Oil Industry in the ex-USSR
Gushers for Some...
[Sector Focus]
By Lynda L. Maillet

The former Soviet Union is well-known as the world's leading producer of oil. In fact, Russia and the other oil-producing republics hold an estimated 40% of the world's reserves of oil and gas, more than double those of the United States. However, the former Soviet republics lag far behind Western and Middle Eastern oil-producing countries in terms of efficient production and capital investment in the oil industryÑproviding unprecedented opportunities for Western investors. Foreigners can provide the needed capital to develop oilfields, repair existing facilities, and increase production. The volume of oil production has been steadily falling from a record level of 12.5 million barrels per day in the mid 1980s to less than 10 million barrels per day at the end of 1991. Western investment can help reverse this trend as well as provide an alternative to expensive Mideast oil supplies.

The majority of the remaining oil reserves are in more remote areas of Russian Siberia which, if exploited, would be more difficult to reach, subject to a rising tide of environmentalism, and would be located in an area with a tradition of labor shortages and unrest. Outside Russia (which accounts for 90% of oil production in the former USSR), oil fields are also located in Kazakhstan, Azerbaijan, Ukraine, and Belarus with smaller fields in Georgia and the Central Asian nations of Uzbekistan, Turkmenistan, Kirghizia, and Tadzhikistan. A system of pipelines throughout the former Soviet Union carries oil to refineries and distribution points.

Republican autonomy & decentralization
Among other things, the break-up of the Union in 1991 has greatly affected the oil industry. The individual republics have all claimed authority over the oil fields on their territory and in some cases, specific regions, like the oil-rich Tyumen Region in Russia, have defied the leadership in their own republics causing chaos in the supply of oil throughout the former Soviet Union and in their exports to their primary buyers in Eastern Europe....

Download the complete article: fsu-oil-v1n2.pdf (143K).
Viewing this document requires Acrobat Reader version 3 or higher (this link will open a new browser window).