The OU Potential
of the Barents Sea:
A Future Soviet Bonanza
CIA HISTORICAL REVIEW PROGRAM RELEASE AS9
The Oil Potential
ofjthe Barents Sea:
A Future Soviet Bonanza
Tliii paperpired by
. Office of Global lavesprovidedolSovm
Aiulyili
Comment* and queries lie welcome and n
11m? Oil Potential
of Hi. Barents Sea:
A Future Sosicl Bonanrr
Harem. Sea hat ihc potential foeajor oil bonanza foe ihc
tafca iWe estimate thai recoverable oil resource} in the Soviet poetion of
could amount toillionihe same
-iiJ lm rail rw
amount at thai of ihe North Sea. If proved and developed, these resources would be adequate to support average production ratesillion barrels per dayabout one-sixth of current Sovietmore than AO yean,or more titan iS years. No other new oil region inSoviet Union appear* lo hold such promise. If Barents Sea oil helps keep Soviet exports to hard currency countries up. and. therefore. Imports from the West, the Untied Slates couldomewhat healthier Sovietecade or so from now than many Western capcrts currently envision
Oil production in ihe Barents could technically begin0 andr more by ihe. Actual production levels will depend on the priority ihe Soviets give lo tbc development of Barents Sea oil and Iheir access lo Western technology designed specifically for Arctic condition*
*
arsh area, ihc Barents Sea presents no environ menial problems that would make development of oil impossible. Because of the influence of the Gulf Stream, conditions in the southern part of the Barents are similar to those in (be North Sea. an area that has beat in production for many years. Conditions in the north are similar lo those in the Canadian Beaufort Sea. which is presently being explored t. Western firms and will be developed when economic conditions permit
No breakthroughs in technology will be required to develop the Barents Sea oil. Many types of offshore platforms presently in operation in the North Sea are well suited for operations in ioe-free regions of the southern part of the Barents. This technology is available from various Weil European manufacturers, most of whom would probably be eager to enter tbc potentially lucrative Soviet offshore market. Given the depressed oil market outlook for the next few years, the Soviets can expect attractive offers from Western manufacturers The technology needed to exploit she environmentally tougher northern pad of the Barents exists in the West and could be provided by Finnish. British, Norwegian. Canadian, or US firms. We believe, however, lhal any effort to develop the northern Barents is still anotheroears down the road, at the earliest
i.li 1MB
Development of the Barents Sea oil will have an important impact on the Soviet energy balance in the latter half of. Major production from ihe Barents could beginime when output from the primary onshore regions, especially Wesi Siberia, is expected io be in sharparents break through would help the Soviets avoid the enormous eipcnsc of moving extensively to inefficient enhanced oil recovery techniques in onshore oilfields, shifting their fuel use even more rapidly away from oil, ot adjusting their foreign trade to improve domestic oil supplies. Any of these options would probably be more expensive and far more difficult lhan the admittedly large investment needed to exploit Barents oil resources.
Exploitation of the Barents couldoon to Western petroleum equipment and service companies. If Moscow turns to ihe West for Arctic-offshore technology, the Barents would represent one of the largest markets during the next decade. The United States, however, would not betrong position to capture much of this business. Although the United Slatesorld leader in most aspects of offshorethe Soviets have privatelyreference for USbelieve that the Soviets will try to keep direct equipment purchases from the United Stalesinimum.
The cost per barrel of developing Barents Sea oil will exceed that of allof the non-Communist countries currently in production. To limit investment costs. Moscow could use the Barents Sea to experiment with Joint ventures between (he Soviets and Western firms. American or otherwise. Although the Soviets would appioach such arrangements with great caution, their need for access to Western petroleum technology for Arctic development might incline them to such arrangements. Although the Barents" strategic importance to Moscowaval staging, transit, and exercise area will work againsl this option, ihe" Soviets could use offers lo help develop the Barents Sea as leverage to gain political concessions.inimum, the Barents may present Moscow with an opportunity to create friction between the United States and its allies in the event ihe United States were to oppose Western participation in Barents Sea development. No mailer what strategy is finally adopted, the possibility that the Barcnis Sea oil could help Moscow keep oil exportsive West at high levels, coupled with prospective deliveries of Soviet natural gas, suggestshe USSR over the long term may figure more heavily in Western Europe's energy picture lhan we now foresee
Contents
Pate
too
the USSR 14
ihe West 14
the United States 14
Appcnto
Oil Potential of the BatwtsSea: Out
1
1
v
Tbt So-letlacrotu Oil i: nen -.
Alioears of unialorrapud growth. Soviet oil peodticuon peaked mlill-on barrets pet day| ioand (lipped Io9a addition tocoatinuim declines in other r.otu of Ihe USSR, production in Western win- ii iccounu for abouterceni of national oil oalpaldropped for ihe first lime by about5 (tf*rt I) Accordnt io variow Sonet presi aodeports, raouauni problems with equipment future* ind downtimes.ualityhortages of skilled labor, and inadequate levels inventive ni were the major factors responsible for ihe production shortfall.i is Still Wo soonredict folate production trends with much certainty, out ben climate is lhai Sonet oil production will continue to decline (radoall/ dunm the rest of. posuMy filling to about
In the past, ihe Soviet, hive been able to maintain cro-alh in oil prjCoctKmfindmr and dewlopinfnew oilin the ItJOs and Weil Siberia in thendSonet leaden, however, have publicly iiatcd thai new di* Covcrtfi in West Siberia will he "nailer, more difficult io find, and far more costly to develop, laced with ihit lituation. ihe Soviet* plan to step up eiploistionorh oA'ihore and onshore regions toestive bate to sapporl the oil prodaclion wOed in theand beyond. Oik of the announced priority objective* of tbe curieni Five.Year Plans la develop ihe oil potential n( the nations continentale interpret thu to mean thai the Soviet! will Hep up eiploriuon in ihe Harenti Seaworld't U'feil centmenUl shelf
wi,mr* >krHnlwiir
Thev. i ia. Boundary Dispute
The Soviet and Norwegian boundaryelaimi in the Barents Sra overlap,isputed orra ofJWO squarearea slightly larger than the Middle Atlantic, states of Virginia.Delaware, andJersey
0 years at periodic negotiations, the Soviet Union and Norway have made little progress toward resolving their maritime dispute {see
There I* an outside chance (hat ihe Barcmsis in the Kuwait rangeillion bands)
illion barrels may exist in icgioni ol the Barents Sea subjectoundary dispute between the USSR ana(future 5)
Our geological analysis indicates that the disputed area of ihe Barents Sea contains all or part of ai least eight largein sitequareare potentiallybearing. The disputedeferred toas the Central Barents Uplift and the Peneus Uplift, n't estimate thatillion barrels of potentially recoverable oil exists In ihis area. If proved-up. this amount of oil could approximate that of Alaska's Prudhoe Bay. The Norwegians are well aware of this area's oil potential. The Soviets hove conducted some drillingoint estimated by Norway to be inside the disputed territory, suggesting that they too understand an oil stoke may b; involved in the ongoing dispute. We doubt that the oil Involved In the disputed area figures heavily In Soviet energy plans, at least in the short-io-medium term. As noted, far larger amounts of Oil probably esht in areas of the Bartias that art clearly Soviet ler/itorial woteii
etting of the Barents Sea
Orographic Factors Not All Bad News. The gcogra-phy of the Barents Sea presents some encouraging signs fee potential oil development. Even though it ties entirely wuhin Hie Arctic Circle and covers an areaillion square kilometershalf the tile of the West SiberianBarentshallow, navigableactor that encourage! ihd search for its oil. The average water depthepth easily within present Westerndrilling capabilities, although wdl out of range of Soviet onshore technology. According to industry reports. Western oil companies are already produdng oil at water depths in-etcr range;S Brariio rid record foe sea floorat SSS meters. The Soviets, in contrast, have yet to produce oil at water depths greater thaneters.
The southern part of the Barents Sea environmentally and logittically is the most favorable areaecause of the warm North Cape current (an extension of the Gulf Stream) thatit region from west to east, ice formation Is virtually noneiistant most of the year except on some inland rivers and gulfs (figureelatively long periods of clear weather and moderate temperatures ate more prevalent here than in any other patt of the Barents. The Murmansk area with its extensive industrial and maritime support facilities Is iclativdy dote todrilling sites in the region.
Our analysis of ocanographic and meteorological data indicates thai the strong wave action prevalent in the Barents is likdy to be the most seriousconstraint. This part of the Barents contains some of Ihc most storm-ridden.waters in ihe world: waves commonly riteieicrt in height. During periods of strong west winds (especially coinmon.during ihc fill andhe surge can be greater thaneters
f Ihit nudy. elided ihr Etat.-nna and rorihcin can'i*it |hrImr
The environmental conditions in ihe northern pannature of ihe seats that are likely lo be present In
ihe Barents are even more severe. The ret too isBarents Sea; seals are occessary to hold oil
over for many months of year (Septemberin place. On the basis of direct evi-
MayL with perennial pack ice forming in ihe faron some Soviei drilling activity conducted thus
and rsortheasi Iceberg, often hinder movement,and information on analogous regions in the
dally near Ncraya Zemlya, Franz Josef Land,pan of ihe Barents, however, we believe
Svalbard. Other navigational hazards includeihe odds arc -cry good that effective sealssnowstorms in winter and dense fog in summer.
northernlto much less accesiible to logistic supply bases and routesupport petroleum captoration and development ctTons. Major shipping lanes of ihe Northern Sea Route pass fat to the south, the stea is remote from the nearest major rcuipply points on the Kola Peninsula, and many of the mosi promising oil-bearing re|ions are located moreilomcicn from Murmansk, the major reapply point. Tohe nortbetn part of ihe Barents, ihe Soviets would have to substantially atignsent their ofTtbore support capabilities or attempt toeir offshore drilling efforts from closer land-based supply sites; perhaps bases would have to be built on Novaya Zemyla or Franz Josef Land In any event, development of the northern part of the Barents Sea would entail an engineering and logistic effortcale never before attempted by the USSR
Gr+tfy Vrrj Pi*miu*t- Our assalysaf of Soviet and Western geological literature indicate* that the Barenti Sea contain, the three major factors rveccs-ury for the genera lion and accumulation ofsource rocks, traps, and seats. Sonrce recta arerich, black marine shales that will generate oil and gassttbjccicd to sufficiently highcaused by burial at great depths for loni pcriodi of time. We believe that the most likely source rock in the Barents Seaighly bituminous shale very similar to the Kimmcridgiati age shales of the North Sea and thehnle of the huge WeilBasin, and both area* are established oil-piodudng regions. Our analyst* of baihynvetr ic (seoltoor) maps and Soviet technical literature Indicates the presence of many traps capable of holding accumulations of oil, some of which arc large enough to represent potential supergianie have the least information on
id <nH*UH humfllWa (mnrli ot oil |ul
The saitc rocks in the touihcin pan of ihe Bar enthe Devonian to the Jurassic geoiogi-cal periodsare organiciM) rich and very prodijclrvc. Aaatyus of geological and bathyraetoc dataoniiderabk imm of faulting in areas near the shore, suggestinc that naoai of the oil that is fikdy lo be found ineologicaUy coeoplet area will appear in small traps at considerablemoreneters hi most cases. The scruUwauiern portion of ihe Barents Sen 'a an offshore continuation of the Pechora plate andlose gecdogical analogue to the onshore Timsn-Pocbora Basin in the northwestern part of the USSR. The Soviets have been producingn this baiin for many yean.
We believe that five major geological provinces In the southern part of the Barents arc good prospects for oil. These province* geologically arc referred io as the Mormae-Timari High, the Goose Bank Margin, the SatnorVcv Trench. West Novaya Zemyla. and (be Peefaora Sennalyst* of bathim-tric data indlcaiei the presence of numeroui potential iwo-kuet-bearing structeading io an cast-west di-rrxtion and ranging in sizem'.
Out analysis indicates that structures In the northern part of the Barents Sea are geologically younger than those In the southern area. The rock* range from the Cretaceous through toe Permian periods. Thepan of the Barents Sea has been stable for millions of years, further helping to create highly favorable conditions for the generation of large amounts of oil. Four large geological provinces csist in
HCTrref
northern pan of theAdmiralty liotji. Fraiu Joscl land, ihc Gimci Plateau, and the North Barents Hinge Lute. Within iheie areas, we have Identified numerous petroleum-hearingtrendingorth-south direction and ranging in sizem'.
Otlta-Place and Potentially Recoverable Resource*
The key initial measure of the oil potentialewhe amount of ori in place.he soul estimated amount of oil that may hare migratedeservoir, snoat of which for economic or technical reasons tan never be recovered Extensive field exploration, drilling, and development arelo prove nil in-pl>ce in commercial quantities. Therefore, the Barents, without proved reserves, isotentialportion of the oil-in-place that can be infeired fiom geologic or other geophysical data but has not yet been confirmedull program of drilling
Figure 4
Northern and Southern Barents Sea: Potentially Recoverable Oil
h-nvl.
on the basil of our analysis ofconditions likely to exist in the Barentsmade by outside experts, andwe estimate
rice hi tawea at about ISO billion barrels. Because of the intentionally conservative rati-matin* approach we have taken, higher amounts might actually be clover to the mark. As the Soviet* move further along in their drilling and eipkestion program and more data on source rocks and reservoirs becomeprocess likely to take another three to fiveestimate will be refined
Convening cdl-in-place into proved lesetves willa program of eiploratory and delineationdrillingcale that the Soviets have never attempted before in art offshore area. On the bast* of the experiences of other offshore oilihe Soviets can reasonably expect lo tecover (tornoercent of Ihe otl-io-place Much -ill depend on the type of reservc&rs that are found In rim Mi the Barents and the efficiency of Ihe Soviets in managmi pioduction operation! For estimating purpoiea. w* ate assuming that the Soviets will achieve an ovctall recovery of onlyercent, much lower than
recoveries currently being posted by many offshore producers in ihe North Sea and the Bay of Campoche. At this recovery factor, potentially recoverablein the Barents Sea would amount to aboutillion barrels. This puis the oil potential of ibe Soviet portion of the Barents Sea in the same league as the North Sea
We estimate lhat as much asillion barrels of the potentially recoverable oil could lie in the soot hero area of Ihc Barents Sea or. in some cases, could be in structures lhat straddleh parallel (figureThis oil would be located in numerous individual basins of various siies. We do not know what siw neW the Soviets consider ihe minimum for commercial development. In Westernield would have lo be inil lion-barrel range to justify development under conditions similar in those in ihe
southern pan of ihc Barents Sea. The odds ate favorable thai many basins of ai least that sire -ill be found in this
We estimate that Ute remainingillion bairels of oil lie in ihc nonhem portion of ihe Barents Sea. In Westerncid would have toillion barrels to be considered viable, given the severe environmental conditions in this area. In view of ihc stic of the structures thai we believe are present in the northern Barents, the odds arc favorable lhat ftcidt of that sire will be prescet'in this area. Indeed, supcrgiant fields arc possible in ihts region. The northern part of the Barents Sea is largely unex-ptored. however. No onshore exploration wells have been drilled and few. if any. seismic or acromagnelic surveys have been conducted. Large oil pot en lie! notwithstanding, ihc longo ISto develop this region mean thai there is virtually no chance that any production CooM come from this area until after the turn of Ihe century
Smiec Petroleum Exploration and Drilling Aetitity
Development of offshore oil resourcesime-consuming process even with the best conditions, tuch as shallow water, mild climates, and dose-in logistic supply bates. The sequenceypical offshore development cycle would normally entail:
to seven years for exploration and delineation drilling.
years or more to construct offshore platforms and conduct development dulling
Normally, oil production can be expected aboutears after live start of the eiploration phase Peal productionarticular field usually occurs ihree io four years later. For the most pan. the Soviets are still in the early eiploration phase in oflshore atras of ihe southern part of the Barents Sea
The Sovieti have been activdy collecting geological data in the Barenlt for more than iwo decades. They began exploring for oil in the Barents Sea? According to Soviet literature, teismic tcslmg also began in that ycat close to the shotc neai the Timan-Pechors It-ssin. Multichannel seismic testing Started0 in ihc southern part ol the Baicnts between
Ihc Kola Peninsula and Novaya Zemlya. The Soviet press reports that, in the last IS years, the Soviets hare conducted regional aeromsxnetic. soipboroe gravimetric, bottom sounding, and bottom sampling studies in the southern and western parts of Ihe Barentsareas close lo the territory in dispute between ihe USSR and Norway.
Exploration drilling began offshorend. ihus lai. nine wells have been drilled in ihe southern pari of ihe Baicnts (figureour gas discoveries have been reported in (he Goose Bank Margin, ranging in depthO0 meters. Three of the wells are near ihe Soviet-Norwegian boundary. Ourindicates (hat atcas where drilling has occurred are basically gas prone. This does not mean that oil is not present, but it is more likely that gas will account for tbc major percentage of Iheiven area T*
3
One advantage Ihe Soviets have in the southernthe Barents is the existence of severalKolguyev Island, that could helpexploitation timetable and save explorationcosts if oil is found onsliore. In fact,reported an oil discovery3 onand the well icslcd atthui inwe bdioe thai the
Soviets ate now engaged in oetiueaiion drilling in that area. If Ihe discovery proves large enough to produce and requires only onshore devdopment technology, oulpul could begin within five years
The amouni of drilling conducted Ihus far is very small, romklering the sire of the area involved and the depihs at which oil is likdy lo be found If our geological analysis of the souther it part of ihe Barenlt Sea is accurate, the Soviets wilt need to drill several thousand meters deeper than they hare ihus far lo find the oil we believe ts likely to be there At noted, mutt of Ihe oil tn the southern pall of (lie Barentt will probably cxisl at depths greaterthnically, the Soviets are fully capable ol dnlhng to these depth! Although ihe Sovieu have drilled only
Oil Drilling on Kalguyev Island
InJ ihennounced iheuf oil on iht east coott of Kolguyev Island. Result' of flow tests front the Peschanooiero oilfield, alone with the ureal extent of Ihe drilling, indicate that the find is veryInillion-barrelUntiled crude oil production front this field could begin at soonssuming that the Soviets can complete work for tanker loading.
Wehe Soviets will probably undertakedrilling at part of their effort to delineate the limtn of Pesehanooiero oilfield. C
On the
basis of our onat/slielected West Siberian oll-Heidi, we believe delineation drilling it lust over half completed in the present area, and we expect Ite continued until ativen the current tompletion rate of eight wells per year. The Soviets most likely will expand ihe area being delineated through offshore drilling as well as onshore drilling to the north and -'est of the present area.
The pattern of delineation drilling in the Peschanoo-rero oilfield indicates that the field's geology is complicated Normally, delineation welts artroughly in an oval pattern and are uniformly distributed on euher sideine of wells lhat form the primary axii of the oval At Peschanootero. the delineation wells are arrangedrescent pattern and distributedof geologic faulting and of erosionat pmeeisrt that have possibly modified ihe structures and traps
Kolguyev hland Is In the geological province known as Ihe Pechora Sea. We estimate that the Pechora Sea ii one of the largest oil provinces in theth potential reierves of moreillion barrels. The extensive exploration conducted in this region alonghe delineation drilling now under way >uggtu thai the Soviets also recognise this area's targe oil potential.
well in ihc Barentshat they recognize the need to cO deeper Jnrfmote extensively and plan to step up ciplor'tior. activity in the Barents Seaeside* one SemisubinersiWc rig bulii by ihcrdother Finnish-built drillships now operating otlthorc in ilse Barents. theSovici* recentlycl-up rig from Finland and plan to build iheirIstfc Arctic jact-upt with Tinnish assistanceS
Soviet drilling activity conducted thus far and plans lo increase ihe number of drill rigs in Operation in the Harem* over Ihcfew yearsogical pattern. The Soviets Seem to be concentraling eipio-
r . .ir believe
'on Kolguyei- Island, the easiest jic*ogiesieaTU
Ouitook for Barron Itavefeprrtent
The poicniia! existence oflarge oil resource base in ihe Barents Sea does not fuaraaiec that ihe Sovieu -illassive effort so develop this region. Ijptaraion efforts to dau have been hnv: ed but teens to luggcst lhat ihe Soviets are aware of ike area's huge potential. To develop ihe region. Moscow must be willing and able toarge Investment of inotiey and skilled labor to support greatly capanded activitiesime when both are in short supply. The Sonets frankly admit that shortages of alliedespecially drithag and maintenancealready hampering production in West Siberian fieldi. We have no indication that this situation will Improve much through the end of this decade.'
We believe that Moscow, faced with escalation;recntiremenu throughout tbc oil sector, will have comparatively few fundi available over the neat few years thai can be earmarked for the Barenli Sea. The Soviets have some breathing room with their Barents devetoptnent, however, because they will be. for ihe most pan. is the exploration phase for the rseit few years at least. During ibis period, cxtmparairvdy modest outlays will be required, mainly involving ihc purchase of imported drilling rigs. The big invest-menu In production systems will come In.
lie* fart the Soviets proceed -ith eiploration and deveteipment of the Barents Sea ultimately dependt. in our judgment, on future trends in oil production in established regions of the USSR. If the production situation in established regions worsens falter than we now project, the Sovieu will need to increase ihe priority given to new areas like the Barcau Sea. On the other hand, if Ihc Soviets manageeep reserves up and to suWikat least keep the decline within limits they cart liveneed for developing new oil sources will lessen. Luck will alsoajor role. Although unlikely, we cannot rule oui the possibtliiy that ihe Seniets will yet find large amounu of new oil ceHhore. Some areas of Western Stberia located north of the prounc Middle Ob' Basin
' I- deulUWOCX/SOV IJ-
m imi.
been csptorcd by drilling and are good protpecls for additional oil discover set. Although the operating condiiioni in Wesiern Siberia are perhaps the worst ihe Sovieti now face, the Sovieu at least working in such harsh cmshorr ive farther north with some confidence. Clearly, developmentiven arncwat of new oil in Wesiern Siberia, if discovered, would require much less investment than an equal amount in the Barents Sea.
MiUhtty. We believe lhat Moscow will proceed with the exploration and ultimateof the Baremi Sea butery eatrtidus pace. The Soviets traditionallyo-ttowto projects for which they lack experience. Between nowe capect an increase in Soviet exploration activity, concentrated exclusively in ike environmentally less demanding touthern pan ofBarents Sea. According to our geological asseaimcnts. exptociiion would focus on the Pechora Sea Province and Ooose Bonk Margin which, in ourre the largest oil-prone areas in the southern part of the Barents
At best, production of Harems oil in significantive to eight years away. Given ihe ciperi-ences of offshore ol) producers in the Wat. lite odds are favorable lhat Initial large oil discoverica willetween four to six years after caten-is begun. While thttruleoffat no guarantee oft least suggests lhat the Sovieu. with drilling experience dating backrc entering the window when the possibiii-ties for oil discoveries In the Barents are mostWc believe that initial production could begin about five years after oonaVmationiscovery.
field, two to three years later if Soviet experiences in the Barents follow offshore pattern! in somewhat coenparable regiom like the North Sea. If these estimates prove correct, some commercial production could begin la tbc touthern BarenU by the. Much -ill depend, ol course, on the pt.oe.ly the Sovieu give to ihe Barents, the scale of investments, and ihe possible extent of patticipaiion by Western oil companies.
Soviet Equipment Needs /or Dnelopment of ike Barea
offshore oil capabilities are more limited than those of Western nations: most of the equipment and technology employed in Soviet offshore exploration and development has been either purchased from the West or reproduced from technology supplied by Western firms. Soviet offshore developmentto date has primarily been limited to the more benign conditions of the Caspian Sea Indepths of less thaneters.
The Soviets recognize their offshore limitations and are emphasising to many countries the potential market offered by the Barents Sea. The Sovietlist for Barents Sea development Is headed by requests for detailed engineering studies applicable to the particular reservoir and environmental conditions existing in the Barents Sea. In general, the type of lee conditions. If any. and the she of the oilfield Involved will dictate the most suitable type of production platform. The selection process for the bestfacility, however. Is extremely complex. Many types of offshore production technologies already exist thai would be suitable in tee-free pans of the southern Barents. Western industry has alsomore than SO 'different conceptual designs for Ice-resistant production platforms. In addition to ihe Untied States, West European nations. Including the United Kingdom. Italy. France, and Norway, could provide this type of engineering and management service. In our view, costs for the Initial conceptual work would be as much as fS million
If oil is found in the lot-free areas of the Barents Sea. Norwegian companies, such at the Aker group or
NorwegianIn offshoreget the contract. If oil is found in the eastern Barents Sea where ice is moreactor. Finnish companies with Arctic Icesuch as Rauma Repola or Valmet. could win large contracts. Additionally, numerous service com-ponies from West European countries, such as the United Kingdom. Sweden. Netherlands. Italy. France, and Norway, would be needed to provide specialised servlcei. such as platform installation using heavy-lift barges, module hookup, drilling, diving, and pipeline services and supply operations. Norwegian companies would be strong candidates to help the Soviets build support bases, and locations, such as Murmansk or Klrkenesavebeen discussed as possibilities, accordingarious trade Journals
Except for sophisticated computer hardware and software, very little equipment used in offshore field development is controlled by COCOM exportMost of the dual-use. COCOM-consrolted items involve equlpmenl used In offshore exploration, such as seismic survey vessels, jaieltlte navigation equipment, and acouiticfultrasonic underwaterequipment. The most likely type of con trolled equipment desired by Ihe Soviets for oilfield development projects Is submersible vehicle systems, such os remotely operated vehicleshat are used to install. Inspect, and repair subtcaThe Soviets are reported by numerous industry sources to be atlMy seeking advanced RO Vand technology. Less advanced ROViumber of foreign lupplics.
Prodmeiion PttiiUIUUs Large. At iKi. stage, discu.-sion about oil production io (be Barents i% very speculative.s possible, however.e analogs bated on Western oil industry experience to illnitrst; the ranges of outpul that lie cortsisieoi with the amounts of oil we ifcink ire involved and the present slate of product ion (echnoloiy:
engineer* believe tlut initial prcdaciion from land-bated operations on Kolguyev Island is possible0 f
n view ol the extent Ot Iheossible field sizeillion bands is reasonable. If this estimate is fairly accurate, average production ofould be sustained for atecade from this area alone.
If ihe Soviets prove-up sizable amounts of offshore ai! Ir. the southern part of the Barents between nowommercial production is possible by the. From an engineering perspective, additional production as high5 is reasonable and could be supported by perhaps rive steel-tower drilling platforms,to average size platforms operating io the Nonh Sea.
Ai ihe upper end of the range, if ihe Soviets intend to operate in the Barents Seaairly common planning period in iheestimate of the resource base for the entire Barents would theoretically be adequate to iupport averageof. Thii is about Ihe current level of output in the North Sea and roughly half Ihe production of West Siberia.
More Ad'entureiotne Optioiii. Exploration of ihe oil resources of the Barents Sea could be accelerated by joint arrangements with Western firms Such ar-rangemenu would, of course, require the Soviet! to make substantial ideological concessions, hoi there arc precedents for such flexibility if the gain it judged to be (teal enough. Lenin's advocacy duringf using Western firms to develop Soviet resources might serve as ittenlogical justification
The Baicnti Sea offers attractive potwbititict forivpr of joint arrangement in ibe unlikely eveoiGorbachev regime were toold initiative The Barents Sea is aa isolated area and could be exploited by Western firms with little visibility and. fromoint of view, linle contamination of Soviet society. Given the capital-intensive nature of Western petroleum operations, ihe number ofworkers would be small
A long-shot possibility is that ihe Soviet, might make Ibe Barents an "export zone- and earmark all of Ihe area's output IO hard currency marlcuovegive the Soviets the option of dedicating all of their onshoreeet domestic nndi andoartuKUU of their client stales In ihn way. Barenii development would not directly affect Ihe domestic economy or Soviet military potential.
Sttaicgic military scnsitiviiies would be the major tlumblingblock lo any arrangement involvingpanicipation. The Barents presides Ihe onlyto the Atlantic Ocean for the Soviei Northern Fleet baicd on the coast of inc Kola Peninsula: and it it the site of year-round naval activity that include* eieieises. sea trials, and rrusxile testing. The Soviet military surety would oppose any proposal lo give foreign oil workers access lo (he Barents Sea. no matter how few were involved.inimum, stratc* gieorn would appearirtually rule out the potaibdily of any direct US participation
Some Detliitm f'o/rui and litdicatoti.Uatenti Sea oil it loole in the Soviet energy pictureajor offihorc discoveries will have to be proved up within the next (hiecive yean We believe thatan-even chance that major discoveries will be mark during ihu time frame For the neat tew years ai least, we capect soradual buildup in So-net cintoralion with more drillihipa operating in ihe Goose Sank Margin and the Pechora Sea We may alsoup up in ihe puce of negotiations wjih Wesierr. offihorc equipment producers during ihe same time frame. Offshoreor example, would have to be ordered sometime80 to be In operation5
Seem
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contrail to the usual Soviet practice of giving brood, public media coverage to promising industrialesource developments, toe Soviet* have been tight-lipped retarding activities in the Barcnii Seaf"
oviet reticence in thii case ma> stem from the strategic serwitivriy of the Barents itself or because of the heat Soviet geologists have recently been latins from senior government official* If ciaggcrtiing ihe oil resource potential in some areas of Westhe case of the Barents, ibe Soviets may keep public reportinguoimurn until they are confcdent ihai all the resulu are io
for the West, especiall. Finnish and Norwegianequipment manufacturers. Offshore oil plat-lorm. umilor lo ihose operaitog in the North Sea are inhabit in luppotl production operations in many areas of ihe Barents This type of platform can easily cost WO million Arctic grade rigs capable ofin nioderair-lo-ievere rcc conditions can cost as muchOO million. During. Soviei purchases of platforms alone could involve several billuM dollarsinimum. Direct purchases of exploralion equipment, repair and logistic facilities, andould easily run into the billions of dolars at well
fm ikearge new source of oil in ihe Ba'eais Sea presenti Soviet plannersariety of attractive domestic and foreign policy options If Moscow is confident that nationwide oil production can be maintained at acceptable levels, the Sovieli may opl lo llow exploration efforts in harsh onshore areas, cul back plans to develop high-cost Eastcoal, reduce efforts lo expand nuclear power production, or refrain from moving to high-costrecovery techniques in old oilfields Output from Ihe Uarenti Sea would also make it easier for ihe Soviets io remain a, major oil exporter Oil sales to the Weil are ibe USSR's most important source of hard currency earnings and have brought billions inio Sonet coffers. Many Western experts believe that Sovieto hard currency cuunuics will be soueezed inecause ofeclines in domestic production, forcing the "USSR so reduce badly needed imports of Western equipment and technology Imports of Western offshorewill be very expensive and present Soviet ptaanert with lorrsa tough choices in assigning prion lies to competing import requirements. If Barents Sea oil eventually helps keep Soviet foreign earning! up and. therefore, importi from the West, the United Si tics mightomewhai healthier, more robust Sovietecade or so from no- than many Writrrn expens currently Believe -ill be ihe ense
for ike llVir. Developmentil icsouicesof the Barents Sen would present major Hade opportunities
Moreover, output from the Barents Sea theoreticallyan additional source of oil for Westernnd beyond. Soviet oil presently accounts for .lightly more lhanercent of West European oil imports This share conceivably could grow in, especially if the Barents resources are developed primarily for export purposes. Such an outcome, coupled with prospective deliveries of Soviet natural gas. suggests that the Soviets could figure even more heavily in Western Europe's energy picture inhan we now envision
for the Untied Siein. DcvclOpnKni of the Barents Sea presents some trade opportunities for ihe United Stales, but probably small ones at best. Many Wesi-crn coomiies can supply the USSR with Ihe type and cuantiiy of equipment and technology thai wJI be required And given the depressed oil msrtci "hit most likely wil exist for ihe nest few years, many Western iirppUers would be eager toiece of thelucrative Soviet offshore market. If theo purchase some tug-ticket stems us Ihe neu lewfinancially aitracinc offers are likely to comeariety ai supplier)
Alihough ihe Soviets in their media base repeatedly labeled the United States an unreliable tradingSoiiet officials hniuC dmitted that they Hull US peirokum engineering expertise andMihough Ihe Sovielt -ill probably try tokeep rjirccl equipment purchases from the United Stalesii.nununi. w* believe ihe* may seek US engineering
and management assistance in tic vising pouiMc iiand. perhaps. In identifyingirenenl and lechncaogy. Al most, however this of assistance would probabl) fill intoomly
theillion range and be spread over umi
vears.
Although US otsrapanlca are not likely to gel much of the busmen associated with Barents development, the United States oouM use Barenls activitiesush for new joint commercial arrangements bo ween thets and Western firms. Moscow clearly needs access to Western lechrvjlogy. especially if devctrtptnent of theeen as the best way to maintain oilhe trud-to-lete IWOs- Girea tads ixsori-tv and the rV n'bJityegime interested in opsor-Ing new economic arrangements, the United States could encourage its allies to push for joint ventures fot Barents developrnent. If successful. iuch ventures would give Ihe West greater access lo certain regions of the Soviet Union and some influence on certain dimensions of its ecooomic development. The obvious strategic naval importance of the Barents, however, will worl against this option and would certainly preclude US firms from direct operation In the region
The development of the Barenii Sea offers Moscow possible political rmponanities. in additionbvious economic beneriii With the Bar ecu Sea likely to be the only major offshore oil Development that wilt be undertaken anywhere for the neit decade,could dangle the pouibility of muHibiUien dollar deals in front of Western goverttineau in the hope of extracting political concessions.ould not be surprising toeplay of the frictions thatew years ago over construction of the Soviei gas pipeline lo Western Europe
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