countries
Western Europe:
Non-COCOM Countries
Asia:
COCOM Country
Latin America:
Non-COCOM Countries
Asia:
Non-COCOM Countries
______________
USSR Eastern
Europe
United Canada BENELUX b France
States
West
Germany
Italy Norway
United
Kingdom c
Austria
Finland
Sweden Switzerland
Japan
Argentina
Brazil
Mexico
Peru
Venezuela
India
Singapore
South
Korea
Taiwan
Exploration
Technology (all phases)
Lo
Lo
X
Hi
Hi
X
Hi
Hi
Hi
X
A
0
0
Hi
A
A
A
A
A
Lo
Lo
0
0
Project feasibility and management studies
Lo
Lo
X
Hi
Hi
X
Hi
Hi
Hi
X
A
0
0
Hi
A
A
A
A
A
A
Lo
0
0
Technical integration of hardware and sQftware
Lo
Lo
X
Hi
Hi
X
Hi
Hi
Hi
X
A
0
Lo
Hi
A
A
A
A
A
Lo
A
0
Lo
Geophysical equipment (all types)
Lo
Lo
X
Hi
A
Hi
A
A
A
Hi
Lo
Lo
Lo
Lo
0
0
0
0
0
0
Lo
0
Lo
Seismic survey vessels (equipment package
excluding hull and boat)
Lo
Lo
X
Hi
A
Hi
A
A
A
Hi
Lo
Lo
Lo
Lo
0
0
0
0
0
0
Lo
0
Lo
Satellite navigation equipment
Lo
Lo
X
Hi
Hi
Hi
Hi
Hi
Hi
Hi
Lo
Hi
Hi
Hi
0
Lo
0
0
0
0
Lo
0
Lo
Acoustic/ultrasonic sensors and geophysical equipment:
Geophones for onshore and offshore seismic surveying
Lo
Lo
X
A
A
A
A
0
0
Hi
0
0
0
0
0
0
0
0
0
0
Lo
0
Lo
Land gravimeters
Lo
Lo
X
A
A
A
A
0
0
Hi
0
0
X
0
0
0
0
0
0
0
Lo
0
Lo
Magneto-telluric systems
Hi
A
Well-logging equipment
Lo
Lo
X
A
A
A
A
0
0
Hi
0
0
0
0
0
0
0
0
0
0
Lo
0
0
Mud-logging equipment
Lo
Lo
X
A
A
A
A
0
0
Hi
0
0
0
A
0
0
0
0
0
0
Lo
0
0
Monitoring equipment for drilling operations
(mud systems and drill-stem testing equipment)
Lo
Lo
X
A
A
Hi
A
0
A
Hi
0
0
0
A
0
0
0
0
0
0
Lo
0
0
Computer hardware
Lo
Lo
X
A
Hi
Hi
Hi
Hi
A
Hi
0
0
0
Hi
0
0
0
0
0
0
Lo
0
Lo
Drilling and Production
Technology (all phases)
Lo
Lo
X
Hi
Hi
Hi
Hi
Hi
Hi
Hi
Hi
0
0
Hi
A
Hi
Hi
A
Hi
A
Hi
0
A
Project feasibility and management studies
Lo
Lo
X
Hi
Hi
Hi
Hi
Hi
Hi
Hi
Hi
0
0
Hi
A
Hi
Hi
A
Hi
A
Hi
0
A
Technical integration of hardware and software
Lo
Lo
X
Hi
Hi
Hi
Hi
Hi
Hi
Hi
Hi
0
0
Hi
A
Hi
Hi
A
Hi
A
Hi
0
A
Equipment (all types)
Lo-A Lo-A
X
Hi
Lo
Hi
Hi
Hi
Lo
Hi
A
Lo
0
Hi
Lo
Lo
Lo
Lo
Lo
Lo
A
0
Lo
Corrosion-resistant producing equipment (all types)
Lo
Lo
X
Hi
A
Hi
Hi
Hi
Lo
Hi
A
Lo
Lo
Lo
Lo
Lo
Lo
0
Lo
Lo
Lo
0
0
Christmas trees and blowout preventers
Lo
Lo
X
X
A
Hi
Hi
Hi
0
Hi
A
0
0
Lo '
Lo
Lo
Lo
Lo
Lo
0
Lo
0
0
Remote control systems
0
Lo
X
X
0
Hi
0
0
Hi
Hi
A
A
0
0
0
0
0
Lo
0
0
0
0
0
Wellheads
Lo
Lo
X
X
A
Hi
Hi
Hi
A
Hi
Hi
0
0
Lo
Lo
Lo
Lo
Lo
Lo
0
Lo
0
0
Special steel tubes-casing, tubing, drill collars,
drill pipe
Lo
Lo
X
Hi
Lo
Hi
Hi
Hi
0
Lo
Hi
0
Hi
Hi
Hi
Hi
A
0
A
0
Hi
Lo
0
seals, valves
Packers
Lo
Lo
X
A
0
A
Lo
Lo
0
Hi
Lo
0
0
0
Lo
A
A
0
A
0
0
0
0
,
Pump rods
Lo
Lo
X
A
0
A
Hi
A
0
A
Hi
0
0
A
A
0
0
0
0
0
Lo
0
0
Deep submersible pumps (below 600-meter depths)
Lo
Lo
X
0
0
A
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Manifold systems
Lo
Lo
X
X
Hi
Hi
Hi
Hi
Hi
Hi
Hi
Lo
Lo
Hi
A
Hi
Hi
0
Hi
A
A
0
Lo
Chemical inhibitors
Lo
Lo
X
X
Hi
Hi
Hi
Hi
Hi
Hi
Hi
0
0
A
A
A
A
0
A
A
A
0
0
High-pressure/temperature production
equipment (all types)
Lo
Lo
X
Hi
Lo
Hi
Hi
Hi
Lo
Hi
Lo
0
Lo
Lo
Lo
Lo
Lo
0
Lo
Lo
Lo
0
0
Christmas trees and blowout preventers
Lo
A
X
X
Lo
'Hi
Hi
Hi
Lo
Hi
A
0
0
Lo
La
Lo
Lo
Lo
Lo
Lo
Lo
0
0
Remote control systems
0
Lo
X
X
A
Hi
A
A
Hi
Hi
A
A
0
A
0
0
0
Lo
0
0
0
0
0
Well heads
A
A
X
Hi
Hi
Hi
Hi
Hi
Lo
Hi
A
0
Lo
Hi
Lo
A
Hi
Lo
A
A
A
Lo
0
Casing and tubing
Lo
Lo
X
X
Hi
Hi
Hi
Hi
Lo
Hi
Hi
0
Hi
Hi
Hi
Hi
Hi
0
A
A
Hi
Hi
0
Packers, seals, valves
Lo
Lo
X
A
0
A
Lo
Lo
0
Hi
Lo
0
0
0
Lo
A
A
0
A
0
Lo
0
0
Deep submersible pumps (below 600-meter depths)
Lo
Lo
X
0
0
A
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Deep-well drilling rigs (below 3,000-meters depths)
and tools
Lo
Lo
X
Hi
Hi
Hi
Hi
Hi
Hi
Hi
Hi
A
0
Hi
A
A
A
0
0
0
Hi
0
0
Offshore drilling platforms
Lo
Lo
X
I-li
Hi
Hi
Hi
Hi
Hi
Hi
0
A
A
Hi
A
A
A
0
A
A
Hi
Hi
0
Measuring instruments and control systems
Lo
Lo
X
Hi
A
Hi
Hi
A
Lo
A
A
0
0
Hi
0
0
0
0
0
0
0
0
0
Riser and motion compensation systems
Lo
Lo
X
Hi
Hi
Hi
Hi
Hi
Hi
Hi
0
0
0
Hi
0
0
0
0
0
0
0
0
0
Dynamic positioning systems
Lo
Lo
X
A
I-li
Hi
Hi
Hi
Hi
Hi
0
0
0
Hi
0
0
0
0
0
0
0
0
0
Pipeline Construction
Technology (all phases)
A
A
X
X
Hi
Hi
Hi
Hi
Hi
Hi
A
0
0
Hi
A
A
A
Lo
A
A
A
0
0
Project feasibility and management studies
A
Lo
X
X
Hi
Hi
Hi
Hi
Hi
Hi
A
0
0
Hi
A
A
A
Lo
A
A
A
0
0
Technical integration of hardware and software
A
Lo
X
X
Hi
Hi
Hi
Hi
Hi
Hi
A
0
0
Hi
A
A
A
Lo
Lo
Lo
Lo
0
0
Materials and equipment (all types)
Lo
Lo
X
X
Hi
Hi
Hi
Hi
Lo
Hi
Lo
0
Lo
Hi
Lo
Lo
Lo
0
0
0
0
0
0
Large-diameter pipe (1,020- to 1,420-mm-diameter pipe)
Lo
Lo
Hi
X
Hi
Hi
X
X
0
Hi
A
0
Hi
X
0
0
0
0
0
0
0
0
0
Pipe wrapping and coating materials
Lo
Lo
X
X
A
Hi
X
Hi
Lo
Hi
Lo
0
0
Hi
0
0
0
0
0
0
0
0
0
Large-diameter valves (1,020- to 1,420-mm bore)
Lo-A Lo
X
Hi
X
X
X
X
0
Hi
0
0
0
X
0
0
0
0
0
0
0
0
0
Pipeline control systems
Lo
Lo
X
X
X
X
X
X
Hi
X
0
0
0
Hi
0
0
0
0
0
0
0
0
0
Turbine drivers and compressors
A
Lo
X
Hi
Hi
Hi
Hi
Hi
0
X
0
0
Hi Hi
Hi
0
0
0
0
0
0
0
0
0
Heavy-duty pipelayers (over 50-ton load capacity)
A
Lo
X
0
0
0
0
X
0
0
0
0
0
X
0
0
0
0
Processing and Refining
Technology (all phases)
Lo
A
X
X
X
X
X
X
A
X
Hi
A
A
X
A
A
A
Lo
A
A
Hi
A
A
Project feasibility and management studies
Lo
A
X
X
X
X
X
X
A
X
Hi
A
A
X
A
A
A
Lo
A
A
Hi
A
A
Equipment (all phases)
Lo-A Lo
X
X
X
X
X
X
Lo '
X
A
Lo
A
X
Lo
Lo
Lo
Lo
Lo
Lo
Hi
Lo
Lo
Fluid catalytic cracking (FCC) Lo-A Lo
X
X
X '
X
X
X
Lo
X
A
Lo
A
X
Lo
Lo
Hi
Lo
Hi
Lo
Hi
Lo
Lo
Hydrocracking
Lo
0
X
Hi
Hi
A
Hi
Lo
Lo
Hi
A
Lo
A
Hi
Lo
Lo
Lo
Lo
Lo
Lo
Hi
Lo
Lo
Reduced crude cracking (alternative to FCC)
0-LoO
X
0
0
0
0
0
0
0
0
0
0
X
0
0
0
0
Lo
0
0
0
0
Hydroprocessing
A
Lo
X
X
X
X
X
X
to
X
Lo
Lo
Lo
X
Lo
Lo
Lo
Lo
A
Lo
A
Lo
Lo
Delayed coking and fluid coking
Lo-A Lo
X
Hi
Hi
Hi
Hi
Hi
0
Hi
Lo
Lo
Lo
Hi
Lo
Lo
Lo
0
A
Lo
A
Lo
Lo
Catalytic reforming
Hi
A
X
X
X
X
X
X
0
X
A
A
A
X
A
A
A
Lo
Hydrogen-fluoride alkylation
Lo
0
X
A
A
A
Lo
Lo
0
A
O
0
0
Lo
0
0'
0
0
0
0
0
0
0
Equipment for production of additives for lubes
Lo
Lo
X
Hi
X
Hi
Hi
Hi
A
X
A
A
A
Hi
Lo
Lo
Lo
0
Lo
Lo
Lo
Lo
0
Gas-processing plants
Lo
Lo
X
Hi
Hi
Hi
Hi
Hi
Hi
Hi
A
A
a Listing of more than one code in an entry (for example, Lo-Hi)
indicates that some country or countries in the group have the
higher capability, while the rest have at least the indicated lower
capability.
b State-of-the-art and high ratings largely reflect the R&D capabil-
ities of Shell Oil.
C State-of-the-art and high ratings reflect the R&D capabilities of
British Petroleum.
Key:
x = Highest or state-of-the-art capability.
Hi = More than adequate for needs.
A = Adequate for most needs.
Lo = Some capability, but inadequate for most needs.
0 = No demonstrated capability.
Blank = Unknown.
31 Secret
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 Declassified in Part - Sanitized Copy Approved for Release 2011/12/01: CIA-RDP87T00787R000100140002-9
Secret
General
Blowout preventer
Christmas trees
Compressor station
Feedstock
Gas lift
Methane
Methanol
Mud log
Oil country tubular
goods
Production manifolds
Pyrolysis
Real-time
Appendix B
Glossary
A wellhead installation to prevent uncontrolled high-pressure flows of oil and gas.
The surface installations placed over individual wells to test and control flow of oil
and gas. Marine Christmas trees are used for offshore service above water on
platform decks (dry) or for seafloor installation and underwater service (wet).
An installation that uses a power source (for example, electric motors or gas
turbines) to drive compressors that pump gas through pipelines.
A hydrocarbon stream used in the manufacture of a refinery product or chemical
product.
A method of artificial lift for operating oil wells where large volumes of fluid are
extracted by injecting high-pressure gas at the bottom of the well to stimulate the
flow of the oil, gas, and water mixture to the surface.
The major hydrocarbon component of natural gas streams.
Methyl alcohol, a flammable liquid often derived from methane; used as an
intermediate chemical product, antifreeze, and increasingly as a fuel.
A running analysis of drilling fluid samples taken during the course of drilling a
well.
Seamless steel tubes for oil and gas well use; includes well casing, tubing, drill
pipe, drill collars, and linepipe.
The degree to which the rock pores are interconnected; thus an indicator of the
rate at which oil, or gas, can flow through these pores.
The pore space, or voidage, in the rock matrix of an oil-gas reservoir.
Surface installations that collect the output from several wells, flow lines, or
gathering systems prior to treatment.
Process of breaking down heavy, high-boiling hydrocarbons into simpler and
lighter ones by the use of high temperatures.
Instantaneous readout and analysis of data being acquired.
33 Secret
Declassified in Part - Sanitized Copy Approved for Release 2011/12/01: CIA-RDP87T00787R000100140002-9
 Declassified in Part - Sanitized Copy Approved for Release 2011/12/01: CIA-RDP87T00787R000100140002-9
Secret
Sour oil, sour gas Oil and gas streams that contain corrosive and toxic admixtures of hydrogen
sulfide (HZS) and carbon dioxide (CO2).
Sour-service trim The coatings or finish applied to exposed equipment surfaces used in the
production of oil or gas containing H2S and CO2.
Standard fuel equivalent A common denominator of the heat content of various fuels, expressed in terms of
a reference fuel, for example, coal containing 7,000 kilocalories per kilogram.
Secondary processing
Alkylation
Cracking
Catalytic cracking
Fluid catalytic
cracking
Hydrocracking
The first step in refining, which achieves a rough separation of petroleum
constituents in some form of closed apparatus by the application of heat at
atmospheric pressure.
General category for refining of various oil fractions after primary distillation to
provide a higher yield of the lighter products and to upgrade produce quality.
A process of combining light hydrocarbon molecules in the presence of a catalyst
to form high-octane blending components for production of motor gasoline.
A process by which large oil molecules are decomposed into smaller, lower-boiling
molecules; used for production of gasoline and diesel fuel from heavy fuel oil.
Conversion of high-boiling-point hydrocarbons into lower boiling ones by means of
heat and a catalyst that may be used in a fixed bed, moving bed, or fluid bed.
A catalytic cracking process in which the oil is cracked in the presence of a finely
divided catalyst maintained in a fluid state by oil vapors.
Conversion of high-boiling hydrocarbon into lower boiling ones by the use of heat
and a catalyst with the addition of hydrogen.
A refining process that decomposes, rearranges, or combines hydrocarbon mole-
cules by the application of heat.
Declassified in Part - Sanitized Copy Approved for Release 2011/12/01: CIA-RDP87T00787R000100140002-9
 Declassified in Part - Sanitized Copy Approved for Release 2011/12/01: CIA-RDP87T00787R000100140002-9
Secret
Secret
Declassified in Part - Sanitized Copy Approved for Release 2011/12/01: CIA-RDP87T00787R000100140002-9