In the Squeeze of the Early Five-Year Plans
In December 1927, at the 15th Congress of the AUCP(b), Soviet political leadership decided to transition the country to “five-year plans” of economic development. The First Five-Year Plan (1928–1932) called on group “A” enterprises (i.e., heavy industry) to accelerate development, and the strategic goal of the country became industrialization. In the USSR the reforms of the NEP were successively rolled back, and the Soviet leadership transitioned to total control over the economy, continuing to accelerate the formation of an administrative command system dominated by directive and noneconomic methods.
In his work, “Particularities of the Development of the Oil Industry in the USSR during the Years of the First Five-Year Plans (1928–1940),” in the anthology Soviet Union’s Oil [Neft strany Sovetov], Professor Aleksandr Igolkin, Doctor of Historical Sciences, emphasized that the deep contradiction present in the Soviet Union, associated with the complex foreign and domestic processes of the 1930s in which dictatorial and bureaucratic aspects of the command-administrative system predominated, could not help but leave its mark on the development of the Soviet oil industry.
Fiscal 1929–30 saw some advancement in the USSR’s oil industry as compared to 1928–29, but the rate of development could not keep pace with the demands of the time. For example, in 1929–30, domestic consumption of light petroleum products reached the level planned for the last year of the Five-Year Plan. This called for a radical reexamination of the Five-Year Plan for the oil industry.
In a resolution of the AUCP(b) Central Committee dated November 15, 1930, Soviet leaders outlined the future development of the oil industry: “Based on the size of the national economy’s demand for petroleum products and the prospects for development of exports, the CC proposes: 1. The VSNKh shall raise the production of oil in 1933 to 49–50 million tons, with no less than 44–45 million tons coming from old and new fields of the Transcaucasus and North Caucasus.... The VSNKh must devote special attention to exploration and prospecting for oil in the eastern part of the USSR (the Urals, Emba, Sakhalin, the Volga region, etc.).”
At the end of 1930, Gleb Krzhizhanovsky (1872–1959), the head of the State Planning Committee [Gosplan], who was developing a “constructive” Party approach and emphasizing the special significance of the Soviet oil industry on the world market, announced at a meeting of his agency: “The VSNKh is not carrying the banner of power generation the way it should. A change of direction, a decisive break with the past, is needed in 1931. Such a position must be defended from this perspective: we need to be extremely thrifty both with money and with our proposals, etc., with the exception of this front.... In this one area, special conditions need to be created for a break with the past.... The socialist shark is supposed to swallow the entire world, but without fuel or energy nothing will be accomplished.”47
According to Party instructions, the Neftesindikat organization was reformed, and in January 1930 all oil production organizations in the country were included in the All-Union Association Soyuzneft.
The Baku-Batumi trunk oil pipeline went into operation in late April 1930, carrying Caspian oil. Less than two years later, the country successfully realized, using its domestic potential, a large-scale pipeline project providing large-scale deliveries of Soviet oil onto the world market. However, as Azneft Director Mikhail Barinov had stated earlier in his letter addressed to Glavgortop, the new pipeline had one other important purpose: “The intended purpose of moving oil from Baku to Batumi is to bring Baku oil close to the export port of Batumi, where this oil will be refined into petroleum products, whose quantity and quality will be determined mainly by the requirements of the foreign market.” As of the end of 1931, the operational trunk oil pipeline extended over 1,980 miles.
The accelerated development of USSR industry, including the oil industry, was in full swing. Colossal resources (money, materiel, and manpower) went to achieving set goals. During the years of the First Five-Year Plan, the sum invested in the oil business—more than 1.5 billion rubles—was significant for the time.
On April 1, 1931, the directors of the Azneft Association sent a triumphant report to the AUCP(b) Central Committee stating that they had fulfilled the First Five-Year Plan in 2.5 years “by technical renovation of the industry, increased labor productivity, development of new fields, increased drilling, and heroic labor on the part of the oil workers.” Production figures confirmed this: Whereas 1928 oil production on the Absheron Peninsula was 8.38 million tons, in 1931 it was 12.3 million tons. This gave top Soviet leaders an exaggerated idea of the ability of Soviet industry to reach any heights and overcome all obstacles, without having the necessary resources or reserves to do so. Indeed, the achievements and successes hid a great deal that did not reflect the true state of affairs.
In assessing the rates of Soviet industrialization and its achievements, the American historian Professor Hiroaki Kuromiya of Indiana University noted the following in his work Stalin’s Industrial Revolution: Politics and Workers, 1928–1932: “Soviet industrialization gave birth to superhuman efforts that were heroic, romantic, and enthusiastic.”
In 1931, the Grozny oil industry’s share of the USSR’s total production reached 36.1% of its crude oil and 73.0% of its gasoline (the leading product). For its high achievements, the Presidium of the Central Executive Committee of the USSR awarded the Order of Lenin to Grozneft.
In response to rapidly growing demand for petroleum products on the foreign and domestic markets, central Soviet agencies repeatedly amended Five-Year Plan production goals almost every year. Such plan reviews adversely affected the operations of petroleum enterprises, especially given the severe limits on capital construction and the insufficient availability of materials and equipment in the oil industry. Achievement of success and avoidance of the negative consequences of such chaos required a series of emergency measures by economic, Party, and social organizations.
One of a series of organizational restructurings of the administrative system of the national economy created the USSR People’s Commissariat for Heavy Industry on July 6, 1932. It was headed by Sergo Orjonikidze, and its structure included the Main Administration of the Oil Industry.
The next plan established by the new agency started with a production volume of 46 million tons of oil for 1932–1933 instead of the 24 million tons that had been adopted earlier. In accordance with the adjusted development program for 1932–1933, oil production in the USSR had to be substantially increased.
But practically speaking, it was impossible to achieve a further sharp increase in oil production volumes on the Absheron Peninsula and in the North Caucasus. Many fields showed a natural decline in oil production volumes, and this applied in particular to the Surakhany petroleum area, which had been producing two-fifths (38.6%) of Azneft’s total production.
At the start of the 1930s, it should be noted that the Soviet oil industry was operating in the midst of a general world economic crisis and an oil crisis in particular. World oil production in the first half of 1931 had fallen by 8.6%. During the same period, oil production in the USSR increased by a quarter (24.2%) over the corresponding period in 1930. Thus, at the start of 1931, the USSR was the world’s third largest oil producer, behind only the US and Venezuela.
At the height of the world economic crisis, the physical volume of the USSR’s petroleum products exports steadily began to grow, but at the same time, its earnings from oil exports began to decline. Whereas crude oil and petroleum products exports were 4.25 million tons in 1929, earning the nation 138 million rubles, these figures were 5.19 million tons and 157 million rubles, respectively, in 1930, and 5.7 million tons and 116 million rubles in 1931.
The increase in the volume of Soviet oil exports over the years of the Great Depression caused great concern on the part of the leading oil companies of the West, which had combined into a world oil cartel. In May 1932, an oil conference opened in New York, with Soviet participation, whose basic question had to do with the export of Soviet oil. English and American oil companies proposed that the USSR refrain from acting independently on world markets and deliver 5.5 million tons of oil to them every year for 10 years at a fixed price. The proposal by the Western partners to eliminate Soviet oil sales organizations overseas was rejected by the Soviet Union. Moreover, the Soviets immediately responded with excessive counterdemands. Joseph Stalin, general secretary of the AUCP(b) Central Committee, wrote about this to the prominent Party functionary Lazar Kaganovich, a member of the AUCP(b) Central Committee Politburo: “The oil group is economically stronger than we are. It can always interfere with our oil exports; it can drive down prices and cause us great losses, even if we assume that we will have more and more worthless oil for export. But the point is that we will not have more worthless oil, and our fund of export oil will decrease because of the colossal and constantly growing demand for petroleum products by ships and railroads, the freight and automobile industry, and the tractor and aviation industry.... [Commissar of Foreign Trade] Rozengolts’s directive does not take into account the strength and relative importance of oil workers in the matter of interventions. It does not take into account the fact that it is beneficial to us to more or less politically neutralize the Anglo-American oil group if we really want to protect the peace for at least the next two to three years.”
Intense negotiations continued in New York for several weeks, but given the unreasonable nature of the proposals and the impossibility of reaching a mutually acceptable decision with the Western partners, the Soviet representatives never achieved the necessary agreement.
Table 9. USSR Oil Production by Year, in millions of tons
Source: Economy of the USSR [Narodnoye khozyaystvo SSSR]. Moscow, 1959, pp. 204–208.
Despite the raging world economic crisis, the Soviet government targeted a sharp increase in the volume of oil exports as it prepared the goals of the Second Five-Year Plan. For example, in December 1931, Gosplan planned for USSR oil exports to climb to 11.5 million tons by 1937; among export products, first place was to be occupied by gasoline and naphtha with 4.68 million tons; then residual oil with 2.48 million tons; kerosene with 1.3 million tons; gas oil with 1.1 million tons; and lubricants with 579,000 tons. According to this version of the plan, crude oil was to account for less than 6% of oil exports, or 661,000 tons.
At first, everything went according to plan, and 6.7 million tons of Soviet crude oil and petroleum products were delivered in 1932, earning 107 million rubles. However, USSR oil export volumes significantly declined at the beginning of the Second Five-Year Plan, and in 1933 only 5.39 million tons of crude oil and petroleum products were delivered to foreign countries, bringing in only 76 million rubles. This was largely due to the fact that the growth in oil production in the industry had sharply slowed, while the domestic demand for petroleum products had continued to grow. Gasoline had become necessary for transportation using automobiles, the numbers of which had increased dramatically. For example, automobile production in the USSR grew from 671 units in 1927–1928 to more than 2,000 units in 1932. The situation with tractor production was similar: in comparison with 1926–1927, the consumption of fuel by tractors in the Soviet Union increased by a factor of 18.7 during the Five-Year Plan. And more and more petroleum products were being demanded by the Soviet armed forces—the army, air force, and navy.
The new Five-Year Plan, begun in 1933, placed special emphasis in the oil industry on accelerating the development and exploitation of new oil fields.
In the middle of the 1930s, several developments were introduced in Grozny that did not have any precedent in drilling practice in the USSR or elsewhere in the world. In 1932, metal derricks began to be used in the Grozny region. In 1934, the first experiments were carried out with directional drilling, and work began using apparatus for rotary drilling with the help of casing pipes. In 1935, scientist A. N. Shangin studied the mechanism of borehole deviation. An attempt at turbodrilling was made at that time by lowering a turbodrill on a cable. The height of drilling derricks increased from 112 to 135 feet, which made it possible to work with 82-foot drill stands.
The intensive search for new fields in the Bashkir Autonomous Soviet Socialist Republic (ASSR) continued. On May 16, 1932, a well near the village of Ishimbayevo on the territory of the Bashkir ASSR became a gusher that brought around 55 tons of oil to the surface within four hours. After the discovery of this field, the academician Ivan Gubkin wrote: “There could be hundreds of millions of tons of petroleum reserves in Bashkiria. And what if Ural petroleum is not limited to Bashkiria? If the Verkhnechusovskiye Gorodki fields compelled prospecting along the Urals, then the Ishimbayevo field will compel prospecting work to be performed broadly along the entire western approaches to the Urals and the entire Volga region.”
Ishimbayevo District soon had 10 geologic and six geophysical groups working within it. At the suggestion of geologists K. Chepikov, N. Gerasimov, and Ye. Tukhvinskaya, a detailed study of the geologic structure of the western regions of Bashkiria was begun. In the fall of 1934, craelius core drilling was begun there, and in 1935 strong oil shows were detected in Kungurian and Artinskian deposits.
A significant contribution to the development of the industry during the Second Five-Year Plan was also made by the engineering and technical community. In August 1933, Baku hosted the First Congress of the All-Union Scientific Engineering and Technical Society of Oil Workers [VNITON], and the 202 delegates that participated represented production enterprises, scientific organizations, and the governing bodies of the Soviet oil industry. The first man elected chairman of VNITON was academician Ivan Gubkin, a scientific authority whose popularity among oil industry workers did much to involve many major oil specialists actively in the work. The same VNITON Congress defined the basic directions of its activity, involving broad social assistance to the industry in solving scientific problems on the one hand and, on the other, discussing engineering production questions and developing solutions to them, increasing qualifications, and publishing reference works. During the early Five-Year Plans, the Society conducted a series of important conferences, meetings, debates, competitions, and other measures to promote stable development of the Soviet oil industry, and actively pursued publishing and professional development through courses, lectures, and speeches intended to raise the production qualifications of oil specialists.
Besides exploring for petroleum in the Volga region, specialists turned their attention to other territories of the country whose geology had not yet been investigated. On December 5, 1934, Moscow hosted the first conference of geologists devoted to the oil prospects of Western Siberia. The conference was chaired by academician Gubkin, and featured a detailed talk by engineering geologist Viktor Vasilyev about oil shows on the Bolshoy Yugan and Belaya Rivers. The decision of the specialists was unanimous: large-scale work to explore for petroleum had to begin immediately in this region.
However, despite the progress of the USSR oil industry, there were substantial shortcomings in its development. Principal among these were a low rate of making headway and slow mechanical drilling speed, an insufficient use of roller cutter and multiblade drill bits, complexity of oil-bearing deposits (petroleum lying in strata up to 6,500 feet deep that were oriented perpendicular to the Earth’s surface), and a high accident rate (due principally to drill pipe defect rates of up to 45%).
Although crude oil production grew by 20%, kerosene production by 38%, and gasoline and naphtha production by 7% from 1933 to 1935, the rates of gasoline and naphtha production were rather low, and did not correspond to the level of development of aviation and the fleet of motor vehicles and tractors. To address these needs, the USSR resumed mutually beneficial economic relations with the US in the oil industry, and on June 4, 1935, an agreement was concluded between the American company ALCO and the Amtorg Soviet-American Joint-Stock Company to supply the Soviet Union with a refinery capable of processing 12,000 barrels of Sterlitamak oil per day and refining it into high-octane gasoline, motor fuel, boiler fuel, residual asphalt, and gas.
The obvious shortcomings in the development of the oil industry in those years were noted by Pravda, the central Soviet newspaper. The lead editorial of this Party publication for October 14, 1936 stated: “Are not 2,000 accidents in nine months the result of incompetent placement of personnel and the lack of personal responsibility, technical leadership, and elementary order at the enterprises?!”
Nevertheless, progress was visible in 1936: the oil industry produced around 32 million tons of oil and gas, drilled more than 6.8 million feet of hole, and started more than 1,600 new wells. In 1936, both oil production trusts in the Volga-Urals region, Bashneft and Embaneft, produced around 1.7 million tons of crude (compared with 750,000 tons in 1935).
In 1936, work began on two new Central Asian fields, Khaydag and Uchkizyl, which produced around 330,000 tons of oil in that year. In Turkmenistan, Nebit-Dag produced around 385,000 tons of oil and preparations were being made to open up two new fields.
The first to fulfill the plan for all years was the Sakhalinneft Trust, where preparations were being made to develop the new Ekhabi field. Meanwhile, commercial oil was being produced at Chongelek field in the Crimea, while the new oil areas of Shongar and Kizyl-Tene in the western Absheron Peninsula and Pirgasat in the Amet District yielded commercial oil in the Azerbaijan Soviet Socialist Republic.
In 1936, oil production began in Dagestan. Regions such as Achi-Su, Izberbash, and Kayakent were to produce more than 1.1 million tons of oil in 1937. New sites also appeared at the Mayneft Association in the Kuban region: the “Asphalt Mountain,” Kuisskoye, and Kura-Tsetse fields. Such a rapid rate of development of a large number of fields was primarily related to accelerated rates of exploration and an increase in drilling speed.
In the mid 1930s, the 440-mile Caspian-Orsk oil pipeline was placed in service, carrying Emba oil to the Orsk Refinery. In 1936, the 118-mile Makhachkala-Grozny oil pipeline was placed in service.
On December 20, 1936, the state committee formally accepted the commissioning of all the equipment at the Ishimbayevo Refinery, which had an annual capacity of 550,000 tons of oil. At the end of that same year the Ufa Cracking Refinery, which had a design capacity of 1.1 million tons of crude, was prepared for start-up. The refinery was expected to refine 80% of Bashkir oil. In January 1937, the first gasoline production system was put into operation at this refinery, and the first gasoline was produced.
On the whole, however, the USSR oil industry did not fulfill plan figures. Fulfillment was 68.2% for drilling; 63.6% for drilling speed; 88.3% for oil production; 84.15% for gas production; and 92.6% for refining. Thus, within the system of the USSR People’s Commissariat for Heavy Industry, which ended 1936 with a “triumphant report about fulfillment of the Five-Year Plan in four years,” the oil industry ended up on the list of industries that had fallen behind.
People’s Commissar for Heavy Industry Sergo Orjonikidze issued an order on September 5, 1936, noting that the oil industry had fallen seriously behind, asking for decisive steps to overcome deficiencies, and defining basic production goals for 1937. The People’s Commissariat planned to develop 14 new fields in 1937 and continue development in the eastern part of the country. The order of the people’s commissar spoke of a struggle to increase the quality of all work in the oil industry.
In 1937, Baku hosted the All-Union Conference of Oil Workers, which examined questions of improving equipment and technology of well drilling, oil production, transportation and storage, and also the introduction of new forms of labor organization.
By way of background, it should be noted that in that period the USSR oil industry had lost its export orientation, and crude oil and petroleum products export volumes had begun to decline rather quickly. By 1935, the proportion of exported gasoline production had decreased from 91.5% in 1929 to 21.4%, and kerosene exports decreased from 34% in 1929 to 8.5%.
This trend persisted into the Third Five-Year Plan. For example, although Soviet petroleum products and crude oil exports amounted to 2,127,000 tons in 1937, such exports dropped to 1,531,000 tons in 1938, and to only 791,000 tons in 1939.
Another factor that had a substantial negative effect on the oil industry of the 1930s was the implementation of mass political repression in the USSR. This dealt a substantial blow to the industry’s engineers and technicians, along with the most varied strata of the general population.
At the beginning of the First Five-Year Plan, the OGPU held the so-called “Shakhty Trial,” a show trial that affected many engineers not only in the coal industry, but also in other industries of the USSR. On March 2, 1928, Genrikh Yagoda (1891–1938), deputy chairman of the OGPU, reported to Joseph Stalin that “this counterrevolutionary organization directs sabotage not only in our coal industry, but also in other branches of our economy.”
The Shakhty Trial gave rise to subsequent trials in other industrial sectors. Speaking at the November Plenum of the AUCP(b) Central Committee, Party functionary Lazar Kaganovich said that after the Shakhty Trial, cases of “wrecking” were undertaken at a series of industrial enterprises, including Azneft, Grozneft, and Neftesindikat, which were set aside into separate legal proceedings. Soon, the OGPU made arrests, and after a short investigation, cases concerning a “counterrevolutionary, wrecking, and spying organization in the oil industry of the USSR” were sent to the “most humane proletarian court.” As a result of the first trials, many prominent engineering and technical specialists were convicted and sentenced to various terms of imprisonment, including: Professor Ivan Strizhov, oil industry director of the VSNKh; Nikolay Tikhonovich, deputy director of the Geologic Committee; Nikolay Lednëv, senior geologist of the Geologic Committee; Pëtr Polevoy, an authoritative petroleum geologist; Doctor of Mineral Geology Ilya Ginzburg; Aleksey Anosov, regional geologist of Grozneft; Grigory Surabekov, deputy director of the Azneft refineries; Vladimir Delov, an experienced drilling engineer of Azneft, and many others. The choice of where their “proletarian punishment” sentence was to be served was quickly determined, and was strongly influenced by the aforementioned resolution of the VSNKh Presidium, “On the Development of a Fuel Base in the Northern Territory” of April 20, 1931. Exploration and development of the northern hydrocarbon fields required, first and foremost, qualified specialists, such as geologists and mining engineers, mechanical engineers, and production engineers; in fact, the very people forming the basic contingent convicted in the “oil” trials. Several years later, the oil industry was hit again by a new and even more severe wave of repression. Many leading industry workers were arrested, convicted, and shot, including: Aleksandr Serebrovsky, who had led Azneft at its most difficult restorative period; Mikhail Barinov, head of Glavneft; Sergey Ganshin, director of the Soyuzneft Association; Noy London, deputy head of Glavneft; Semën Slutsky, head of Azneftekombinat, and many others.
Mass repression among engineering and technical workers inflicted serious damage on the USSR oil industry as a whole, and was the tragic result of deep contradictions in social, economic, and political processes that were occurring under the very difficult conditions of the authoritarian and despotic regime of Joseph Stalin and his closest associates.
Despite the losses suffered by the oil industry during this period, it was still expected to fulfill the Five-Year Plan. One of the basic goals of domestic refining in the Third Five-Year Plan (1938–1942) was to accelerate the production of gasoline. “The country demands more and better gasoline” was the basic slogan of Soviet refinery workers in 1938. Moreover, the Third Five-Year Plan assigned the oil industry the following goals: 1) accelerated mechanization of all processes of exploratory drilling; 2) sharp expansion of the role of motor vehicle transportation in geologic exploration; 3) increased volume of shallow mechanical drilling and craelius core drilling; and 4) use of the American practice of reusing oil wells. To address this goal, Amtorg signed a contract in 1938 with the American company Universal Oil Products to construct a new aviation fuel refinery in the Bashkir ASSR.
On October 12, 1939, the USSR CPC issued a resolution dividing the People’s Commissariat for the Fuel Industry into two parts: oil and coal. AUCP(b) Politburo member Lazar Kaganovich was appointed People’s Commissar for the USSR Oil Industry, and he spent nine months in the post. On July 3, 1940, the Presidium of the Supreme Soviet of the Soviet Union issued an edict appointing engineer Ivan Sedin (1906–1972) in place of Kaganovich.
In the period from the beginning of 1938 through the end of 1940, the number of tank farms in the USSR increased from 1,520 to 1,686. The largest among them were located in Makhachkala, Astrakhan, Saratov, Gorky, and Yaroslavl. The basic type of tank was the standard riveted airtight tank operating at a positive pressure of 0.79 inches of water column. Experimental vertical welded metal tanks of small capacity (under 175,000 cubic feet) were constructed at the same time.
Table 10. USSR Oil Production by Year, in millions of tons
Source: Economy of the USSR [Narodnoye khozyaystvo SSSR]. Moscow, 1959, p. 205.
The end of the 1930s saw the finalization and approval of the tank farm as a clearly defined idea: a sales enterprise that would receive, store, and dispense various grades of petroleum products, and do so on a profitable basis. Thus, new organizational branches of the industry—oil transportation, storage, and supply—were formed.
In 1938, a new subdivision was created within the Soyuzneft All-Union Association: Glavneftesbyt [“Main Crude Oil and Petroleum Products Sales and Transportation Administration”]. It was assumed that organizing three independent main administrations—Glavneftedobycha [“Main Oil Production Administration”], Glavneftepererabotka [“Main Refining Administration”], and Glavneftesbyt—for oil production, refining, and sales, respectively, would provide their administrations with the necessary conditions for real operational management.
Glavneftedobycha faced a gradual transition from flowing well operation to mechanized production, taking into account that given 88.3% fulfillment of the oil production plan, flowing wells supplied only 27.4%. As of January 1, 1938, 35% of wells in the USSR were idle. One reason for idle wells was that well operation was assessed on the basis of figures calculated for a group or field, without regard for the peculiarities of each individual well.
Along with stimulating oil fields in old regions, the leadership of the industry did not abandon its intention to organize geologic prospecting and exploratory work in Siberia. On September 10, 1939, Vasily Senyukov, head of Glavgeologiya [“Main Geologic Exploration Administration”], sent the people’s commissar for the fuel industry a special memorandum “On Organizing a Large Geophysical Expedition to Western Siberia in 1939–1940,” that emphasized: “In compliance with your instructions to accelerate oil prospecting in Siberia, it is proposed that preparations be made in 1940 to locate a series of deep wells within the Western Siberian Plain. To single out regions and points for deep exploratory drilling, it is proposed that a large geophysical expedition be organized in the winter of 1939–1940 within the system of the Main Geologic Exploration Administration of the People’s Commissariat for Fuel.... It is proposed that the expedition be composed of nine pendulum crews (770 points), three gravimeter crews (1,300 points), one seismic crew, two electrical prospecting crews, 10 magnetic crews, two variometric crews, and four geodetic crews.... The expedition should have 32 crews with a staff of 300.” The Glavgeologiya leadership’s proposal was accepted, and on November 22, 1939 the USSR people’s commissar for the oil industry signed an order “On Expanding Oil Prospecting in Siberia.” The expedition was given the basic goal of carrying out geologic studies over an area of 190,000 square miles and preparing regions for deep rotary drilling for oil by the fall of 1940. The experienced geologist A. Shayderov was named leader of the expedition. However, this very complex mission was not adequately supplied with financial, human, or equipment resources, and the preparatory period dragged on for months, pushing out the deadlines for beginning work by almost a year.
According to 1940 data from the newspaper Neftyanoye khozyaystvo [“The Oil Industry”], the results of the first years of the Third Five-Year Plan were as follows: “Over the last two to three years, the oil industry’s progress has slowed somewhat, and current rates of development, production, and refining are completely inadequate; in any event they do not correspond to the rich reserves present in oil production and refining. This slowing in the development of the oil industry has created a gap between the production of and demand for these products in the USSR economy. The rates of production adopted by the people’s commissar for the oil industry in the first quarter of 1940 are clearly insufficient, so much so that oil workers must not only fulfill, but exceed the plan for 1940.”
A significant reason for the industry slowdown was that, over the past three years, prospecting drilling decreased to a level that threatened further operational drilling. For example, whereas 437,000 feet of prospecting drilling was done and 153 wells were completed in 1936, the 1937 figures were, respectively, 207,677 feet and 50 wells; in 1938, they were 157,480 feet and 40 wells; and in 1939, they had fallen to 134,186 feet and 21 wells. A direct consequence of this was a sharp drop in oil production. In 1939, production from new wells significantly decreased in comparison with 1936, and did not make up for the decline in old wells. In 1940, 34.3 million tons of oil were produced, but the sale of all petroleum products in the USSR amounted to 27.6 million tons. The Plan non-fulfillment was thus 5.6 million tons of crude.
By 1940, Soviet oil exports had fallen 88.2% in comparison with 1932, to 522,000 tons of petroleum products and 269,000 tons of crude oil. Over the same years, kerosene exports fell by 93.5%, and gasoline exports by 94.2%.
In 1940, the Malgobek–Grozny oil pipeline (9.8 inches in diameter, 62 miles long) and Gora–Gorskaya oil pipeline (7.9 inches in diameter, 35 miles long) were built. In total, 355 miles of trunk oil and petroleum products pipelines were built and placed in service during the Third Five-Year Plan (1938–1941). The main goal of the economic and design studies carried out at that time to justify the choice of a pipeline network route was to improve the supply of crude oil and petroleum products to the eastern regions of the country.
By 1941, craelius core drilling had prepared more than 100 promising structures and prospecting drilling had discovered 14 oil fields, and so intensified and accelerated prospecting for new oil areas and increased drilling volume were set as the basic goal for the year. In terms of geologic petroleum reserves, the USSR was first in the world (5.2 billion tons), but in terms of production, the USSR lagged quite substantially behind the US (201.6 million tons in 1940).
In 1941, a large-scale program of economic construction and further enhancement of the country’s defensive capability was proposed in connection with the war in Europe, which had been going on for more than a year.
One of the pre-war characteristics of the USSR’s oil industry was its territorial arrangement. By the beginning of 1941, oil production and refining were concentrated in the southern regions of the USSR, on the Absheron Peninsula and in the North Caucasus, while the areas of the “Second Baku”—the Volga-Urals region—were producing around 2.2 million tons, which represented only 6% of total Soviet production.
The geographic distribution of the oil production and refining industry that emerged, with an inordinate concentration of production and large reserves of raw hydrocarbons in the south of the country, coupled with an underdeveloped pipeline and transportation infrastructure, created great difficulties in the delivery of oil from production points to regions where it was consumed, and proved to be one of the key factors behind the extraordinary complications faced by the Soviet Union in the organization of oil supply and production.
The Harsh Years of the Great Patriotic War
Early on the morning of June 22, 1941, German armed forces crossed the national border of the USSR without a declaration of war, and thus began World War II for the Russian people.48
What followed was the fiercest and bloodiest war the country has ever experienced. It forced its way into every home, every family, and into the heart of every person. It lasted 1,418 days, from June 22, 1941 through May 9, 1945. More than 27 million citizens of the Soviet Union gave up their lives for their country.
Adolf Hitler’s inhuman plans for conquest to achieve world domination were determined to a great extent by energy resources, and the oil factor had a substantial influence on the nature and course of the war. To a certain extent, the limited nature of fuel and energy reserves predetermined the strategy and tactics of Nazi Germany’s actions in theaters of military operations. As one European country after another fell to the Nazi regime, the Führer’s first order of business was to examine the conquered countries’ oil reserves.
In preparing for war, the Nazi leaders had bet on producing synthetic gasoline. In the 1930s, Adolf Hitler issued several orders to expedite the construction of refineries to produce synthetic gasoline from coal. On the eve of military actions in Europe, Germany organized mass production of “synthetic” gasoline on the basis of the Fischer-Tropsch hydrogenation process, using hard coal and brown coal as raw material. With government support, the companies Ruhrchemie AG and Wirtschaftsgruppe Kraftindustrie built a wide network of hydrogenation plants, and from 1934 through 1938 the production of liquid motor fuel increased almost eightfold, reaching 1.7 million tons of synthetic gasoline. Although the production of such fuel was expensive, the Führer noted: “The German fuel industry must now develop with maximum speed... and cost is no object in obtaining raw materials.”49 German production of synthetic fuel continued to develop at a very rapid pace. At the time of the attack on Poland in September 1939, Germany was operating 14 hydrogenation enterprises, and by 1941 the number had risen to 22, with a total production capacity amounting to 6.7 million tons of synthetic fuel.
By June 1941, Nazi Germany controlled 93 refineries with a total capacity of 29.2 million tons in the annexed and occupied territories (Austria, France, the Netherlands, Belgium, Poland, Czechoslovakia, Denmark, and Norway). Wehrmacht forces seized more than 8.8 million tons of petroleum products as they occupied Europe. In 1941, Germany itself produced 1.72 million tons of oil. Romania, a German ally, possessed a significant oil area in the Ploiesti region, and before the attack on the USSR, the Romanian regime of Marshal Antonescu was supplying 58% of oil delivered to the Reich.
It should be noted that in the initial period of World War II, limited volumes of Soviet oil (only around 725,000 tons) were delivered to Germany only after August 1939, when Germany and the USSR signed a nonaggression pact, and they continued until June 22, 1941, i.e., for less than two years. Therefore, they could not have had any significant influence on the course of military operations.
Oil played a significant role in Hitler’s decision to attack the Soviet Union, and according to the testimony of Albert Speer, minister of armaments and war production, it was a prime motive. According to the Führer’s associates, he was always obsessed by the idea of seizing the oil in the Caucasus. This, he felt, would make his German Reich truly invincible.
But what determined Hitler’s eastern military strategy? He understood that moving westward would unavoidably lead to a confrontation with the US, the most powerful military force in the western world, while he considered the Soviet Union to have a weak economy and military. Military intelligence reports available to German headquarters said that German troops would enter Russia “like a knife through butter.” Hitler called the USSR “a giant on clay legs,” which would crumble at the first blow. Operation Barbarossa was to be another exercise in blitzkrieg warfare, which had already brought success in the defeat of Poland, France, Norway, Yugoslavia, and Greece.
Hitler’s “cannibalistic” economic calculation remained the same, i.e., the number of German victims from an attack on Russia would not exceed the number occupied in the production of synthetic fuel. The German command was counting on Russia being finished by winter of 1941: Moscow would be captured, and a border would be reached running from Arkhangelsk to Astrakhan. A program for occupying seized Russian territories, the Generalplan Ost [“Master Plan East”] was developed at the same time as Operation Barbarossa. The resources of such territories, including petroleum, were to become property of the Reich. A special ministry, the Reichsministerium für die besetzten Ostgebiete [“Reich Ministry for the Occupied Eastern Territories”], was created to deal with the eastern territories. A number of regions would be colonized by Germans, while Russia itself was to be “thrown across the Urals.” The local population would be a source of cheap labor. Some inhabitants would be physically eliminated, including any and all Jews, Gypsies, and the physically and mentally handicapped, wherever they might be, as well as the “commissars” and communists, Hitler’s principal ideological enemies.
It should be noted that Germany’s attack on June 22, 1941 took the Party political and military leadership of the Soviet Union, headed by Joseph Stalin, by surprise. The initial period of the war was especially tragic. In the first three months, during the course of bloody battles, the superior enemy forced the Red Army to retreat to the distant approaches of Moscow. Concentrated aerial bombing strikes destroyed airfields, oil storage facilities, and tank farms of the Special Western Military District. At the beginning of the war, the Red Army’s Fuel Service had 247 stationary storage facilities and fuel bases with a total bulk capacity of 23 million cubic feet, and up to 2,000 rail cars for packaged products and goods. Ninety percent of all army storage facilities were distributed in military districts near the border. The People’s Commissariat for Defense held 1.34 million tons of petroleum products in reserve. In the first six months, the People’s Commissariat for Defense lost 176,000 tons of day-to-day fuel supplies and 330,000 tons of mobilization reserves. Only around 66,000 tons were evacuated.
Lacking fuel, most aircraft, tanks, and automobiles on the western borders of the USSR were destroyed. German tank wedges outflanked the Red Army on the territory of Belarus, inflicting crushing defeats. The lack of reliable communications between headquarters and units due to sudden strikes also played a role, as did the lack of fuel for military hardware.
Although the defeats were largely due to mistakes in Stalin’s leadership, the entire blame, as was customary, was placed on the command of the Special Western Military District, headed by Army General Dmitry Pavlov (1897–1941). The accusations made against him included disintegration of the rear echelon’s supply capability.
In those grave days, mass heroism on the part of privates and officers, who gave up their lives trying to do everything to protect their homeland under unbelievably difficult conditions, became a clear form of demonstrating patriotism. Soon, Red Army units were able to recover from the initial shock of Germany’s unexpected attack, and near Yelnya they made their first successful counterattack.
At the beginning of the war, the loss of important economic regions of the country had a serious effect on the Soviet economy. As a result of the enemy occupation of a large piece of Soviet territory, the country lost an area that was home to 80 million people (41.4% of the entire population) before the war and produced 46% of all the country’s industrial output, including 68% of its steel, 67.8% of its rolled products, 60% of its aluminum, and 62.5% of its mined coal. The damage caused to the oil industry was addressed in particular in the financial reports of the USSR People’s Commissariat for the Oil Industry, which stated the expenses and losses for 1941 as 19,647,000 rubles, and those for 1942 as 55,645,000 rubles.
From the first days of hostilities, the country undertook measures to put the economy on a war footing. On June 24, 1941, the USSR CPC created the Evacuation Council. Key figures in this emergency government agency were the talented leaders Aleksey Kosygin (1904–1980) and Mikhail Pervukhin (1904–1978). Three days later, the USSR CPC and the AUCP(b) adopted a resolution, “On the Procedure for Removing and Distributing Human Work Forces and Valuable Property.”
The State Committee for Defense went on to adopt resolutions “On Measures to Develop Oil Production and Refining in the Eastern Regions of the USSR and Turkmenistan” (July 30, 1941) and “On the Evacuation of Maykopneft and Grozneft to the Bashkir ASSR” (October 28, 1941).
In accordance with Soviet government decisions, around 1.5 million railroad cars carrying people and various cargo were sent into the eastern regions of the country from July through December 1941, and more than 1,360 major industrial enterprises were evacuated. By July 1941, the Odessa, Kherson, and Berdyansk cracking refineries had already been dismantled and relocated from Ukraine to the eastern regions of the country.
Massive Red Army conscription stripped the production labor force, and there was a catastrophic shortage of workers. Extreme measures were undertaken to provide personnel to defense-critical branches of production, including oil production and refining. Most workers were now teenagers and women, who were mobilized into production, industrial training schools, and trade schools. Mobilization measures were accompanied by increasingly frantic conditions at enterprises, especially where martial law or a state of siege had been imposed. In December 1941, an order was adopted holding blue-collar and white-collar workers of defense enterprises responsible for leaving work without authorization or arriving for work late. Everyone employed at such enterprises was considered to be mobilized on the labor front, and violators were considered “labor deserters” who could be tried under wartime laws.
Incidentally, the severe measures introduced by Soviet leaders at that time found support and understanding among the population, and it was a time of mass labor enthusiasm and heroism. For example, in August 1941, the Soviet Information Bureau reported that Soviet oil workers were steadily increasing the production of fuels and lubricants necessary for the front and rear. At industry enterprises there was a widespread patriotic movement of “200 percenters”—workers who fulfilled at least 200% of their quotas during their shifts. They gave their work all they had under the slogan: “Everything for the front! Everything for victory!”
Under the most difficult conditions of the initial wartime period in the USSR, the question of supplying sufficient volumes of fuel and lubricants became especially acute. Colonel General Vasily Nikitin, head of the USSR Armed Forces Fuel Service, estimated that in 1941 the Soviet oil industry was able to supply the People’s Commissariat for Defense with only 26.6% of its war year requirements for aviation gasoline; 67.5% of its requirements for diesel fuel; and 11.1% of its requirements for aviation oil.
On July 15, 1941, the State Committee for Defense adopted a resolution, “On Increasing the Aviation Gasoline Production Plan for the Third Quarter of 1941,” which confronted the USSR People’s Commissariat for the Oil Industry with complex challenges to supply fuel to aviation units.
On July 30, 1941, the State Committee for Defense adopted a resolution, “On Measures to Develop Oil Production and Refining in the Eastern Regions of the USSR and Turkmenistan.” This decree called for increasing the capacity of the oil fields and refineries and accelerating the construction of refineries at Ufa, Syzran, Saratov, Ishimbayevo, and elsewhere.
Answering the government’s call, Soviet oil workers made colossal efforts in the first year of the war to increase oil production. At the fields of the Absheron Peninsula, 3 million feet of hole were drilled and 752 wells were put into production. In the first year of the war, the Baku region gave the country 25.9 million tons of oil and 91.8 million cubic feet of natural gas, which was the highest level of raw material production in the country’s entire history of industrial oil production. The Grozny region also made its contribution to the common cause, producing 3.3 million tons. On the whole, the USSR produced 36 million tons of oil in 1941, thereby exceeding the level of the last prewar year.
In August 1941, the AUCP(b) Politburo approved a military and economic plan for defense of the country. For the fourth quarter of 1941, the USSR people’s commissar for the oil industry set the amount of drilling in the regions of the “Second Baku,” Kazakhstan, and Central Asia at 1.1 million feet, including 442,913 feet of exploratory drilling. For 1942, the amount of drilling planned was 5.8 million feet, including 2.1 million feet of exploratory drilling. Plans called for starting 1,550 new development wells, and accelerating the construction of a number of new refineries.
Having met fierce resistance on the central front, the German command began redeploying its reserves. Forces were insufficient, however, to mount a general attack on all fronts, as called for by Operation Barbarossa, and thus nowhere did they completely succeed in achieving their aggressive plans.
Meanwhile, combat operations revealed shortcomings in the Nazi blitzkrieg strategy, including an acute fuel problem. When traveling on Soviet roads (which were poor if they existed at all), German military vehicles consumed two to three times more fuel than planned. There was an immediate fuel shortage. Supplying attacking German troops, which had become separated from their rear support units, became substantially more difficult.
In the fall of 1941, a gigantic battle took place near Moscow. At its start, German units had reached the city limits. Yet here again, it became apparent that the German command had miscalculated, and that logistical supply of attacking troops was in jeopardy. Counting on rapid success, the Nazi military leaders had not prepared their forces to fight in fall and winter conditions. German equipment got stuck in the mud, and it literally had to be pulled out by hand. And when early frosts came, another problem became apparent: German tank and aircraft engines that ran on synthetic fuel did not easily start in the cold, and lubricant congealed. The closer the Germans came to Moscow, the fiercer was the resistance from Red Army units, who were receiving fuel and lubricant supplies without interruption from the rear echelon. In the end, the Germans retreated from Moscow.
At the beginning of 1942, Hitler’s Reich had recovered somewhat from the defeat near Moscow, and the German command started to prepare a new Russian offensive. The operation, which was given the code name Fall Blau [Case Blue], had been developed with Hitler’s direct involvement, and assumed a clearly pronounced nature as an “oil crusade.” Hitler’s Directive 41 of April 5, 1942 planned to strike a blow in the southern direction and seize the Caucasus and the Absheron Peninsula from the USSR, thereby winning a dominant strategic position and cutting Soviet lines of communication with allies in the anti-Hitler coalition. To accomplish this, Army Group A was formed, which was supposed to reach Baku and then, in coordination with friendly Turkey, to continue to the Middle East, into oil-rich Iran, Iraq, etc. A supportive strike was made by Army Group B, which was supposed to overcome the Volga line in the region of Stalingrad and cut off routes connecting the oil regions of the Caucasus with the center of the country.
The diary of General Franz Haider, chief of staff of the Army High Command [OKH], who wrote down Hitler’s speech, contains the following words: “The time has come to look ahead. It has become possible to capture the Donets Basin and the Caucasus oil region. Operations in the Caucasus will require large forces, but any price should be paid for oil. All the more so, seizing the Caucasus will allow the occupation of Iran and the straddling of the passes on the Iran-Iraq border.”
The summer and fall of 1942 brought a succession of failures for the Red Army. Grozny became a front city. On August 10, 1942, the Nazis occupied Maykop; on August 22, Krasnodar; and on August 25, Mozdok as well.
In connection with the threat of attack by Nazi troops, on September 13, 1942 the State Committee for Defense adopted Resolution 2298, “On Dismantling the Grozny Refineries,” which soon had a very strong effect on fuel deliveries to the army. Fierce battles broke out when Nazi troops began to mount an active attack from the region of Mozdok, on the approach to Grozny. On October 10, 1942, the city literally burst into flames from the bombs that had been dropped on it. Buildings and structures were destroyed, oil tanks burned, and around 100 wells were knocked out of service. Nevertheless, the enemy failed to seize this most important oilfield region or to knock it completely out of service. In 1942, Grozny provided the country with 1.5 million tons of oil.
In response to the German advance, martial law was declared in the Transcaucasus in the fall of 1942, and the situation in Baku soon became critical. Only 1.8 million tons of oil were shipped before navigation was halted, instead of the planned 6.6 million tons. A number of oil-producing enterprises that did continue to operate had to release produced oil into mountain depressions for storage. Special wells were designated, into which hundreds of thousands of tons of oil that had undergone gas-gasoline processing were pumped. The shortage of containers led to work stoppages. In the fall of 1942, oil was actually being produced by only a single trust: Neftechala.
It should be emphasized that from the first days of the war, there were widespread efforts throughout the country to help the army and navy. For example, workers in the rear gave the Defense Fund 17 billion rubles in cash contributions, 289 pounds of gold, 29 pounds of platinum, 20,985 pounds of silver, jewelry worth 1.7 billion rubles, government debt bonds worth more than 4.5 billion rubles, and half a billion rubles were transferred through contributions in savings banks. These resources were used to build 2,500 warplanes, several thousand tanks, eight submarines, 16 military cutters, thousands of artillery pieces, mortars, and various infantry arms.
A significant contribution was also made by oil industry workers who, every month, contributed one or two days of pay to the Defense Fund.
Another widespread patriotic initiative in the industry was the collection of money from individuals to build “named” tanks, airplanes, and even ships. For example, the money of the Soviet oil industry was used to build airplanes for the units “Bashkir Oilman,” “Kuybyshev Oilman,” “Syzran Driller,” “Okhta Oilman,” the fighter “Bashkir Geophysicist,” the tank columns “Stavropol Oilman,” “Ukhta Oilman,” “Kazakhstan Oilman,” and so on.
The difficult situation of the Caucasus oil regions intensified the role of eastern regions in oil production and refining. On September 22, 1942, the State Committee for Defense adopted a decree “On Measures to Expedite in Every Way Increased Oil Production at Kazakhstanneftekombinat, Permneftekombinat, and at the Buguruslanneft, Syzranneft, Ishimbayneft, Tuymazaneft, Turkmenneft, Kalininneft, and Voroshilovneft trusts.” In essence, this was an elaborate program to create a mighty oil production and refining region in the Volga-Urals region. It planned, by the end of 1942, to increase average daily production in eastern regions by a factor of 1.5 over August of the same year. Before the end of 1942, the amount of development drilling was set at 684,711 feet; exploratory drilling, at 306,430 feet. By that deadline, plans called for putting 482 wells into production and an additional 580 wells in the first quarter of 1943.
To realize these plans, major organizations with experienced geologists and drillers, as well as equipment for exploratory work, were relocated from the old oil regions to the Bashkir and Tatar ASSR, and to Samara, Orenburg, and Perm Provinces. From just the Krasnodar and Grozny regions, 17,486 persons traveled east and into Central Asia; of these, 1,351 were engineers and technicians.
Highly qualified production organizers were appointed to head the new oil enterprises: E. Tagiyev was appointed director of Permneftekombinat, S. Kuvykin was appointed director of Bashneftekombinat, A. Vasilyev was appointed head of Kuybyshevneft, and Ts. Astvatsaturov was appointed head of Saratovneft.
On September 22, 1942, the State Committee for Defense adopted the important Resolution 2326, “On Expediting in Every Way Increased Production of Aviation Gasoline, Automobile Gasoline, Toluene, Oil, and Lubricants at the Refineries of the Center, East, and Central Asia,” which planned urgent measures to substantially increase the production of fuels and lubricants.
The Fuel Component of Lend-Lease
Contemporary historical literature and domestic Russian press publications on the role played by crude oil and petroleum products in supporting military actions during World War II speak mostly in general terms. Numerous memoirs recount in detail the tank breakthroughs, sea battles, air raids, and heroic deeds at the fronts. However, most of these fail to mention the fact that, without fuel, the crews of tanks, airplanes, and naval vessels could not have carried out their assigned combat missions. For the rear echelon, the need for fuels and lubricants was one of the most acute problems.
The oil factor had a substantial effect on the nature and progress of World War II. To a certain degree, the limited availability of fuel and energy resources, including oil, predetermined the strategy and tactics of Nazi Germany in the theaters of war. The German high command bet on a blitzkrieg strategy for operational use of large mechanized formations and the application of massive air power to support its infantry. In turn, this meant the preliminary stockpiling of adequate reserves of armaments, fuels, and lubricants during a preparatory period, followed by a sudden attack on the enemy. This explains the existence of definite intervals between Nazi Germany’s occupation of Poland, the seizure of much of France, and the attack on the Soviet Union. However, having occupied much of Europe, and in attempting to force the populations of occupied countries to work for the German military economy, Nazi leaders encountered the need to provide mineral raw materials and fuel, which was very difficult to do given their total international isolation. Anticipating a fuel shortage, Nazi leaders set an objective of mass synthetic motor fuel production. However, this could not solve all the fuel problems of the Third Reich, because while Germany proper produced 1.4 million tons of oil in 1940, imports amounted to 2.5 million tons, including 1.7 million tons from Romania.
It is thus quite logical that the 20th century war of motors was largely won by the anti-Hitler coalition of powers thanks to their ample supply of both munitions and hydrocarbon fuels. American and British armed forces together expended several times more fuel during the Second World War than Nazi Germany and its satellites.
It can confidently be said that the availability of fuel to the Red Army and Navy during the Great Patriotic War was a major factor in the Soviet people’s victory in their struggle with their Nazi German occupiers. Colonel General Vasily Nikitin, head of the USSR Armed Forces Fuel Service, estimated that the Soviet Armed Forces used 18 million tons of various fuels in strategic, frontal, and army operations during World War II.
Despite the heroic labor of the Soviet oil workers, the extreme conditions of the war caused a drop in the country’s oil production from 34 million tons in 1940 to 21.3 million tons in 1945, i.e., a 37.7% reduction, and correspondingly exacerbated the already difficult situation in the refining sector, which found itself incapable of fully meeting growing Air Force demands for high-octane aviation gasoline. For instance, the USSR produced 1.4 million tons of aviation fuel in 1941, but only 1 million tons in 1942. The collection The Economy of the USSR in the Great Patriotic War of 1941–1945 [Narodnoye khozyaystvo SSSR v Velikoy Otechestvennoy voyne 1941–1945 gg.] presents data on the production of aviation gasoline, which amounted to 6.1 million tons during the war. At the same time, Red Army planes consumed 4.9 million tons of aviation gasoline during the war years, and naval aviation units consumed over 5.5 million tons.
It should be stressed that, from 1941 to 1945, the USSR still had fairly large consumers of aviation gasoline. These included the aviation industry, which produced 137,000 planes during the war and additionally had its own fleet of planes. Civil aviation and airborne units of the Main Administration of the Northern Sea Route [Glavsevmorputi] likewise consumed considerable volumes of aviation fuel. Even the People’s Commissariat for Internal Affairs [NKVD] had its own airborne squadrons. According to the most approximate calculations, the aforementioned organizations, taken together, consumed considerably more aviation gasoline during the four war years than the 615,000 tons indirectly allocated to them by Soviet statistics.
Thus, it is reasonable to conclude that the USSR received significant volumes of aviation fuel from third-party countries from 1941 to 1945, which made up the fuel shortage.
A study by the Russian historian Alexander Matveychuk, Candidate of History, entitled “The Oil Component of Lend-Lease,” published in the collection Soviet Union’s Oil [Neft strany Sovetov], is the first thorough examination of the place and role of petroleum products deliveries to the USSR under the Lend-Lease program during World War II.
Subsequent study of this issue has confirmed the special importance of aviation gasoline deliveries from the USSR’s allies in the anti-Hitler coalition under the Lend-Lease program. According to official data, the US delivered a total of 2,159,336 tons of petroleum products to the USSR under Lend-Lease and commercial contracts, and the volume of high-octane aviation gasoline was 1,320,113 tons, including 615,561 tons with an octane rating above 99.
An important feature of aviation gasoline deliveries under Lend-Lease was that the US delivered aviation gasoline with an octane rating of 99 or higher to the USSR at a time when the technical level of the domestic refining industry permitted only the production of low-octane aviation gasoline. Thus, in the prewar year of 1940, the vast majority of the 973,800 tons of aviation gasoline produced was fuel with octane ratings of 70 to 74, used by antiquated domestic airplanes. Understandably, this situation did not change during the war, and the pressing demand for B-78 aviation gasoline required by the new Yak-1, II-2, MiG-3, La-5, and other warplanes could not be met by Russian refineries. And so, American high-octane gasoline was used in large quantities as an octane-boosting additive to make quality aviation fuel both under factory conditions and directly at Red Army and Navy combat units. According to available data, 53% of the total volume of high-octane gasoline was made at military storage facilities from April 1943 to May 1945.
Equally important for the supply of quality fuel to Soviet aviators were Allied deliveries of special octane-boosting additives (e.g., tetraethyl lead solutions) for the preparation of high-octane aviation gasoline for the Soviet Armed Forces and for boosting automotive gasoline octane ratings. In all, 919,798 tons of these additives were received, including 807,217 tons from the US and 112,581 tons from the British refinery at Abadan, Iran.
Thus, the investigation of this question leads to the conclusion that deliveries of high-octane gasoline and octane-boosting additives from the US were indisputably important for supporting airborne combat operations by the Soviet Armed Forces, as well as effective production operations at domestic aircraft plants and other aviation organizations.
America’s other contributions should not be overlooked. From April 1943-May 1945, US deliveries also included: 294,415 tons of automotive gasoline, 18,595 tons of kerosene, 316,650 tons of residual oil, 123,100 tons of lubricants, 6,359 tons of paraffin, 5,278 tons of chemical additives, and 1,100 tons of other products.
It should be stressed that the fuel component of Lend-Lease, in addition to petroleum products, also included US deliveries to the USSR of equipment for four complete refineries, as well as drilling rigs and other oilfield equipment, casing pipe and flow tubing, portable knockdown pipelines, monitoring and measuring devices, tankers, railroad tank cars, fueling trucks, and much more.
Officially, Lend-Lease deliveries to the USSR were suspended May 12, 1945, and from that date until the Red Army’s crossing of the Manchurian border in the Far East, cargo delivery was done under a “special October 17 program” and a so-called “Molotov-Mikoyan list” supplemental to that. These agreements set maximum volumes of military and civilian materials that would be allocated by the US and Great Britain to the Soviet Union.
The Pipeline Agreement, signed October 15, 1945, continued the Lend-Lease protocols and was very important to the devastated Soviet economy. This treaty, worth $222 million, also had a substantial effect on the postwar development of the Soviet oil and gas industry.
On the whole, American, British, and Canadian deliveries of petroleum products, refining and oilfield equipment, pipe, and other materials as part of the overall Lend-Lease program substantially affected the supply of fuel to Soviet armed forces, and helped modernize the Soviet oil production and refining industries and develop the nation’s pipeline system.
In the conclusion of his book Lend-Lease: Weapon for Victory, published in 1944, American General Edward R. Stettinius, Jr., head of the Office of Lend-Lease Administration, wrote: “Cooperation through Lend-Lease as it is today was destined, of course, to end one day, but we know that the principles of mutual aid and mutual benefit that form the basis of the Lend-Lease Act must continue to operate. Now as never before, freedom-loving peoples are united in their aims and actions. In this unity, we can find strength to establish peace in a world where everyone will be guaranteed freedom and equal opportunity.”
Lend-Lease was a unique phenomenon in the recent history of relations among the USSR, US, Great Britain, and Canada. Under the very difficult conditions of the Second World War, the Allies managed to reach a mutual understanding and successfully used an effective mechanism of international economic relations to achieve total victory for the anti-Hitler coalition over Nazi Germany.
The Contribution of Soviet Oilmen and Scientists to the Victory
The acute shortage of petroleum products during the war in the Soviet rear explains the USSR’s elaborate campaign to conserve liquid fuel. It included a transition to gas and solid fuel, acceleration of synthetic liquid fuel production, and maximized use of additives—benzene, synol, and other liquid products of thermal processing. Previously, gas fuel had been obtained from oil production waste only as a byproduct of crude oil production. During the war, fields producing solely natural gas in the area of Buguruslan and Saratov came online. The gas was used primarily to fuel industrial enterprises and power plants. A number of long gas pipelines (Yelshanka–Saratov, Voyvot–Ukhta, etc.) were built during the war to supply gas fuel to industrial enterprises.
Soviet petroleum scientists, who participated in the development of oil and gas fields and in the introduction of advanced technologies and new oilfield equipment, also made a major contribution to the overall victory over the enemy. On June 3, 1942, a special commission was formed to mobilize the resources of the Volga and Kama River Valleys. Its oil section was headed by academician Sergey Nametkin, and the People’s Commissariat for the Oil Industry was actively represented by First Deputy People’s Commissar Nikolay Baybakov. The geologists of the Moscow Petroleum Institute, along with their colleagues from the All-Union Scientific Research Geologic Exploration Institute, the Institute of Petroleum, and other institutions of the Academy of Sciences, performed extensive geologic studies of oil prospects in the Volga-Urals region. Their research on oil and gas percolation in a porous medium was of tremendous importance for the selection of oilfield development methods. The following well-known petroleum geologists took active part in the analysis of materials from geologic exploratory expeditions in the Volga-Urals region: Academicians D. Nalivkin, N. Shatsky, and S. Mironov; Corresponding Members of the Academy of Sciences S. Fëdorov, M. Mirchink, K. Chepikov, and V. Nalivkin; and geologists A. Chernov, V. Fëdorov, K. Timirgazin, A. Trofimuk, A. Blokhin, A. Bogdanov, and M. Barentsov.
The Volga-Urals region, nicknamed the “Second Baku,” became a proving ground for testing and introducing new methods of oil production and refining. For example, during the war, turbodrilling was successfully introduced in Bashkiria and in the Samara and Perm regions. The method increased drilling speeds and lengthened equipment life. In the Bashkir ASSR, top crews achieved rates of 2,625 feet per rig per month, versus the usual 787 feet. Large modular drilling derricks also began to be used at this time, accelerating the drilling of oil fields in the Volga-Urals region. In 1943 and 1944, workers at the Dossor and Maqat fields in the Emba District began actively waterflooding oil formations to enhance oil production. At Ishimbayevo, hole bottoms were treated with hydrochloric acid and “shots” were detonated to stimulate oil production.
The productive collaboration of scientists and engineers soon resulted in milestone events. On December 31, 1942, the Krasnokamsk office of turbodrilling at Molotovneftekombinat [“Molotov Petroleum Integrated Works”] was the first in the world to begin turbodrilling an experimental directional well. Eventually, 208 slant wells were drilled in this manner at the Krasnokamsk oil field.
On July 25, 1943, Shugurovo Well 1 (Verey-Namurian field) in the Tatar ASSR yielded a commercial inflow of oil, which gave a powerful new impetus to further development of the promising oil area. In September 1943, exploratory Well 5 at Kinzebulatovo field in Bashkiria was the first oil gusher.
In March 1944, the USSR CPC adopted a resolution, “On the Development of Exploration and Preparation for Construction of an Oil Field at Shugurovo Field, Tatar ASSR.” In turn, People’s Commissar Ivan Sedin immediately followed up this important government decision by signing an order by the same title.
Triumphant reports from the Volga oilmen soon followed. On June 9, 1944, at Yablonevoy Gorge in the Kuybyshev Region, the first flowing Devonian Well 41 yielded 234 tons of oil per day. On September 26, 1944, at Tuymaza, on the slopes of the Narashtau Range, a crew led by foreman A. T. Tripolsky drilled Well 100, which became a gusher flowing at more than 220 tons of Devonian oil per day.
Oil workers who developed the Timan-Pechora oil and gas province made their own substantial contribution to the achievement of victory over the enemy. Thus, oil production in Ukhta District increased considerably during the war and the gas industry was born. From 1941 to 1945, 635,400 tons of crude and 53 billion cubic feet of natural gas were produced, and the first gas field went into production in the Verkhne-Izhma District near the village of Krutoy, 56 miles from Ukhta. In 1942, more than 7.8 billion cubic feet of natural gas was refined to soot, which was badly needed by defense plants for rubber production, as it was used as a filler to reinforce rubber mixes. Geologists played their part as well in developing the resources of this region. In October 1943, they discovered the Voyvozh gas field, and in June 1945, they found the Nibel gas field (the country’s biggest, with a daily flow of 21 million cubic feet of gas).
At the war’s end, the country’s leadership was able to assess the status and prospects for the geologic study of the new regions more realistically, as is shown by the joint order of February 17, 1944 by the People’s Commissariat for the Oil Industry, the USSR CPC Committee for Geologic Affairs, and Glavsevmorputi, “On Performing Work to Generalize Geologic Materials Regarding the Oil Content of Western and Eastern Siberia, the Far Eastern Territory, and the Arctic Part of the USSR,” which set the main objective of exploring oil prospects and determining the direction of further geologic exploration for oil based on available geologic information. The All-Union Scientific Research Petroleum Institute of the People’s Commissariat for the Oil Industry was placed in charge of this effort. Professor Nikolay Kudryavtsev was appointed scientific director in charge, and academician Vladimir Obruchev was named editor-in-chief.
The course of the war turned decisively after the Soviet victory in the Battle of Kursk. Reconstruction work began immediately in territories liberated from the enemy. To start with, the first oilfield reconstruction crews began work in the Kuban region. A 1943 State Defense Committee [GKO] resolution, “On Measures for the Partial Restoration of the Grozny Oil Industry,” played a major role in reviving the oil industry. In February 1945, drilling of the first well at Tashkala field began in the Grozny fields, and by June 1945, a well with a good flow rate had been found. Over the whole of 1945 and 1946, 17 highly productive flowing wells were drilled in the Grozny fields.
The war caused a qualitative shift in the Soviet oil industry, allowing it to break through in the postwar years. The introduction of new drilling methods—such as slant turbodrilling to penetrate the hard rock typical of the fields in the “Second Baku”—was expedited. The “Second Baku” trusts and conglomerates increased oil production by half during the war, and the region’s share of total output rose to 14.6% by 1945. Overall, the USSR oil industry began gradually increasing oil production. In 1943, the country produced 19.82 million tons; in 1944, it produced 20.13 million tons, including 13.1 million tons of crude on the Absheron Peninsula.
During the course of the war, the USSR discovered 34 oil and gas fields, 21 of them in the eastern parts of the country, thereby laying the foundations between the Volga and Urals for the creation of a powerful new fuel infrastructure.
In summarizing the activities of the Soviet oil industry during the harsh years of the Great Patriotic War, it can be said that the industry withstood this severe test honorably, and managed to deliver adequate fuel and lubricant resources to the USSR Armed Forces, thereby making a solid contribution to victory in the war. And all this despite numerous difficulties, despite the costs of the irrational and inefficient command-administrative economic system, and despite the incredibly difficult working and living conditions faced by the oil workers.
The Postwar Years
In the last year of the war, Soviet oil industry production was 77.8% of the 1940 level, greater than that of industry as a whole. A USSR CPC resolution dated March 25, 1945, “On the State Plan for Recovery and Development of the Economy in 1945,” called for a 9% increase in oil production that year. However, actual production performance for the year rose 6.5%, to 21.42 million tons of crude, which was still 37.5% less than in 1940.
Compared to the last prewar year, operational drilling in the USSR was down 62.4%; exploratory drilling had shrunk least of all compared to 1940, but even here, the drop was 25.6%. The decline in oilfield equipment output was particularly large: 1945 production was only 9% of the 1940 level, which is completely understandable, as machinery factories had been converted to make war materiel, and reconversion took time. All the same, the country did make a quarter more downhole pumps in 1945 than in 1940.
The country continued to experience a shortage of petroleum products. The USSR’s entry into the war with Japan and the waging of broad-scale hostilities against the Kwantung army required delivery of a large volume of fuels and lubricants.
During 1945, the Soviet government undertook a series of steps intended to increase oil production. On May 8, 1945, the State Defense Committee [GKO] adopted Resolution 8458 on the production of items for the oil industry by factories of the People’s Commissariat for Heavy Machine-Building. Accordingly, the Stalin Plant in Kramatorsk was ordered to make swivels, crown blocks, and tackle blocks; the Stalin Plant in Elektrostal was ordered to make reduction gears, rotors, and reversible transmissions; the Kuybyshev Plant in Irkutsk was ordered to make highspeed winches; and the January Uprising Plant in Odessa was ordered to make sucker-rod pumps.
On October 26, 1945, the USSR Council of People’s Commissars required the People’s Commissariat for Heavy Machine-Building [Narkomtyazhprom] to manufacture eight sets of drilling rigs at the Ural Machinery Plant, 15 winches for drilling to 9,800 feet at the Kuybyshev Plant in Irkutsk, and 150 sucker-rod pumps at the January Uprising Plant in Odessa, and to deliver them to the People’s Commissariat for the Oil Industry [Narkomnefti] by the end of 1945. Incidentally, the designers at the Ural Machinery Plant used diesel engines from T-34 tanks to power drilling rigs.
The country did not have enough oil for its economy, and so old-fashioned manual methods of production that required no capital investment or machinery and equipment came back into play. In 10 months of 1945, abandoned oil pits and wells in Baku District yielded 16,000 tons of oil using cottage-industry methods. This work in Baku District was done primarily by a few industrial cooperation enterprises that, in 1946, raised their oil production to 19,800 tons. In addition, besides “trap” crude, other Azerbaijan SSR entities outside the system of the USSR People’s Commissariat for the Oil Industry produced 51,300 tons by various means. Naturally, such cottage-industry methods yielded a very small share of total production, and would soon disappear from the fields.
As of January 1, 1946, the fixed assets of the USSR oil industry were estimated at 401.9 million rubles, making it the Soviet Union’s fourth biggest industry, after railroad transportation (864.2 million rubles), electric power generation (708.3 million rubles), and nonferrous metallurgy (420 million rubles).
Speaking on February 9, 1946 during the USSR Supreme Soviet election campaign at a rally for voters in Moscow’s Stalin Election District, Stalin set a new objective for the industry: “We must achieve a level where our industry can annually produce up to 55 million tons of pig iron, up to 66 million tons of steel, up to 550 million tons of coal, and up to 66 million tons of crude oil. Only then can we regard our Homeland as secure against any eventuality. This may take three more Five-Year Plans, if not more.”50
The head of the People’s Commissariat for the Oil Industry at the time, Nikolay Baybakov (1911–2008), recalled his reaction to the speech: “The next day, I called [First Deputy Prime Minister] Lavrenty Pavlovich [Beria] and asked him, ‘Who gave Stalin these figures? Are there any calculations, or not?’ ‘None of your business,’ Beria shot back. ‘What did the general secretary tell you? So go think and make those 66 million happen.’”
On March 18, 1946, the USSR Supreme Soviet enacted the Fourth Five-Year Plan, for 1946–1950. It called for an increase in oil production over the prewar level, to 39 million tons, only 14% more than in 1940. In reality, however, the Soviet oil workers were actually required to substantially increase oil production, because a goal 14% over the 1940 level was 82.5% over the 1945 level.
The Fourth Five-Year Plan also included targets for refining: “Develop the production of high-octane gasoline. Improve the quality of automotive gasoline, tractor kerosene, diesel fuel, and lubricants. Increase petroleum product yield from crude oil by reducing losses and extensively introducing catalytic processes and other latest methods of producing gasoline and technical oils. The Five-Year Plan requires construction of four new refineries and 16 refining installations. Three refineries are to be refurbished to provide petroleum products to agricultural and industrial regions of the South.”
In early 1946, the Fourth Five-Year Plan called for constructing a refinery with a total capacity of 9.7 million tons for primary crude processing and 6.63 million tons for cracking. To meet such an ambitious plan with the limited materials and equipment available, a great deal was required from all supervisors and rank-and-file workers in the industry.
Baybakov wrote in the journal Planovoye khozyaystvo [“Planned Economy”] in 1946 that: “In order to achieve oil production of 39 million tons in 1950, we must increase development drilling to 2.5 million meters [8.2 million feet] and exploratory drilling to 1.5 million meters [4.9 million feet] in 1950.”
In 1946, the average well depth in fields of the USSR Ministry of the Oil Industry of the Eastern Regions was 3,084 feet. Under the Five-Year Plan (the October 1946 version), this was to increase to 4,100 feet by 1950, and the number of wells in the ministry’s fields was to increase by 210%.
The first year of the Fourth Five-Year Plan brought the industry some success. Oil production in 1946 rose 12% for the USSR as a whole, and 26% in eastern regions. Total headway drilled (not counting enterprises of the NKVD or Main Gas and Synthetic Liquid Fuel Administration [Glavgaztopprom]) rose from 2.9 million feet in 1945 to 3.8 million feet in 1946.
Although oil production on the Absheron Peninsula remained nearly unchanged, Grozny District exceeded its plan targets. In late 1945 and in 1946, Grozny oil workers discovered new oil fields at Tashkala and Suvorovskoye, and new oil fields were also discovered in older areas. The Grozny oil fields produced 1.472 million tons of crude in 1946, 45% more than in 1945, fulfilling the plan by 109.4%.
In the first year of the Fourth Five-Year Plan, restoration of production at those refineries destroyed or evacuated during the war proceeded rapidly. In 1946, Aviation Oil Refinery 3 at Grozny was completely rehabilitated. But not all refineries could be restored so quickly. For example, in the 1941 evacuation of the Odessa Cracking Refinery, all equipment (primarily a two-furnace cracking and asphalt-vacuum unit) was removed, and all facilities of the refinery’s infrastructure were destroyed, including the raw-material, receiving, finished-product, and intermediate tanks.
Reconstruction of the Odessa Refinery began by 1944, though annual capital investments totaled only 70,000 rubles at the time. For 1945, the capital budget was set at 4 million rubles, but only 1.783 million rubles could actually be spent. In all, the refinery’s reconstruction would cost 27.5 million rubles according to figures from the time. Delays were due to, among other factors, late arrival of main equipment for installation (it could not be manufactured) and a shortage of materials and technical resources from the USSR state fund. Even by mid-1946, only three of the 67 major pieces of equipment needed for startup had been delivered. During the first months of 1946, only 5.7% of the stated amount of cement, 7.7% of refractory brick, 5% of round timber, etc. arrived for construction.
USSR Council of Ministers Resolution 1449 of July 2, 1946 ordered the complete reconstruction of the Odessa Refinery by the fourth quarter of 1947. However, due to outside factors, this could not be done until the fourth quarter of 1949.
Meanwhile, the country continued its strict fuel economy and conservation policy. Thus, already meager fuel consumption standards were lowered 4.95% in 1949 and 4% in 1950. Given the ongoing shortage of motor fuel, the USSR started deriving fuel from nonpetroleum sources. In the fall of 1948, it commissioned a gas shale plant at Kohtla-Jarve, Estonian SSR, and it continued construction of a gas shale plant in Slantsy, Leningrad Region (commissioned in 1952). In 1946–1947, it began construction of the Angara Synthetic Products Works and the Novocherkassk Synthetic Products Plant. Somewhat later, it began construction of the Salavat Petrochemical Works. These plants were to produce liquid fuel from coal using German equipment obtained as part of reparation payments.
Although the USSR’s Five-Year Plan was adopted in March 1946, the prewar practice of “correcting” plan targets was resumed just a year later. Since the industry was developing successfully in 1947, state planners began developing tougher oil production targets for 1950. At the start of 1947, the State Planning Committee proposed increasing the 1950 oil production target from the original 39 million tons to 41 million tons. A new “correction” soon followed; in the spring 1947 version of the Plan, the 1950 oil production target had been revised upward once again, to 44 million tons.
Thanks to the selfless labor of Soviet oil workers, 1947 oil production rose by a quarter (25.4%) over the prior year, to 29.93 million tons. These positive rates were achieved by increasing development drilling rates, which approached the 1940 level, and through exploratory drilling, which exceeded the prewar level by 50%. These rates allowed additional development of dozens of new fields, areas, and formations in various parts of the USSR. The year 1947 saw a further rise in production for eastern regions, whose share of national oil production nearly tripled by year’s end.
Geologic surveys in the Stalingrad Region revealed the Archeda, Saush, Vetyutnev, Verkhovka, and other oil and gas structures. In November 1948, a crew working under foreman Idris Altynbayev completed Archeda Well 4, which yielded the first inflow of oil, and on July 12, 1949, Zhirnoye Well 1 was commissioned, marking the beginning of commercial oil production in the Stalingrad Region.
New fields were also opened in other parts of the country, including the Azerbaijan SSR. In 1947, the Gurgan offshore field was discovered in the Caspian, followed in 1949 by the soon-to-be-famous Neftyanyye Kamni [“Oil Rocks”], and then in 1950, Darwin Bank.
In addition to the restoration of facilities in the production industry, the issue of transporting crude oil and petroleum products was likewise an acute problem. Nearly 90% of all crude oil from the eastern regions was transported to refineries by rail. The heavy workload of the railroads prevented additional shipments of crude oil and petroleum products, causing interruptions in oil exports and in many cases wells had to be shut in. Ongoing growth in oil production would exacerbate transportation problems even further, and for this reason, a decision was made to accelerate pipeline construction.
In 1947, the Main Crude Oil and Petroleum Products Sales and Transportation Administration [Glavneftesbyt] began the design and construction of a network of new petroleum products pipelines. Oil supplies were improved by refining Sakhalin crude on site and the continuous transportation of Sakhalin crude to the mainland via the Okha– Komsomolsk-on-Amur pipeline, as well as by refining Volga-Urals crude at the point of production and constructing new refineries in Siberia to manufacture all types of petroleum products. All this enabled the Urals, Siberia, and the Far East to be supplied with petroleum products without having them hauled from the south (Baku, Grozny, Turkmenistan).
In 1950, nearly all the equipment needed by the oil industry was made in the USSR. It was supplied by awide array of Soviet ministries, including the Ministries of Heavy Machine-Building, Armaments, Transportation Machine-Building, Machine Tools, Electrical Industry, Automotive and Tractor Industry, Means of Communications, Construction and Road Machine-Building and Instrument-Making, Railroads, etc.
Table 11. USSR Oil Production by Year, in millions of tons
Source: Economy of the USSR [Narodnoye khozyaystvo SSSR]. Moscow, 1959, p. 205.
By 1950, well drilling speeds had grown substantially thanks to the use of new technologies. The number of operational drilling rigs had grown from 322 at the start of 1946 to 1,019 in 1950, with each rig making more headway than before. Thus, by 1949, Tuymaza Petroleum [Tuymazaneft] required roughly 70 days to drill a well; about half of what it had taken only a few years earlier. By 1950, the speed of exploratory drilling for the USSR Ministry of the Oil Industry as a whole had more than doubled compared to 1935. For example, in 1949, Buzovyazy Petroleum [Buzovyneft] completed a 6,190-foot well in 16 days. Wooden derricks were a thing of the past, replaced by prefabricated metal structures. Whereas a crew of seven took an average of 10 days to install drilling equipment in 1935, by 1950 that crew could do the work in only three to three-and-a-half days.
In fact, more headway was drilled in 1950 than planned (14 million feet, as opposed to 13 million), but the ratio of development drilling to exploratory drilling was not what Minister Nikolay Baybakov had envisioned in 1946: development drilling amounted to 7,071,194 feet, while exploratory drilling was much greater than originally planned—6,979,331 feet. Furthermore, the volume of turbodrilling had risen from 7% in 1945 to 24% in 1950.
At Tuymaza field in 1946, at the suggestion of the noted petroleum geologist Georgy Maksimovich (1904–1979), edge flooding, an effective new method of stimulating oil production, was introduced for the first time in the USSR, and this process was mastered in two years. The Americans, incidentally, had begun to develop edge flooding earlier, in 1936, and had implemented it on an industrial scale in 1942. For the Soviet oilmen, however, the method was not a simple borrowing, and as the noted scientist Professor Vladimir N. Shchelkachëv (1907–2005) wrote, “quite a few fundamentally new things” were introduced. His detailed analysis of edge flooding technology showed that the engineering and organizational implementation of the idea was very original, and made possible only by Russia’s fairly high scientific and technical potential.
The government did not overlook the hydrocarbon resources of the Far East, either. On August 19, 1948, the USSR Council of Ministers adopted a resolution, “On Measures to Develop Oil Production on Sakhalin Island,” which guided the sharp growth in production from 838,000 tons in 1948 to 2.2 million tons in 1952.
In addition to an extensive series of engineering and technical measures, the industry carried out several steps to find the optimal administrative structure. On March 4, 1946, the People’s Commissariat for the Oil Industry was split in two, into the People’s Commissariat for the Oil Industry of the Eastern Regions and the People’s Commissariat for the Oil Industry of the Southern and Western Regions. On December 28, 1948, however, these agencies were reunited into a single USSR Ministry of the Oil Industry. In addition, the government created a specialized Ministry of Construction of Fuel Enterprises to support oil industry construction and assembly operations.
In the first postwar Five-Year Plan, the RSFSR surpassed the Azerbaijan SSR by producing 20 million tons to the latter’s 16.3 million, thus taking first place in oil production among USSR republics. This was owed primarily to the Volga-Urals region—the “Second Baku”—which had greatly accelerated its oil production.
Overall, the period of the Fourth Five-Year Plan (1946–1950) should be considered successful for the Soviet oil industry. The industry resumed operations, upgraded fields and enterprises, prepared infrastructure for further development of its pipeline network, and surpassed the prewar oil production level through accelerated development of the Volga-Urals region.
The Oil Heights of the “Second Baku”
Directives issued by the 19th AUCP(b) Congress for the USSR’s Fifth Five-Year Plan (1951–1955) called for approximately a 70% increase in the country’s industrial production over 1950. Party leadership devoted particular attention to the development of the oil industry: crude production was to grow at an even more impressive rate of 85%, to 86.25 million tons, by 1955.
In order to meet targets and ensure substantial growth in oil production, Soviet oil producers had to resolve several serious issues related to the exploration, development and construction of new oil fields in the Volga-Urals oil and gas province, which on a map covers a vast triangle of land between the cities of Kirov, Molotov (Perm), Chkalov (Orenburg), and Saratov, an area much bigger than the European nations of France or Germany.
Preliminary projections by the country’s leading scientists and specialists on the enormous hydrocarbon resources of the province, which was justifiably called the “Second Baku” in the national press, made quite an impression on Soviet Party leadership.
Favorable economics and geography were two of the main components that played a major role in the Soviet government’s strategic decision to accelerate the development of the Volga-Urals province. This was because the “Second Baku” had exceptionally favorable economic and geographic factors working in its favor, seeing as how it was located between two of the country’s largest industrial bases (the central economic region and the industrial Urals region). Oilfield equipment and machinery could be brought to the region without excessive expense or cost, production areas and settlements for oil workers could be equipped quickly, and crude oil and petroleum products could be transported efficiently to primary areas of consumption. The region also had a favorable climate in which to live and work. Finally, natural geographic factors—namely, high well flow rates, the excellent consumer properties of the Devonian crude, and its enormous reserves—served as a powerful argument in favor of the rapid development of the “Second Baku.”
A USSR Cabinet of Ministers Resolution of April 28, 1950, “On Measures to Accelerate the Development of Oil Production in the Tatar ASSR,” played a decisive role in the early phases of addressing this important economic challenge. The resolution established the following objectives: creation of a new national oil base in this region, acceleration of oil production rates within a new organizational framework, and completion of a targeted volume of drilling and exploration, as well as the construction of production, housing, and cultural facilities. The Tatneft Association was set up as a joint entity composed of the Bavlyneft and Bugulmaneft oil production trusts, the Tatburneft drilling trust, the Tatneftpromstroy construction trust, and the Tatneftprodukt design office.
Several ministries and agencies were involved in the program to accelerate development in the new oil producing region, which had received the undivided attention of Party, Soviet, and economic agencies throughout the country’s regions and republics, as well as wide segments of Soviet society. Program objectives covered several equally important areas, but the most complicated aspects were providing the oil production industry with skilled engineers and personnel, developing a proper technical policy to maintain a high rate of drilling and meet oil production targets, creating a strong logistical and production infrastructure, and setting up necessary housing and living conditions for oil workers. During the early development stages of the Volga-Urals province, personnel problems were solved mainly by sending in oil workers to Tatarstan from older oil regions such as Grozny, Krasnodar, Sakhalin, and Baku.
In an effort to step up the construction of Tatneft’s field and energy resource base, the USSR Cabinet of Ministers passed a resolution in March 1951 that, among other tasks, called for the construction of Tatneft housing, as well as oil tank farms, turbodrilling bases, and several other necessary facilities. Four hundred skilled construction specialists and some 1,000 workers were sent to work at oil facilities in the Tatar ASSR on the basis of this resolution.
The discovery of the enormous Romashkino field provided a powerful incentive for the further expansion of geologic exploration in the Volga-Urals region. The top priority was to sharply increase exploratory drilling rates, continue the transition of drilling equipment from diesel power to electricity, and expand the use of turbodrilling (its volume was to grow from 24% to 70%), thus lowering the cost of drilling wells. Oilfield production also called for expanded use of methods for maintaining formation pressure and producing secondary oil.
In addition to the Ishimbay and Tuymaza fields, other large fields were discovered and successfully developed in the Bashkir ASSR during this period, including the Shkapovo, Chekmagush, Mancharovo, and Arlan fields. Two geologic exploration trusts had been set up somewhat earlier, on the basis of the Bashnefteradvedka trust, and these expanded exploratory work throughout the entire Birsk Basin. Exploratory drilling in the republic amounted to 10.5 million feet from 1951 to 1960, a fivefold increase over the previous decade. Incidentally, the Bashkir drillers were among the first in the USSR to use electric downhole drills. The successful resolution of organizational drilling problems enabled workers to develop oil fields at a faster pace.
The Soviet government maintained constant control over operations in the Volga-Urals oil and gas province. In a resolution “On the Accelerated Development of the Oil Industry in the Tatar ASSR and Bashkir ASSR,” dated July 19, 1952, the USSR Cabinet of Ministers noted the high growth rates in crude output in the region and set a goal of developing oil production at an even more accelerated pace, to attain 16.5 million tons by 1955 instead of the previously planned 7.7 million tons. To achieve this goal, the Soviet government sought out the necessary logistical resources.
To implement the government’s resolution, the Almetyevburneft drilling trust was set up within Tatneft, along with Almetyevneft, Tattekhsnabneft and Tatnefteprovodstroy subdivisions. The Tatneftegeofizika trust was set up that same year and performed a large amount of geophysical work. Utilizing the efforts of its enterprises, Tatneftegeofizika organized geophysical field research in addition to oilfield research.
Upon Stalin’s death in March 1953, Nikita Khrushchëv (1894–1971) assumed leadership of the country following several months of behind-the-scenes political infighting. Instead of a rigid command system of management and the subordination of everything to the center, some powers gradually began to devolve to local authorities and organizations. This policy of greater independence for economic entities, in turn, led to an increased rate of growth in oil industry development.
Thus, a fundamentally new approach was taken to develop and further exploit oil fields in order to meet the goal of accelerating oil and gas industry development in the “Second Baku” over an unprecedentedly short period.
The most respected Soviet oil industry scientists and specialists were invited to work in the Volga-Urals region, and industry research centers were set up with their participation. After encountering the unique Volga-Urals province, which was not at all like the older oil producing regions, the scientists proposed fundamentally new and more efficient methods of field development that would stand the test of time and enrich the engineering and technological heritage of the country’s oil industry. It was during this period that the method of formation-pressure maintenance came into use, significantly reducing the number of wells that needed to be drilled, considerably increasing total oil withdrawal, and sharply cutting production costs. The widespread use of edge waterflooding, as well as the growth of cities and worker settlements, however, made the problem of water supply a top priority. A massive search began throughout the region to find and utilize water resources as well as to manage supplies of water to industrial facilities and the public.
These groundbreaking methods and new technologies considerably accelerated the process of putting new fields into operation, increased the volume of recoverable resources, and lowered production costs. The initial gamble on the natural geologic component was thus complemented by engineering and process achievements, which resulted in more rapid and efficient development of the region.
The unique raw-materials base of the Volga-Urals Province was developed with a high level of efficiency. The production cost of a ton of Volga-Urals crude, for example, was much lower than in other regions. Whereas in the early 1960s crude cost 7.43 rubles per ton in Azerbaijan, 5.38 rubles in Krasnodar Territory, and 4.23 rubles in the Turkmen ASSR, the cost in the “Second Baku” fluctuated from region to region, between 1.33 rubles in the Tatar ASSR and 3.74 rubles in the Orenburg Region. With the cost of transporting Volga-Urals oil to the consumer much less as compared to other regions, the benefits were obvious.
The most complicated production task was arranging for the transportation of crude to refining sites. The only way to resolve the problem was to build a network of field and trunk oil pipelines, which led to the creation of the Tatar Oil Pipeline Administration in Bugulma, which was later turned into the Northwest Oil Pipeline Administration.
Table 12. USSR and Volga-Urals Oil Production by Year, in millions of tons
Source: Maltsev, N. A., et al. The Russian Oil Industry in the Postwar Years [Neftyanaya promyshlennost Rossii v poslevoyennyye gody]. Moscow, 1996, p. 84.
Organizing the collection and efficient use of associated gas produced along with crude was an important and difficult part of oilfield development. Tatneft began working in this area virtually from its inception. Construction began on the 160-mile Minnibayevo–Kazan gas pipeline in 1951. The Minnibayevo Gas and Gasoline Plant was built to process associated gas, with the first phase of the plant coming on line in 1957. Oil production trusts set up specialized gas collection departments. From the beginning, gas was supplied to urban populations and to oil worker settlements.
Table 13. Total Volga-Ural, Tatar ASSR, and Bashkir ASSR Oil Production by Year, in millions of tons
Source: Maltsev, N. A., et al. The Russian Oil Industry in the Postwar Years [Neftyanaya promyshlennost Rossii v poslevoyennyye gody]. Moscow, 1996, p. 84.
The rapid development of oil fields, however, led to a rise in the ratio of oil produced by natural drive, from 33% in 1950 to 58% in 1958. The increase in production by natural drive, in turn, resulted in higher average well flow rates. The average flow rate in 1955 was 125% of the 1950 level. Unfortunately, the growth of natural-drive oil production was not accompanied by the development of methods and equipment to make further use of fields after formation pressure had subsided. This approach resulted in wells that could not operate after cessation of natural-drive production and which would at times be reclassified as inactive. The use of these methods also disrupted the environment. However, Soviet leaders did not consider the opinions of those scientists and specialists who were opposed to the use of such oil production methods, since the most important result for Party officials was increasing production volumes, no matter what the cost.
Regardless of concerns about these methods, it is clear that they were effective: In 1956, Tatneft produced 19.84 million tons of oil, becoming the number one oil producer in the Soviet Union.
The battle for “big” Soviet oil was just as intense in other regions of the Volga-Urals oil and gas province. Whereas oil production totaled only 552,000 tons in the Molotov (Perm) Region in 1950, 10.5 million tons of oil were extracted between 1951 and 1960 following the development of the Yarina–Kamenny Log field and several other fields. In 1957, Perm oil workers produced the one millionth ton of oil, and in 1960 the two million mark was reached in the Kama River Valley.
Another large oil field, Bakhmety evo, was discovered in the Stalingrad Region in 1951, just north of Zhirnovsk, and put into operation in 1955. Klënovka field was opened in 1962. These three fields determined the oil output level at the Zhirnovsk Oil and Gas Production Administration for most of the next 45 years. By 1955, the region had already caught up with several older oil-producing regions in the country in terms of crude production and occupied seventh place in the USSR. Before long, the unique Korobkovo oil and gas field was discovered and turned out to be the largest in the oil and gas history of the Volgograd Region. Twelve productive oil and gas formations were uncovered in the section of this field in the depth interval from 650 to 5,750 feet. Production testing began in September 1955, and by the end of that year, the section had produced more than 1,100 tons of oil and 145 million cubic feet of associated gas. On December 29, 1955, the independent Korobkovo oil field was created.
The average annual growth in oil production in the Volga-Urals oil and gas province from 1950 to 1965 was more than four times higher than the combined output of the Azerbaijan SSR, the North Caucasus, Ukraine, Georgia, the Central Asian republics, the Komi SSR, and the Sakhalin Region. The explicit use of innovative approaches to meeting complex production challenges was instrumental in the efficient and rapid development of the “Second Baku” from its first days of operation, and as a result, oil production increased 62-fold over a 20-year period.
A powerful oil base was thus created in the Volga-Urals region, producing 78% of the country’s total oil supply. The center of the USSR oil industry moved from the southern part of the country to the Volga-Urals region. Petroleum products from the regional branches of the “Second Baku” were shipped to Kazakhstan, Siberia, the Far East, and elsewhere. Transportation expenses amounted to several billion rubles each year. In an effort to lower costs, the Tuymaza–Omsk 2, Omsk–Irkutsk, Ufa–Omsk 2, and Novosibirsk–Irkutsk pipelines were planned to come online between 1956 and 1960.
More targets were set for the USSR oil industry at the 20th CPSU Congress in 1956. Directives issued by the Congress called for a significant increase in the oil industry’s growth rates compared to several other heavy industries. Oil production was to grow by 91% over five years to 149 million tons in 1960, while the production of light petroleum products and lubricants was to increase by 100% and 80%, respectively. According to Party directives, proven oil reserves were to increase 65–70%, while proven natural gas reserves were to grow 85–90% compared with the figures from the first half of the decade. The “Second Baku” once again bore the brunt of meeting the targets.
In summarizing the impressive accomplishments of Soviet oil workers in the Volga-Urals region during this period, special mention should be made of the significant contributions made by the talented production organizers Aleksey Shmaryov (1913–1993) and Valentin Shashin (1916— 1977), who were directors at Tatneft, as well as Bashneft association Director Stepan Kuvykin (1903–1974).
Thanks to the Volga-Urals oil and gas province, oil production plans that seemed inflated or unrealistic to some scientists were not only fulfilled but exceeded. The production target of 66 million tons, announced by Joseph Stalin in 1946 for the three postwar five-year periods, was met and exceeded within ten years. By 1960, when this figure was originally supposed to have been reached, oil production had exceeded Stalin’s plan target by almost 150% and amounted to 163 million tons.
The accelerated creation of a reliable energy system, transportation routes, and machine-building industry coincided with the development of oil production and refining in the Volga-Urals region. The oil industry was essentially the foundation for creating a complex industrial infrastructure in regions that had previously been predominantly agrarian. An engineering and scientific elite took shape at this time, and skilled personnel were trained for professions that had previously been under-manned.
Over the next twenty years, the Soviet Union steadily increased its share of global oil production (from 5.5% in 1945 to 16% in 1965), remaining firmly in second place throughout the world (behind the US), and was Europe’s top oil producer by a large margin. Particular mention should be made of the fact that oil production grew at a much faster pace during this period than did the economy as a whole. In addition, the USSR fuel balance had undergone significant changes: oil and gas accounted for 42.4% in 1962, as compared to 23.5% in 1955.
The Great Western Siberian Oil Saga
Serious changes in USSR Party leadership took place in fall 1964. On October 14, the Plenum of the CPSU Central Committee accused leader Nikita Khrushchëv of “a breach of collegiality and collectivity in leadership, a disregard for the views of comrades, the revival of a ‘cult’ atmosphere, and the destabilization of the country’s overall situation as a result of ill-conceived reforms and the frequent replacement of personnel” and relieved him of all Party and government positions “due to advanced age and deteriorating health.” Leonid Brezhnev (1906–1982) was elected general secretary of the CPSU Central Committee, while Aleksey Kosygin (1904–1980) was appointed chairman of the USSR Cabinet of Ministers.
The decision to dismiss Khrushchëv was met with almost unanimous approval throughout Soviet society, and by some with great joy. He was no doubt a highly controversial political figure, but as Mark Frankland, a prominent American Sovietologist, accurately noted: “Khrushchëv could say with a clear conscience that he left affairs in the government in better shape than they were when he took over.”51
From the start, the new Soviet leadership demonstrated a determination to implement a new policy that sought to ensure the sustainable development of the country’s economy on the basis of scientific and technological progress, together with the universal and complete use of the energy and enthusiasm of labor collectives.
As part of the 1965 economic reform led by Cabinet of Ministers Chairman Kosygin, oil industry management underwent significant changes. Under the reform, management was to focus on the sector principle and create an environment in which a region’s development pace could be regulated depending on the economic efficiency of developing fields in that region. The Ministry of the Oil Industry (Minister Valentin Shashin) and the Ministry of the Gas Industry (Minister Aleksey Kortunov) were established on October 2, 1965, and put in charge of creating industry regulations and systems to boost oil industry output as well as to manage and improve planning. In addition to manufacturing companies, all scientific research and design organizations working on solutions for oil industry problems were incorporated into the Ministry of the Oil Industry.
Under directives from the 23rd CPSU Congress in 1966, oil production was to increase to 380–390 million tons by 1970. In order to meet this target, roughly 230 million feet of hole were to be drilled, to an average drilling depth of 8,200 feet. There were also plans to increase the volume of primary refining and the production of light petroleum products by 40–50% and to increase lubricant output by 40%.
The prospects for such a significant increase in oil production volumes in the USSR were linked above all to Western Siberia. Geoscientists estimated that this region, which contained an enormous oil province covering more than 775,000 square miles, at that time had probable reserves comparable with the Volga-Urals oil province.
There was a solid foundation for these projections, as several remarkable discoveries had been made in the Ob River Valley by this time. On September 25, 1959, the first oil flow of Western Siberia was generated by a drilling crew under foreman Semën N. Urusov. The flow rate was not particularly high, but the most important thing was that Western Siberian oil had finally become a reality. On October 4, the newspaper Tyumenskaya pravda [“Tyumen Truth”] reported the event as follows: “On September 25, an oil-bearing formation was discovered at a depth of 1,405 meters [4,610 feet] at the Mulymya structure near the village of Shaim with a daily flow rate of more than one ton of light oil, according to preliminary data.... Considering that the village of Shaim is located 174 miles from the village of Maly Atlym, where oil was also discovered, huge prospects can be expected for the first oil-bearing region in Siberia. The Tyumen Region will become the new Soviet Baku in the near future!”
The news of the first oil flow in Western Siberia led to the promulgation of an important government resolution. On March 20, 1960, the USSR Cabinet of Ministers passed Resolution 241, “On Urgent Measures to Boost Construction in the Area of the Western Siberian Oil and Gas Complex,” which outlined guidelines for the large-scale industrial development of the Western Siberian region.
Meanwhile, work was still underway at the Mulymya structure. The next well drilled there, Well 7, produced more impressive results on April 25, 1960, with a daily flow rate of 13 tons of oil. Semën Urusov’s crew began drilling yet another new well, which three months later would go down in history.
Scientists, geologists and industry officials had been impatiently waiting for commercial Siberian oil. Finally, on June 21, 1960, Mikhail Shalavin, the leader of the Shaim oil and gas expedition, sent a radiogram to Yury Ervye, director of the Tyumen Territorial Geologic Administration, with the following message: “Well R-6 flowed through the 5-inch casing string without flow tubing through a 4-inch valve into an earthen pit. The earthen pit has a capacity of 350–400 cubic meters [12,360–14,125 cubic feet]. After the well bottom was perforated and oil replaced the service water, the well flowed periodically at 385–550 tons per day. It is impossible to give an exact flow rate because the well had to be shut down twice for technical reasons. The earthen pit is almost full of oil now. I will report the pressure later.”52
Along with Mikhail Shalavin and Semën Urusov, this joyous event was also shared by chief engineer Vladimir Sobolevsky, transportation engineer Aleksandr Krivonogov, and drillers V. Shidlovsky, L. Raspopov, V. Teterevnikov, N. Peshkov, among others. Per tradition, the oil workers washed their hands in the oil and smeared it on each other’s faces. Well 6 became famous throughout the country, and not just because it represented the opening of the Shaim field but because it was the pioneering well of all Western Siberian oil.
Two days after the well began to flow, academician Andrey Trofimuk (1911–1999), director of the Geology and Geophysics Institute of the Siberian Branch of the USSR Academy of Sciences, said: “This is the first big oil in Siberia with commercial potential.... Until now, there have been skeptics among geologists who did not believe in the prospects for our regions. Now everyone will move from disputes to action.... Perhaps, most importantly, the significance lies in the fact that Shaim oil is of high quality and has low sulfur, which indicates its superiority to oil from the Volga-Urals region.”53
Yury Ervye (1909–1991), director of the Tyumen Geologic Administration, recalled the important details of this significant event: “Well 6 was the third well sunk as part of the search for oil in the Shaim area. Its location was established by seismic data that showed a line of deposit and the possible accumulation of fossil fuels, the so-called reservoirs of the downthrown part between the Mulymya and Tri Ozera structures. Like the previous two wells, this well was drilled by the crew of experienced foreman Semën N. Urusov. Drilling to a depth of 1,523 meters [4,997 feet] was completed in 18 days. A 12-meter [39-foot] thick layer of oil sandstone was discovered at a depth of 1,488 meters [4,882 feet]. Perforation began on June 17 and signs of oil were seen after the first shot. The well began to flow on June 18. According to preliminary calculations, Well 6 has a daily flow rate of 385 tons by natural drive.”54
During the next year (1961), several impressive events occurred in the history of the region’s oil industry. On March 21, a powerful oil gusher was obtained from exploratory Well 1, with a daily flow rate of 440 tons. The well had been drilled near the village of Megion by the crew of drilling foreman Grigory Norkin from the Nizhnevartovsk section of the Surgut geologic exploration expedition and given the name Megion. On October 15, light crude began to flow at a daily rate of more than 110 tons from Well 28, which had been drilled by Semën Urusov’s crew and was located in the Mortymya area northeast of Shaim field. On the same day, Well 62, which had been drilled by Yevgeny Voytsekhovich’s crew in the Ust-Balyk area, started to produce oil at a rate of over 220 tons per day. By the end of 1961, five oil fields and 12 gas fields had been added to the map of the Tyumen Region.
On May 19, 1962, the USSR Cabinet of Ministers passed a resolution, “On Measures to Boost Geologic Exploration for Oil and Gas in the Regions of Western Siberia.” The resolution set an objective of preparing the main formations of the Ust-Balyk, Megion, and Shaim fields for development.
Speaking at the second session of the Supreme Soviet of the USSR on December 12, 1962, Boris Shcherbina (1919–1990), a deputy from Tyumen Region, stressed: “Thirteen gas fields and four oil fields have opened on the region’s territory. The discovery of the Tyumen oil and gas region, whose reserves exceed all known reserves in the country, is an enormous event in scientific and geologic exploration which deserves the highest praise.”55
In addition, in 1962 the Tazov gas field was discovered in the polar region of Western Siberia, quickly followed by the discovery of the Novy Port, Gubkin, and other gas fields, thereby expanding the borders of the Western Siberian oil and gas province even further.
The recoverable reserves of what one might call a typical oil field opened in Western Siberia in 1961 and 1962 exceeded 330 million tons. Based on the classifications used in Soviet years, a field with recoverable reserves of more than 330 million tons was classified as “unique.”
The Western Siberian fields considerably exceeded existing raw material bases (Volga-Urals region, Absheron Peninsula, North Caucasus, etc.) in terms of quality and quantity of reserves. The most notable features were the extremely high flow rates of exploratory wells and, even more important, of the production wells. During this time, wells with flow rates of roughly 110 tons per day were more the norm for Siberian oil workers than an exception. In addition, these unique oil reserves were contained at fully accessible depths ranging from 5,900 to 8,200 feet. It is important to note that all Ob Valley oil exhibited excellent chemical composition and operational performance and was relatively light, with an acceptable level of viscosity and low sulfur and paraffin content.
There was, however, one problem. This abundance of “black gold” was located in extremely harsh geographic and climatic conditions with no infrastructure whatsoever. Up to 70% of the basin territory (and frequently the most interesting areas) was covered with virtually impassable swamps. Geologists could only work there during the winter when most (but not all) of the swamps had frozen and could withstand the weight of heavy machinery. In addition to strong squally northern winds, drillers and geophysicists had to work in temperatures of –22°F (occasionally dropping to -58°F). All this work was performed under wild, uninhabitable conditions without any form of utilities, infrastructure, or communications.
Still, the discovery of the large oil and gas fields in the Mesozoic strata, as well as the promising oil and gas potential of the Western Siberian plain, particularly in the northern parts of Tyumen Region, allowed the Soviet government to raise the issue of creating a new oil-and-gas base for the country in this region that would be comparable to the Volga-Urals Oil and Gas Province. And so on December 4, 1963, the USSR Cabinet of Ministers passed a resolution, “On the Organization of Preparatory Work for the Industrial Development of Known Oil and Gas Fields and the Further Development of Geologic Exploration in Tyumen Region.”
The leaders of the country’s ministries understood that pursuing the Western Siberian fields would require a major increase in investment in the oil industry initially and then in the gas industry; however, it was obvious that such an investment in Western Siberian oil and gas would be highly efficient and provide immediate returns. Officials also considered the possibility of increasing investment in Western Siberia with export revenue.
The government decided to focus its efforts on the largest and most unique oil and gas fields, at least for the first few decades, which would make it possible to significantly reduce capital investment in the industry and ensure a quick return on investment. In developing the largest fields, the government hoped to ensure a major increase in fuel production while keeping expenses “per 1,000 cubic meters [35,315 cubic feet] of gas and per ton of oil... no higher than the national average.”
The fact that the unique Tyumen fields were located in relative proximity to a zone of centralized fuel consumption (primarily the Urals) would also result in significant savings. This factor would lower transportation costs to a certain degree (the fuel route from the northern areas was 620 miles shorter than from Central Asia), but the most important factor was that large industrial bases could be quickly supplied with crude hydrocarbons that were cheaper than other types of fuel. There would follow a reduction in industrial production cost and a positive effect throughout the national economy. Finally, a proposal was made for the widespread use of labor performed on a rotation basis to lower the capital intensity of developing the Western Siberian oil and gas province. The issue of building future cities would be considered later, i.e., once oil and gas production in Western Siberia could provide the required financial revenue. However, the Tyumen Regional Committee was insisting on rapid social infrastructure development in the east-west Ob River Valley and in the north, forcing oil and gas officials to try to defuse this issue. Minister of the Gas Industry Aleksey Kortunov (1907–1973), in particular, defended the use of labor performed on a rotation basis. He maintained that this method would avoid major expenses on facilities for workers’ families and allow rotation workers to be mobilized to meet maximum production targets. He also believed it was much easier to set up and provide supplies to small rotation camps than it was to build large cities in the taiga and beyond the Arctic Circle.
Proponents of the rapid development of Western Siberia within the Soviet government also drew attention to strategic, or rather political, considerations. Becoming a large exporter of raw hydrocarbons would not only bring the country significant hard-currency income, but also provide it with additional levers of economic influence throughout the world. Many Soviet economists realized that the era of cheap Middle Eastern oil and uncontrolled economic management by transnational oil companies was coming to an end and that the onset of a global energy crisis was becoming a reality.
Tyumenneftegaz Production Association was set up in January 1964 and put in charge of developing the hydrocarbon resources of Western Siberia. The first director of the new association was Aron Slepyan, who had previously worked at Bashneft. Vitaly Timonin, a specialist from Tatneft, was appointed chief engineer.
The association was given its first specific short-term targets for oil production: 110,000 tons in 1964 and 220,000 tons in 1965. By 1970, oil production was to rise to 11 million tons.
Tyumenneftegaz was soon transformed into the Main Tyumen Oil and Gas Production Administration [Glavtyumenneftegaz] and put under the control of Viktor Muravlenko (1912–1977), a well-known oil specialist and former director of the Middle Volga Regional Economic Council’s oil administration.
The development of the largest oil and gas fields in Western Siberia was considerably constrained by the harsh climate (colder than –40°F), the absence of any social or transportation infrastructure, and the remoteness of the oil and gas fields from industrial areas. Therefore, employing traditional methods of development, planning, and use to the Western Siberian oil and gas fields risked extremely high financial and material expenses, which in turn could cast doubt on the feasibility and economic viability of widespread extraction of raw hydrocarbons. It was clear that other solutions were needed, together with unconventional new approaches to the development and exploitation of complex oil and gas fields, in order to resolve these challenging problems.
A decision was made to set up the Main Scientific Research and Design Institute for the Oil and Gas Industry [Giprotyumenneftegaz] in Tyumen to provide design and engineering support. An industrial institute was also created in Tyumen to prepare engineering personnel. On January 8, 1964, RSFSR Minister of Higher and Secondary Special Education V. Stoletov signed a decree “On the Organization of an Industrial Institute in Tyumen.”
A government delegation led by Nikolay Baybakov (1911–2008), chairman of the State Committee for the Oil Production Industry under the USSR State Planning Committee, traveled to Tyumen Region in early January 1964. Not long after his visit, on January 30, the Regional Economic Council of the Middle Urals Economic District set up three new oilfield administrations within Tyumenneftegaz: Surgutneft, Igrimgaz and the Shaim consolidated field.
Each year, additional skilled oil specialists came to work in the Western Siberian oil industry from the Bashkir ASSR, the Tatar ASSR, and the Kuybyshev Region. In 1965, utilizing the experience of these specialists, Glavtyumenneftegaz drew up a program that focused primarily on the industrialization of well construction, the introduction of modular platforms, the creation of all-terrain vehicles for the transportation of drilling rigs, solutions to the problem of building and installing drilling rigs in flooded zones and swamps, the simplification and unification of installation diagrams, and improved forms of labor organization.
On March 23, 1964, the drilling of Well R-91 resulted in the discovery of the South Balyk oil field. The development and exploitation of the Megion, Ust-Balyk, Shaim, Tri Ozera, and West Surgut fields began in March 1964. In addition, eight oil fields and two gas fields were opened in the region in 1964. All told, a total of 27 oil fields were discovered in the region from 1961–1964.
An important date in the history of the development of Western Siberia was April 3, 1965, when drilling at Well R-240 led to the discovery of the Mamontovo oil field. The well had a daily oil flow rate of 7,063 cubic feet. On May 29, Well R-1 produced 10,595 cubic feet, at a depth of 6,965–6,988 feet. Within 24 days, on June 22, following the reperforation of the entire pay zone, the well produced a powerful flow of pure oil at a daily rate of 35,315 cubic feet, which officially opened the enormous Samotlor oil field. The final touch was put on this milestone year when a crew from the Ust-Balyk drilling office, led by foreman M. I. Sergeyev, set a new Soviet record. The crew drilled Well 523-bis in 64.5 hours, reaching a commercial drilling rate of 46,145 feet per rig per month, surpassing a previous record by 3,373 feet.
Oil industry officials were obviously thrilled with the discovery of new fields and oil gushers, but a problem soon arose: what to do with the oil produced? The commercial volumes of oil produced at the Shaim field were initially transported by water. On May 23, 1964, Tanker 652 (Captain Konstantin Tretyakov) became the first tanker to load Shaim oil at the Sukhoy Bor oil terminal on the Konda River, and regional media reported extensively on the tanker’s journey along Siberian rivers to Omsk. On June 4, the tanker arrived safely at the terminal of the Omsk Refinery and started unloading.
However, with a navigational season of only 120–140 days on the Ob and Irtysh Rivers, the river transportation system could not handle the delivery of oil produced at the Shaim consolidated field.
The inability to deliver large volumes of Western Siberian oil to the country’s refineries was the biggest problem in the development of this region. For this reason, the development of the Western Siberian fields marked the start of the creation and rapid construction of a trunk pipeline network. Soviet leadership understood that oil production in Western Siberia could not be increased quickly without developing a corresponding transport infrastructure. With the center of oil production shifting to Western Siberia, geographic limitations made it more difficult to locate oil production and refining facilities—which were concentrated in the European part of the country, southern Siberia, and Central Asia—in conformance with a policy that called for large refineries to be constructed in areas of high consumption. Therefore, the government, in addition to setting targets for increased oil production, decided to build pipelines as the most economical and technically sound method of transporting oil.
The Moscow-based Main Pipeline Design Institute [Giprotruboprovod] found a practical solution to this problem in early 1964. Field expeditions led by directors Valery Demosfenov and Khaydar Manerov managed to design a pipeline route that was significantly shorter than that envisioned in the project specifications. Surveying parties led by Anatoly Kretov and Aleksandr Pankin cleared a path through dense forests and impassable taiga swamps, crossing many rivers and water obstacles.
The Moscow experts were soon joined by specialists from the Leningrad-based Giprospetsles institute. The two institutes jointly decided to analyze materials in the field, instead of at laboratories, and to provide builders with blueprints on the spot as they conducted research. In doing so, the designers managed to cut the surveying period by two-thirds and were able to analyze materials and give the builders blueprints for the construction of the entire pipeline within five months, the first time something like this had happened in Soviet pipeline construction.
The first welding operations on the pipeline route were assigned to a specialized department from the USSR State Gas Industry Committee [Glavgaz], which had successfully completed welding on the Druzhba [“Friendship”] transcontinental pipeline. Other groups from Glavtyumenneftegazstroy later joined in this work.
A large volume of construction was completed under a tight schedule, and the 264-mile Shaim–Tyumen oil pipeline was put into operation on December 21, 1965. Oil received through the pipeline was transported from Tyumen to refineries by train. The “black gold” from the Tyumen subsurface had gained reliable year-round access to the country’s main industrial centers. On December 28, Tyumenskaya pravda reported on a ceremonial rally near the loading facility in Tyumen. “Several banners proclaimed: ‘Receive Tyumen Oil, Country!’ Amid applause from everyone who had gathered, Shaim oil was shipped from the loading facility at exactly 12 noon for its long journey through Sverdlovsk, Perm, Yaroslavl, Moscow, and beyond. The first shipment consisted of 2,180 tons. It will be followed by one shipment after another, which will bring the wealth of the Tyumen subsurface to the country’s refineries. Have a good trip, Shaim oil!” An even bigger pipeline, stretching more than 620 miles from Ust-Balyk to Omsk was inaugurated in 1967 and provided support for the further transportation of Western Siberian oil.
The year 1965 went down in the history of the Soviet oil industry as a milestone once the one millionth ton of oil was produced in Western Siberia. Noting the achievements of the country’s oil labor collectives on the eve of this event, August 28, the Presidium of the USSR Supreme Soviet established the All-Union Day of Oil and Gas Industry Workers, which was to be celebrated each year on the first Sunday of September.
USSR Council of Ministers Chairman Kosygin visited the Western Siberian oil fields in winter 1968 and praised the work performed by the builders and oil and gas workers to develop a new oil-producing region that would soon become the country’s main fuel base.
Approximately 3,000 wells were drilled and put into production in Western Siberia in 1969. Many respected specialists said, however, that such rapid drilling contradicted the plan for the efficient use of fields. A total of 248 oil and gas fields were discovered from 1966 to 1970, of which 109 were put into production. The development of the gigantic Samotlor oil field began in 1969.
With the steady increase in oil production in the region, the Tyumen Region was already producing almost 33 million tons of oil in 1970. An October 1975 report stated that the Tyumen Region had produced 550 million tons of oil since the Western Siberian fields had been put into production. Drilling totaled 3.3 million feet in 1970, and had risen to 9.2 million feet by 1975. Such remarkable results had never before been achieved in USSR oil regions. Whereas Baku oil producers had required almost 100 years to reach an annual production of 28 million tons, it took the Tyumen producers less than five years to achieve the same results.
The pace of oil production continued to rise rapidly in subsequent years. On February 2, 1975, the country’s leading newspaper, Pravda, wrote: “Siberian oil is going to Baku. Ten years ago, such a report would have sounded like a fantasy.... Every fourth ton of Soviet oil today begins its journey on the shores of the Oka River.... It took Tatarstan 15 years to bring its annual production level to 110 million tons. Tyumen surpassed the 110 million mark only four years into the Ninth Five-Year Plan....” More than 80 oil and gas fields had been opened in the Tyumen Region by this time, with oil production amounting to 155 million tons in 1975.
In the early 1970s, more changes were made to the management of the oil industry. A General Management Plan was developed that called for a transition in production management—oil and gas would now be produced under a two-tier management system. The new document envisioned further specialization of core and maintenance production by removing maintenance functions from core production; creating conditions needed for the oil industry to transition to self-sufficiency; and using automated oil management systems to run companies, associations, and the industry. With this plan, the Ministry of the Oil Industry intended to include some independent companies and organizations as subdivisions within production associations and enlarge several existing drilling companies and future oil production units. The introduction of this general plan was aimed at optimizing the central bureaucratic structure by reducing the number of employees.
The USSR oil industry continued to develop primarily through extension in the first half of the 1970s. The considerable production volumes of Siberian oil, however, were unable to conceal several production flaws in the industry.
In order to address priority objectives, USSR Minister of the Oil Industry Nikolay Maltsev (1928–2001) said it would be “necessary to perfect measures aimed at enhancing oil production as much as possible both at fields under development and at fields that are to be put into production. With our production volumes, raising the oil production factor by even one percent would be the equivalent of discovering and inaugurating a large oil field.”
It should also be noted that the Tyumen Region Party organizations, after assuming a leading role, frequently tried to supplant Soviet and economic agencies and intervene in the decision-making process on various issues concerning the organization of oil and gas production.
Table 14. USSR Total and Western Siberian Oil Production by year, in millions of tons
Source: USSR Petroleum [Nefl SSSR]. Moscow, 1987, pp. 106, 111, 113, 180, 181.
From the table above, it can clearly be seen that the center of Soviet oil production shifted from the Volga-Urals region to Western Siberia in the 1970s. Western Siberian oil also helped achieve another prestigious objective on the international stage—surpassing the oil production level of the US. Whereas in 1974 the Soviet Union was producing at 93.2% of the US level (for comparison, the figure was only 20% in 1955), by 1975 the USSR produced 541 million tons, which was 4.5% more than its main competitor. By 1980, Soviet oil production was 9.8% higher than US output.
As a direct participant in the development of the Western Siberian province and recalling the early stages of the Great Western Siberian Oil Saga, I can say that this was a special period comparable, perhaps, to wartime. Under harsh climatic conditions, it was the selfless labor of several thousand Soviet engineers, technical specialists, and workers, in addition to extremely high concentrations of material and financial resources, an efficient management system, and new engineering and technological solutions that enabled the domestic oil industry to achieve results that had never before been seen anywhere. It took just ten years to establish and develop an enormous domestic oil, gas, and energy complex in Western Siberia at an unprecedented pace, thus creating a reliable base for the subsequent development of the USSR’s economy.
The Ups and Downs of the USSR–US Energy Dialogue
On the whole, the 1970s were a rather stable period of development for Soviet oil workers: financing, materials, and technology were provided to the industry without disruptions and in sufficiently large volumes.
Consequently, in 1976 the USSR produced 563 million tons of oil and natural gas condensate, 22 million tons more than in 1975. It put 4,798 new oil wells into production, well over a planned target of 4,453. Moreover, 1,184 wells were removed from the nonproducing well stock and 3,215 wells were switched to artificial lift. In Western Siberia, seven new fields were put into production, and a modern system was introduced to organize formation-pressure maintenance. In the Komi ASSR, the Usinsk and Vazeyskoye oil fields were put into operation in 1976, which allowed the conglomerate Komineft to fulfill its plan targets.
In that year, total capital investment in the industry was 4.4 billion rubles. The Nizhnevartovsk–Kuybyshev oil pipeline—with a diameter of 48 inches and a length of 1,333 miles—was put into operation. Part of the pipeline had been laid in the same corridor as the Samotlor–Kholmogory–Surgut oil pipeline, which was 139 miles long.
In the following year (1977), the USSR planned to produce 595 million tons of oil, but ensuring oil production growth of 32 million tons only required increasing development drilling by 1.6 million feet. A year earlier, however, at a meeting of industry leaders in Moscow, Oil Industry Minister Shashin gave a speech containing a key phrase that everyone basically ignored in that period of “enthusiastic reports by the winners of socialist competition and ceremonial communiqués.” The minister noted that “in order to sustain the existing level of oil production, we must introduce new oil production capacity of no less than 99 million tons every year, because an ever-growing number of fields are entering the stage of declining production.” At that time, industrial development of new fields in Western Siberia, with its harsh natural climatic conditions, still required significant capital investment and substantial expenditures for materials, equipment, and human resources. But these were steadily decreasing in the country, which had entered the so-called “period of stagnation.”
Under these conditions, the leadership of the USSR Ministry of the Oil Industry decided to bet again on increasing the efficiency of existing production capacity, and to return to studying the advanced experience of the leading foreign oil producing countries. The country chosen here was the US, which was one of the leaders of the world oil industry, producing 508 million tons of oil in 1976.
In December 1976, on the basis of an exchange of correspondence between the cochairmen of the Joint American-Soviet Committee on Cooperation in the Field of Energy, a Working Group on Scientific and Technical Cooperation in the Field of the Oil Industry was formed. By mutual agreement, the first meeting of this working group was held in the US, from October 26 through November 3, 1977.
The head of the American delegation and chairman of the meetings was J. Wade Watkins, who was acting deputy director of the Oil, Gas, and Shale Production Technology Division of the US Department of Energy (DOE). The American delegation included: D. Kramer, deputy director of the Division for Scientific and Technical Cooperation with the USSR and Countries of Eastern Europe of the US Department of State; J. Ball, director of a DOE research center; L. Schrader, deputy director of a DOE research center; G. Dean, director of the DOE Research Administration; R. Johansen, director of a section in the area of oil production at a DOE research center; J. Sugihara, dean of the College of Chemistry and Physics of the University of North Dakota; T. Donovan, geologist with the central office of the US Geological Survey; V. Robinson, section director at a DOE research center; A. Roberts, USGS geologist; L. Marchant, project director of a DOE research center; George Stosur, director of the DOE Sector for Enhanced Oil Production; A. Layton, engineer with the DOE Research Administration; V. Heinz, director of the physical sciences section of a DOE research center; A. Kotb, specialist in the area of fossil energy sources of the DOE International Research and Development Administration; and S. Blacklin, DOE foreign affairs officer.
The Soviet delegation was headed by Professor Gadel Vakhitov, doctor of technical sciences, director of the All-Union Scientific Research Institute for Oil and Gas; Boris Shchitov, head of the Foreign Affairs Administration of the Ministry of the Oil Industry; Doctor of Technical Sciences Leonid Zorkin, deputy director for science of the All-Union Scientific Research Institute for Nuclear Geophysics and Geochemistry; and Doctor of Mineral and Geological Sciences Vagan A. Chakhmachev, laboratory director of the Institute of Geology and Fossil Fuels Development of the USSR Academy of Sciences.
On the very first day, the Soviet and American sides agreed on the following agenda for the meetings: general information; creation of expert groups; scientific and technical discussions on subjects of mutual interest; exchange of opinions on future directions of joint scientific and technical cooperation; and the date and place of the second meeting of the Joint Soviet-American Working Group.
American scientists presented a series of extensive reports about the results of their work in the area of petroleum geochemistry, on maintaining optimal reservoir pressure and increasing oil production, on the development of new technology for use at heavy oil and tar fields, and also on new methods for determining the basic physicochemical characteristics of petroleum.
In turn, Soviet specialists presented brief reports on the future development of the USSR’s oil industry, and also on the results of efforts to increase the oil production factor and other problems.
After the lively debates ended, it was unanimously decided to create two expert groups in five areas of Soviet-American oil cooperation: geochemical prospecting; basic petroleum properties; methods of maintaining pressure by injecting water and gas; new (tertiary) methods of increasing oil production; and methods of extracting hydrocarbons from heavy oil and tar sand fields.
Soviet and American specialists had a very productive day on October 26, 1977, when there were high-level scientific and technical discussions on the subjects of developing lithogeochemical methods of oil and gas field prospecting; of the problem of tar sands at the contemporary stage; and a review of individual oil production methods. And here, great interest was generated by the Soviet scientists’ report on current subjects, including geochemical methods of oil and gas field prospecting (scientific research work and its prospects for development); the status and problems of using geochemical methods to determine oil content during exploratory drilling; the status, principles, and effectiveness of waterflooding in Soviet oil fields; and the use of methods to enhance oil production.
The work schedule of the Soviet-American group was so tight that some speeches prepared by Soviet specialists could not be read at meetings, so some materials were given to the American side for further study. Among such materials were “Design and Results of Using a Selective System of Waterflooding at Oil Fields” (the example given was the Aktash parcel), “State of Knowledge and Use of Methods of Oil Displacement by Steam Combined with Waterflooding,” and “Use of in situ Petroleum Combustion Combined with Waterflooding.”
During the subsequent sectional meetings, the Soviet side presented detailed working programs of potential scientific and technical cooperation, and proposed future joint symposia, exchanges of information and samples, and visits of scientists and engineers to laboratories on both sides lasting three weeks or more. During the meeting, Professor Gadel Vakhitov, leader of the Soviet delegation, officially invited the American side to send its experts on the subjects of geochemical prospecting and basic petroleum properties to an international symposium that was to take place in the Soviet Union in the spring of 1978.
The following work day became an important event in the history of Soviet-American scientific relations. Conference participants concluded that the time allocated to such meetings had to be substantially increased. The Soviet delegation again voiced its proposal that an international symposium be held in the USSR at the end of the following year, with the participation of existing expert groups, on the subject: “Formation Pressure Maintenance, Enhanced Oil Production, and Development of Heavy Oil and Tar Fields.” American scientists fully supported this proposal.
The Soviet delegation also proposed conducting joint research on the process of oil oxidation at temperatures of 212–392°F as one of the methods of stimulating oil production, with the idea that both sides would start from the minimally studied technological aspect of the problem. In turn, American scientists proposed a cycle of joint efforts to create a means for precise determination of residual oil saturation.
At the end of a productive two weeks of activity, the Joint Soviet-American Working Group approved the list and schedule of planned events for subsequent presentation to the leadership of the Joint American-Soviet Committee on Cooperation in the Field of Energy. The sides agreed that the events presented by the expert groups could be held after approval by the Joint Committee and the corresponding government institutions of the US and the USSR.
After attending meetings in the American capital, the Soviet delegates visited a series of major facilities of the US oil industry, which was undoubtedly of practical interest for them. Soviet scientists first visited the Nalco Chemical research laboratory (Sugar Land, Texas), where they had a good opportunity to familiarize themselves with the achievements of their American colleagues. Then, a visit was scheduled to the Wilmington oil field (Long Beach, California), where US Department of Energy specialists were involved in a caustic-soda injection project, and the Midway-Sunset oil field (Chanslor, California), where the US Department of Energy was involved in work to inject steam into oil reservoirs.
The Soviet delegates were very impressed by their visit to the US Department of Energy’s research center in Oklahoma (Osage County), where a successful project was under way to inject micelle solutions and polymers into oil reservoirs. After that, they traveled to a Kevany oil field (Osage County, Oklahoma), where US DOE specialists were involved in an improved project of waterflooding, and then visited the field of the B&H Oil Company (Nowata County, Oklahoma), where a project was under way to inject micelle solutions and polymers.
Upon completing the extensive program of the trip, Professor Gadel Vakhitov, leader of the Soviet delegation, noted the productive nature and good organization of the visit to institutions of the US Department of Energy and oil fields, where work was being carried out successfully to introduce new methods of enhancing oil production, and where American oil workers had demonstrated their competence and high professionalism.
Members of the Joint Soviet-American Working Group also made arrangements for exchanging correspondence relating to their activity through the Foreign Affairs Administration of the USSR Ministry of the Oil Industry and the US Department of Energy.
It should be emphasized that one of the main achievements of the first meeting of the Soviet-American Working Group on Scientific and Technical Cooperation in the Field of the Oil Industry was the beginning of productive exchange of experience among Soviet and American petroleum scientists, and also the decision to carry out joint research to increase the effectiveness of waterflooding at oil fields with complex conditions.
Unfortunately, the broad program of scientific and technical cooperation that was planned between the Soviet and American petroleum scientists was never fully realized due to a sharp deterioration in political relations between the USSR and the US. The introduction of a “limited contingent of Soviet forces” into Afghanistan in December 1979 resulted in a long-term negative response by the American administration in many areas, including a substantial curtailment of scientific and technical cooperation in the oil industry.
The First International Oil and Gas Exhibition in the USSR
In the last quarter of the 20th century, Soviet society had no cause to doubt the stability of the development of the Soviet oil industry, a situation that was certainly confirmed by the Party press: “If we consider the scale of the absolute increases in society’s production, the Ninth Five-Year Plan is our country’s best. In the decisive year of the Five-Year Plan, our country became a mighty oil-producing power, occupying first place among the more developed industrialized countries of the world.”
The USSR did, in fact, surpass the US in 1975 and assume first place in world oil production, and in its 60th anniversary year of 1977, oil production was 601.6 million tons. Despite the complexity of the geologic and physical conditions of developing oil fields in Western Siberia and other regions, oil workers exceeded plan figures set by the country’s Party political leadership by placing 5,114 new wells into service, and restoring 1,595 idle wells to service.
Although the USSR’s achievements in the oil and gas industry were beyond question, Soviet scientists and specialists in the area of petroleum equipment and technology required both familiarity with the latest developments in the field, and an opportunity to learn from advanced Western experience. Largely proceeding on this basis, the USSR government decided that the country would host the first International Oil and Gas Exhibition in June 1978, in Baku, the capital of the Azerbaijan SSR.
Because of the great political and economic significance attached to this exhibition, preparations began early in 1977. The site was well chosen: after all, the capital of socialist Azerbaijan, Baku, which was historically linked to the production of oil on the Absheron Peninsula, also had very rich cultural and historical traditions.
Heydar Aliyev (1923–2003), first secretary of the Central Committee of the Communist Party of Azerbaijan, emphasized in one speech: “The exhibition must play a positive role in the life of the republic. A heavy responsibility has been placed on us, both by the leaders of the country and by our multiethnic people. The exhibition must be carried out at the highest level.”
To hold the exhibition, the republic’s government allocated an area of more than 160,000 square feet on the grounds of the Exhibition of National Economic Achievements of the Azerbaijan SSR. The exhibition displays were to be laid out both in enclosed pavilions and in outdoor areas.
The ceremonial opening of the exhibition took place on Saturday, June 17, 1978. At the opening ceremony, the republic’s Party leader, Heydar Aliyev, read the welcoming words of Leonid Brezhnev, general secretary of the CPSU Central Committee, who, along with wishing great professional success, expressed confidence that “The International Oil and Gas Exhibition should greatly unite the entire scientific community.”
Attendees were then addressed by Aleksey Kosygin. In his speech he presented a brief overview of the achievements of the USSR oil and gas industry in the Ninth Five-Year Plan, emphasized the special significance of fulfilling plan targets in the current Tenth Five-Year Plan, and noted in conclusion that: “The oil and gas industry is assuming greater and greater importance in the world economy and in the development of mankind. Understanding the full importance of future challenges, I would like to hope that in the future, the leading oil and gas powers will work together and help each another in various initiatives.” The Soviet prime minister’s speech was warmly received by the audience, and set the right tone for the further productive work of the International Oil and Gas Exhibition.
The newspaper Izvestia dedicated a review article to the opening of the International Oil and Gas Exhibition in Baku, which it characterized rather expansively: “The exhibition has become one of the links in the chain promoting stabilization and further development of friendly relations between the Soviet Union and countries of the world.”
Altogether, more than 2,000 people from 40 countries participated in the oil exhibition. They included representatives of both leading oil-producing powers and developing states who expressed their insistent desire to join the “international oil club.”
The exhibition’s guests and visitors focused most on the Soviet display, the stands of which were decorated with exhibits presented by leading Russian scientific research institutes. The main organizer of the Soviet display was the USSR Ministry of the Oil Industry. All preparation for the exhibition events and the way they were subsequently carried out were under the personal control of Minister Nikolay Maltsev.
Because of time constraints, the Soviet display emphasized mostly high technology for the oil and gas industry, including a large-scale demonstration of new equipment, high-performance oilfield equipment, apparatus, and tools.
Numerous exhibition visitors focused their attention on the detailed displays of leading industry scientific research institutions: VNIIneft, TatNIPIneft, Giprotyumenneftegaz, and the Siberian Scientific Research Institute of the Oil Industry, which presented its high-efficiency hardware technology and engineering solutions that were a key factor for high rates of Western Siberian oil and gas province development. Among these, specialists singled out: movable masts for new construction, mechanical wrenches of original design that could be disassembled, cable reeling and unreeling systems for tripping operations, electric centrifugal pumps, elevators with changeable bushings, automatic devices for making and breaking sucker rods, and workover swivels, among others.
Moreover, a special stand separately displayed the latest developments in the area of the oil and refining industry that had been built by leading scientific institutions of the USSR Academy of Sciences.
The attention of visitors was also attracted to the interesting display of the Ivan M. Gubkin Moscow Institute of the Petrochemical and Gas Industry.56
The leading oil-producing powers, headed by the US, were thoroughly represented by displays at the Baku exhibition. Their presence at the event was largely connected to a renewal of the Soviet-American energy dialog in the fall of 1977, which in turn echoed throughout the world oil community.
The US display was led by J. Wade Watkins, deputy director of the Oil, Gas, and Shale Production Technology Division of the US Department of Energy, cochairman of the Soviet-American Working Group on Scientific and Technical Cooperation in the Oil Industry. In his words: “Such a friendly initiative of the Soviet government should result in a flurry of scientific and technical activity in the production and development of hydrocarbon fields, and also in the technical and technological innovations necessary for dynamic development of the industry.” Under the patronage of the US DOE, visitors were shown displays of the DOE’s Phillips Petroleum research center (Osage County, Oklahoma), and the Kevany Oil Company (Osage County, Oklahoma), and B&H Oil Company (Nowata County, Oklahoma), which presented the latest development of injecting micelle solutions and polymers. At their exhibits, the Americans also presented brief accounts of work carried out in petroleum geochemistry, formation-pressure maintenance, enhanced oil production, and technology for developing heavy oil and tar fields and for determining basic petroleum properties.
Moreover, numerous prominent American scientists and specialists were delegates at the Soviet exhibition. Among them were the following members of the Soviet-American Working Group on Scientific and Technical Cooperation in the Oil Industry: J. Ball, director of a US Department of Energy research center, T. Donovan, geologist with the central office of the US Geological Survey, V. Robinson, section director at a DOE research center, R. Johansen, director of the oil production section at a DOE research center, L. Schrader, deputy director at a DOE research center, G. Dean, director of the DOE Research Administration, L. Marchant, project director at a DOE research center, George Stosur, director of the DOE Enhanced Oil Production Division, A. Layton, engineer with the DOE Research Administration, V. Heinz, director of the physical sciences section at a DOE research center, and other engineering and technical specialists.
Several international conferences and seminars of great scientific significance were held under the auspices of the exhibition. In the course of their work, Soviet scientists and foreign specialists had creative discussions on subjects of mutual interest, and there was a productive exchange of opinions about future directions of joint scientific and technical cooperation.
Patrice Roi, one of the representatives of the French Ministry of Energy, had an interesting recollection: “It is difficult to convey the delight over what was seen and heard. Here in Baku, an impetus was given for development of the technical and technological future. I believe that, in the very near future, the oil powers will stun the most skeptical of minds with new hydrocarbon production records. Such events will definitely have an effect on mankind’s future prosperity.” Numerous visitors from Eastern and Western Europe, the Middle East, the US, Canada, and other countries had similar viewpoints.
The International Oil Exhibition in Baku gave Soviet specialists a good opportunity, based on its advanced experience in the world oil and gas business, for productive cooperation in the future, using advanced equipment and procedures for oil production.
The first International Oil Exhibition in the USSR drew around 110,000 visitors, including numerous delegations from foreign countries and Soviet specialists from various regions, providing clear evidence of significant interest in both the achievements of the industry and in the trends for development of oil equipment and procedures.
It is also gratifying that it was in this place, where the history of Russia’s oil industry began, that the fine tradition started of Russia regularly hosting one of the largest international specialized exhibition events, the Moscow International Oil and Gas Exhibition, which today is one of the most significant events of its kind for the world business, scientific, and engineering community.
Heading for a Crisis
The Soviet Union entered a period of large-scale structural crisis at the start of the 1970s because its supermonopolized bureaucratic authoritarian industrial system was unable to develop any further or respond to the challenges of modern times.
Over several decades, it became clearly apparent that, while a scientific and technical revolution was under way in the world at large, the USSR’s economy was incapable of ramping up to large-scale production and adopting new technologies. The global energy crisis forced the economies of the leading countries of the West to move from an industrial development model to a postindustrial (information-based) model. At this stage, they succeeded in switching rather quickly to energy-saving technologies (these technologies were used to upgrade 66% of the equipment in the US, 70–75% of that in EEC countries, and 82% of that in Japan), as well as high-tech production (microelectronics, computer science, biotechnology, and robotics).
These global changes were obvious, but Soviet Party political leadership, headed by Leonid Brezhnev, having formally declared the main priority of the Ninth Five-Year Plan (1970–1975) and the Tenth Five-Year Plan (1976–1980) to be to move the economy onto an intensive development track, in reality was continuing on a path of extensive industrial economic development using the Stalinist model, with the help of traditional contributing industries, including the oil and gas industry.
However, the physical wear and tear and obsolescence of the plants and equipment made it senseless to increase capital investments in industrial construction from one five-year plan to the next, and expect to see a return within a decade. In the rapidly accelerating scientific and technical revolution, new projects frequently became obsolescent at the design stage. The number of unfinished construction projects increased, and capital was undergoing “necrosis.” The mania for projects of gigantic proportion did irreparable harm to the ecosystems of many parts of the country. The resources invested in capital construction brought no return. Whereas in 1970 every ruble invested in capital construction increased production by 1 ruble 39 kopecks, in 1973 this figure was 1 ruble 10 kopecks, and by 1981 it was only 81 kopecks. In effect, the country was steadily going bankrupt.
The structural stagnation in scientific and technical areas and the orientation of gross plan targets toward increasing the production volume led to the manufacture of low-quality products that nobody wanted to buy, which in turn led to overstocks. By the end of the 1980s, warehouses had accumulated products worth 400 billion rubles, which were marked down and written off. At the same time, many other products became scarce, creating enormous lines in stores.
Increased raw material and fuel costs likewise drove up the price of industrial products. The rising prices of farm equipment, fertilizer, and compound feed and the rising costs of farm equipment maintenance and agricultural construction wiped out any gains from the increase in the sales prices of foodstuffs purchased from collective farms. Agricultural production growth rates fell from 21% during the Eighth Five-Year Plan (1966–1970) to 6% in the Eleventh (1981–1985).
Social and state interests began to diverge sharply. Soviet workers increasingly felt alienated from property and the lack of incentives for productive labor made them feel like strangers in their own country and enterprises. Labor productivity declined steadily. Qualified labor lost its prestige. Government agencies thrived on excessive paperwork, exaggerated performance, whitewashing of issues, and downward adjustments of plan targets. Society began to feel a general indignation toward the privileged elite, the ineffective work of the administrative apparatus, and the arbitrariness, irresponsibility, and growing corruption of civil servants.
By the mid-1980s, the Soviet population ranked 77th in the world in per capita consumption. The Soviet economy was generally becoming less and less competitive on the world market, and its share of world trade in 1970–1980 was only 4%.
The Soviet leaders failed to acknowledge the fact that a system of social and economic relationships based on mass standardized production, which deprived workers of creative initiative and favored strong-willed, bureaucratic administration of all economic processes, was no longer able to raise production efficiency or product quality. When the system’s development inevitably ran up against the barrier of the new scientific and technical revolution—namely the need to solve the problems of the postindustrial era—the country’s Party political leadership could not meet the challenge. What was required of them was a decisive renunciation of the old dogmatic Marxist constructs, a decisive restructuring of the entire socioeconomic system on a new basis, including renunciation of attempts to control everything from the center and a move toward greater individual and group autonomy and intellectuality, putting social and communication ties on an equal footing, intensively sharing diverse information, putting industrial production on an ecological foundation, and much more. The USSR’s ruling elite, which consisted mainly of people of advanced age, were bewildered by the global information revolution, as they believed that the introduction of any changes would be destructive to the “sacred cause of socialism.”
The attempts of Party political leadership to preserve an imaginary stability in the country only served to aggravate the systemic crisis and further the Soviet Union’s consistent and steady lagging behind leading foreign countries, which had confidently set off on the path of postindustrial development. This situation was also intensified by the obsessive striving, on the part of Soviet leaders, to achieve military and strategic parity with the US, and to provide an ever-increasing level of fraternal assistance to countries of the socialist camp and people’s democracies, and by the exhaustion of the USSR’s financial and material resources, which were rapidly dwindling anyway. Another factor that ultimately led to the country’s ruin was the course of Party political leadership that considered support for national liberation movements in most of the Third World a top priority, sending contingents of Soviet soldiers to 36 regional conflicts between 1970 and 1980 and into a bloody, ten-year war in Afghanistan (1979–1989).
During this period, Western Siberia was a kind of hydrocarbon Klondike for the Soviet Union. The global energy crisis of the early 1970s oriented the Soviet economy toward raw materials. It became advantageous simply to sell raw hydrocarbons for hard currency and then to buy everything the country needed, including wheat, consumer goods, and foodstuffs. As a result, 83–85% of Soviet exports consisted of raw materials and semifinished products, and only 15–17% consisted of finished products. Oil and gas pipeline systems to Western Europe were completed in short order (the largest being the Trans-Siberian Urengoy– Pomary–Uzhgorod pipeline), and these carried almost one-third of oil and 75% of natural gas that was produced.
By the second half of the 1980s, the lack of a well-thought-out foreign economic strategy resulted in serious losses. A drop in world fuel prices devalued raw materials, which were the principal component of the Soviet economy. In contrast to the 1970s, this part of the economy was now losing $10 billion a year, while maintaining past volumes of oil and gas exports.
In the Tenth Five-Year Plan (1976–1980), the industry began to experience a steady decline in oil production growth rates. Whereas the annual increase in oil and natural gas liquid production was 35 million tons in 1975, by 1980 it was only 19.4 million tons.
The crisis symptoms in the USSR’s oil industry that scientists had warned of earlier began to manifest themselves ever more clearly. However, instead of elaborating and implementing a comprehensive approach to solve the industry’s acute problems, the CPSU Central Committee proposed, for the umpteenth time, that Soviet oil workers engage in a “wide expansion of socialist competition to fulfill the assignments of the five-year plan ahead of schedule.” Party ideologues felt that slogans of the type used at the 26th CPSU Congress, “The economy must be economical” (which amazed both Soviet and foreign specialists by its inadequacy), together with preparations to celebrate significant dates in Soviet history, would succeed once again at giving people the resolve to fulfill the vital decisions of the Party and government.
Party ideologues even brought up the forgotten “Stakhanov movement”57 of the 1930s, and printed numerous articles and notes about reviving the glorious labor records of the past; such articles filled the pages of national, local, and large-circulation newspapers. It is hardly surprising that local Party organizations soon gave birth to many different kinds of “oil worker team labor initiatives” under very high-sounding industry slogans: “More oil from each well,” “Complete the five-year plan ahead of schedule: one well over the quota every 15 days,” “Every well must give a lot of oil,” “Give the five-year plan a shock-work finish,” etc.
Party officials did not give much thought to the meaning of these initiatives or how everything would be carried out; the main thing was to think up a new movement or initiative that had not been heard of before, and to do so as quickly as possible. A pattern soon emerged: First, a “labor initiative” was put forward, followed by Party influence on the administration of an enterprise to create exclusive “greenhouse” conditions for so-called “beacons of socialist competition.” This would be followed by the dispatch of a triumphant report to higher authorities and, as a result, a ceremony would be held to celebrate the receipt of honorary Red Banner awards, high governmental awards, and various other honors.
As for the industry as a whole, the influence of such initiatives on the state of production was clearly negative. What was necessary was the very opposite: a radical reexamination of the former frantic rush strategy of oil industry development. A switch was required, as quickly as possible, from intensive methods of oil production to scientifically-based, efficient methods of operating existing fields and developing new ones. However, this was not done.
Thus, despite the experience of developing the Romashkino oil field and foreign fields, oil production at the unique Samotlor oil field in Western Siberia was stimulated starting from the first days it was developed, a practice unprecedented in the world. Very ambiguous design decisions were implemented, such as rigid three-row systems of production well location, suboptimal initial well spacing, and consolidation of independent development sites, including producing several dozen strata from one well and selective advance exploitation of highly productive strata with extremely high depletion rates from the remaining recoverable reserves. The stimulation of oil withdrawals here did not fit into the traditional understanding of this production process, according to which increases in oil withdrawals are done in such a way to maintain efficient development conditions on the oil fields and prevent reduction of the recoverable reserves of the field over its entire life. At Samotlor oil field, petroleum depletion was accelerated to a simply absurd level, without any reasonable limitations. In 1995, the ratio of water volume injected per ton of oil produced reached 13.23. The rate of depletion of remaining recoverable reserves in the middle of the 1980s was 12–14% for the whole field. The vital decisions carried out on the instructions of Party authorities could only result in the irreversible deterioration of the state of development of the Samotlor oil field. The subsequent steady drop in production there simultaneously meant a reduction of oil production volumes in the whole industry.
Other similar examples could be cited. On the whole, development of other fields in Western Siberia also involved minimizing the width of the strips produced when the pool was sliced up into rows of injection wells, or specifying an overall repeating-pattern waterflooding system from the start of field operation. Field practice involved unjustifiably increasing the volume of injected water, while ignoring the reservoir’s energy status. The volume of water injected exceeded not only the volume of oil produced, but it even surpassed the amount of fluids produced. Under these conditions, reservoir pressure exceeded overburden pressure at individual fields, forming uncontrolled artificial cracks with all the attendant consequences.
At the major Talin oil field in Western Siberia, repeating-pattern waterflooding was routinely used from the start of development, with no regard for the geologic and physical structure characteristics of the productive strata. Within five years after drilling began at the field, this led to acute water encroachment, i.e., water cuts of up to 90% with a current oil production of less than 10%.
Oil production enterprises thus lost their sense of moderation about the scale of employing primary contour waterflooding technology, and industry leaders ignored the opinion of leading specialists, who maintained that infill drilling was a necessary precondition to prepare for the waterflooding process. Instead, the predominant idea thrust upon oil workers from above involved the complete depletion of recoverable reserves using a small number of wells, that is, with production wells widely spaced and producing a small quantity of associated water, an approach that had been suggested in the 1950s by academician Aleksandr Krylov (1904–1981).
And so, in accordance with the strong-willed directives of Soviet Party political leadership, in the 1980s Western Siberia was turned into a region where petroleum depletion was stimulated to the maximum extent, in disregard of efficient oilfield development principles and optimal design solutions.
Party decisions also imposed unrelated functions on the oil industry. For example, in carrying out the state foodstuffs program, Soviet oil workers not only had to provide the agricultural industrial complex with fuel, but also create their own subsidiary agricultural complexes to grow grain and raise livestock and poultry. Thus, at the end of the 1970s, the oil industry was operating 48 state farms and subsidiary farms on 697,000 acres of land using more than 10,000 workers. This is a very revealing example of the serious disproportions and distortions of the Soviet economy that ultimately led to its downfall.
On March 3, 1981, the 26th CPSU Congress adjourned after adopting “Basic Directions for USSR Economic and Social Development in 1981–1985 and the Period until 1990.” The document planned, by 1985, to bring the production level of oil with gas condensate to 683–712 million tons and build 6,138 miles of oil pipelines and 2,356 miles of petroleum products pipelines. The proportion of wells operated using artificial lift was to be increased to 80%.
At the beginning of the Eleventh Five-Year Plan (1981–1985), the oil industry entered a new stage of development characterized principally by a sharp decline in production growth rates; the first signs had begun to appear of an impending day of reckoning for the subjective and poorly considered decisions of industry policy. As a consequence, starting in 1982 the USSR’s annual plans for production of oil and natural gas liquids were no longer met, not once. In 1983, production of oil and gas condensate in the USSR fell to 679 million tons, and the following year it slipped again, to 675 million tons.
After the death of Leonid Brezhnev in November 1982, the top Soviet leadership underwent a series of abrupt changes: leadership of the government was assumed by Yury Andropov (1914–1984), and after his death in February of 1984, by Konstantin Chernenko (1911–1985), whose rule lasted little over a year.
Finally, the April 1985 Plenum of the CPSU Central Committee elected Mikhail Gorbachëv to the highest post in the Party. The country’s new leader tried to make a realistic assessment of the country’s economic situation. In his speech “The Key Issue of the Party’s Economic Policy,” he laid special emphasis on the fact that the country had started to feel economic difficulties in the early 1970s, and among their causes he mentioned “the inadequacy of the administrative structure of economic activity, its forms, methods, and very psychology.”
It was clear from these words that the country’s new leader understood that further development of Soviet society inevitably required renunciation of the Stalinist model of state socialism. However, it turned out that a great deal did not depend on him at all: The direction of subsequent reforms, their results, and ultimately the fate of the USSR as a single state were strictly dependent on many factors, including foreign policy, the alignment of forces in the ruling elite, and in most cases that elite’s unwillingness to allow sweeping modernization of the country’s sociopolitical and economic system.
Mikhail Gorbachëv immediately focused his attention on the state of the oil industry, which contributed much hard currency to the country’s budget. On April 19, 1985, Gorbachëv’s eighth day as the head of the government, the CPSU Central Committee and the USSR Council of Ministers adopted a resolution, “On Additional Measures to Retool the Oil and Gas Industry.” Four months later, on August 10, 1985 the CPSU Central Committee and the USSR Council of Ministers adopted a resolution, “On the Comprehensive Development of the Oil and Gas Industry in Western Siberia in 1986–1990.”
The resolution noted that “in connection with the shift of the bulk of operations in Tyumen Region to districts characterized by more difficult natural climate and geology, with delays in commissioning newly discovered oil fields, oil field electrical supply facilities, and housing associated with facilities intended for social, cultural, and everyday uses, and with existing shortcomings in the organization of the production of oil and petroleum gas, many enterprises of the oil production industry in Tyumen Province have of late not been fulfilling the plan for producing oil and associated petroleum gas.” The resolution’s directives included enhancing the technical sophistication of production equipment and processes, improving the organization of labor, introducing energy-saving technologies, speeding the processes of drilling wells and putting them into production, and taking more precautions to prevent accidents.
However, it is easy to understand why this resolution did not produce a rapid effect. In 1985, USSR oil production was 656 million tons. Western Siberia’s share of that total was 388.8 million tons. Overall, the plan for 1985 was only 94% fulfilled, but Western Siberia was responsible for 34 million tons of the plan’s 38-million-ton shortfall. Clearly, the principal breakdown in the government oil production plan occurred in this region.
The reasons for the production plan breakdown, both in the entire industry and regionally, were widely discussed at a series of meetings of the CPSU Central Committee and the Ministry of the Oil Industry and meetings of Party economic activists from oil-producing territories and regions. The main reasons for the plan’s failure are those mentioned above: insufficient attention to providing workers with housing and sociocultural facilities, slow rates of new field development, inadequate scope of transitioning flowing wells to mechanized oil production methods, delays in creating capacities to prepare for water injection and in constructing water-intake facilities, aqueducts and oil-gathering mains, and a substantial manufacturing shortfall in supplying oil workers with modern oilfield equipment. Alas, such basic industry problems remained unexamined, and instead, a commitment was made to stimulate oil production in every possible way, thereby undermining the very fundamentals of efficient field development. After all, the rapid depletion of active reserves was naturally lowering the quality of the recoverable reserves remaining on the industry’s balance sheet, and consequently lowering the productivity of producing wells. At the beginning of the Twelfth Five-Year Plan (1986), the share of inefficient reserves on the industry’s overall balance sheet was 48%; at the beginning of the Tenth Five-Year Plan (1976), it had been 30%. Over this period, the share of inefficient reserves in Western Siberia tripled, from 18 to 54%.
The meetings also did not consider the increasing discrepancy between production volumes and the growth of reserves. From 1971 to 1985, oil production in the Western Siberian oil-producing region grew by a factor of 12.7, while reserves of all categories of petroleum increased by a factor of only 3.1, and active reserves increased by a factor of only 1.8.
According to the government’s position, a choice was again made in favor of emergency mobilization for a “further assault on the treasuries of black gold.” In short order, the conglomerates Bashneft and Tatneft created their own oil production units in Western Siberia, sent numerous crews of qualified oil workers there, and brought new fields into accelerated development. By 1986, 26 fields had been put into operation, twice as many as in the preceding four years. All of this ensured that the conglomerate Glavtyumenneftegaz would achieve planned daily oil production levels by September of that same year.
It should be emphasized that in 1985, the proportion of Soviet energy resource exports was 52.7%, compared with 46.8% in 1980. And although the physical volume of total oil exports declined somewhat over the period, from 131 million tons to 129 million tons, exports to countries that paid in freely convertible currency increased from 30.2 million tons to 31.9 million tons.
A significant portion of the hard-currency funds received from oil exports nevertheless did not go at all toward purchasing the latest equipment and technology urgently needed to modernize industrial production, but was spent to bolster the Soviet economy, which was in a crisis, and to purchase foodstuffs and consumer goods.
In the words of economist academician Stanislav Shatalin (1934–1997), in the early 1980s the situation had already started to get out of control: “Top leadership made increasingly less effort to make rational decisions about what should be done with the petrodollars that were still flowing into the USSR.... But we macroeconomists knew that the economic situation was steadily deteriorating, that the growth rates of the gross national product and national income were falling, and that the proportion of strong factors in them was decreasing.”58
In the fall of 1985, however, Saudi Arabia abandoned the OPEC price agreement, causing world oil prices to drop from $29–30 a barrel to $12–15. Thus, the USSR treasury experienced a sharp decrease in freely convertible hard currency revenue. Purchases of feed grain, so badly needed by Soviet animal breeders, reached a minimum. The lack of feed immediately produced a shortage of milk and meat. The food crisis that seized the country quickly threatened to grow into an economic and political one. The situation forced the Politburo of the CPSU Central Committee, headed by Mikhail Gorbachëv, to turn to the leading Western powers for economic assistance, which they gladly offered under certain conditions.
Gorbachëv closed his first year as Party leader with a speech at the 27th CPSU Congress, which opened on February 25, 1986. This was one of those rare cases when the forum and the Party leader himself drew great interest from all strata of society, because everyone was expecting long-awaited changes. As it turned out, much of Gorbachëv’s speech described events from the recent Soviet past. The key item was the speaker’s confidence in the triumph of communism in the country, and he even repeated Khrushchëv’s well-known slogan, “Catch up and overtake,” expressed in his description of the grandiose economic frontiers that could be reached by the year 2000. The main stages he laid out for economic and social development, along with projected gross indicators of the USSR’s economy for the next 15 years, left the Congress’ delegates and the country’s population breathless. By the end of the century, the gross national income was expected to nearly double, while doubling and qualitatively transforming production potential. Labor productivity was to grow by a factor of 2.3–2.5, the energy/output ratio of the gross national income was to decrease 30%, while metal consumption was to be halved. The Party leader felt that this meant “an abrupt turn towards intensification of production, and an increase in quality and efficiency.”
“Acceleration” was one of the key ideas in Gorbachëv’s speech, and it was interpreted in reformist terms. “What do we mean by acceleration?” he asked, and immediately responded: “Above all, increasing the rates of economic growth. But more than that, its essence is in a new quality of growth: intensification of production in every possible way on the basis of scientific and technical progress, structural reform of the economy, effective forms of administration, and organized stimulation of labor.”
Mikhail Gorbachëv’s speech and the Congress’ decisions on the basic directions of national economic development suggested that the USSR could no longer pursue a path of expansion. The Soviet ruling elite explained that the experience of developed foreign countries showed that the new stage of economic development was connected with intensification and the application of new technologies, and that product quality was more important than quantity. However, the ruling elite failed to understand that in the West, postindustrial relations based on new principles had begun to mature, and that new social and technological infrastructure had come about, based on mass computerization, networked communications, and flexible relationships in production.
Fulfilling the program prescribed by the Congress for technological modernization of the country’s industrial complex would require enormous funds: “It is planned that allocations for reconstruction and technical retooling of production be increased to more than 200 billion rubles in capital investment: more than over the preceding 10 years.” But where would these funds come from? Decisions are easy to make, but carrying them out is an entirely different matter; unless proper funding is supplied, decisions will remain on paper, unimplemented—which is exactly what happened.
Because financial resources were not available to solve the problem of modernization, the country’s Party political leadership again committed to using the mobilization potential of the Soviet economic and political system, with its mechanism of central planning, whose effectiveness was unquestioned by the ruling elite. And so the Party once again used its traditional mechanism of solving the most important economic tasks, organizing mass campaigns in society under loud, attractive slogans such as: “Accelerate the social and economic development of the USSR,” “Restructuring at a march,” “The labor energy,” “Cardinal reform,” etc.
Initially, this strategy worked, both in society in general and in the oil industry in particular. In 1986, the USSR produced 678 million tons of oil and gas condensate, an increase of some 22 million tons over the preceding year. By 1987, oil production had reached the 688 million ton mark, which would be the maximum production level over the entire history of the Soviet state. The increase in production was due mainly to regions of Western Siberia, where 44 new fields had been put into production on an accelerated basis by the end of 1987.
However, the country’s Party political leadership, headed by Gorbachëv, was unable to make use of these initial results of successful industry developments in 1986 and 1987, which would have justified the trust and expectations of the Soviet people. Instead of continuing to search for new ways to reform the domestic economy on a market basis, the country’s leadership went down the dead-end path of deepening the Soviet economy’s direct dependence on hydrocarbon exports and using the hard currency earnings from them to patch the “black holes” in the national economy, all the while supporting the traditional vices of the political leadership, such as its lack of receptivity to the introduction of scientific and technical progress (especially in the area of producing consumer goods), its complete inability to develop high-efficiency agriculture, and its unprecedented squandering of human and material resources. With every passing year, the stagnating and increasingly decrepit Soviet command-administrative system became increasingly hooked on hydrocarbons. Meanwhile, mounting political instability in the country and the aggravation of the world economic situation at the end of the 1980s did little to help the situation in the USSR.
Practical realization of the sweeping policy of “restructuring and acceleration” in the absence of the necessary financial and material resources soon began to produce serious shortcomings shortly after the 27th CPSU Congress. Decisive and consistent fulfillment of a modernization program gave way to promulgation of certain half-hearted and contradictory reform measures, a sort of grafting of commodity and financial market elements onto a planned economy (although the mixture of one with the other already existed in practice). However, half-measures such as these merely deepened the crisis.
A product of this liberalization was the economic reform of 1987, which laid out a transition to a mixed economy with market levers of control, but which at the same time also proceeded from the mistaken assumption that it had to be put into motion with cautious intermediate steps. It was assumed that this reform would be based on worker self-government, independence of worker teams on the market, and their financial interest in the fruits of their labor. However, after the reform, worker income remained only indirectly linked to production efficiency, self-government was replaced by the delegation of increased powers to corporate administration and its independence from higher agencies, and the introduction of the commodity and financial market was postponed due to fears of possible protests on the part of the public.
Within the oil industry, problems that had previously been hidden began to surface more persistently, mounting up and ultimately creating a difficult situation in the industry. One of the main reasons was the exhaustion of possibilities for extensive production, primarily in the Western Siberian oil and gas complex. The late formation of a scientifically-based development concept for Western Siberian oil and gas potential affected the region’s rates of development, its investment policy, its work planning, and the development of its production infrastructure. Every year, existing imbalances deepened in the region’s ability to meet the targets set by the Soviet government with the constantly shrinking financial, material, and technical resources they were given.
In July 1988, a new spiral began in the oil industry’s crisis. The depth of the crisis was largely due to a substantial drop in oil production due to the high degree of water encroachment (up to 80% or more) in the highly productive fields being developed. The water encroachment started to become massive, reducing the energy conversion efficiency of the widely-used water injection technology. The volume of water injected and brought to the surface was increasing over time, while the oil content of the produced fluids was substantially decreasing. Water encroachment also worsened and reduced the raw material base and the quality of remaining reserves at fields that were under development. Oil workers were not prepared for this phenomenon, nor could they do anything to arrest the drop in oil production, since the new enhanced recovery technologies widely used abroad had not been adopted in time on an industrial scale at the fields. The orientation toward reckless stimulation of oil production also led to other negative phenomena, since future plans for developing the industry did not duly address such problems as how to create and produce a new generation of equipment and instruments for mechanized production of large volumes of water-cut product from wells, including various models of new downhole pumps and gas lifts; wellhead equipment to be used with various methods of well operation; rods, tubing, and packers; and, finally, materials for these purposes that were light, strong, and resistant to corrosion. A serious problem was created by the lack of reliable equipment for developing multizone fields through combined/separate oil production and combined/separate water injection, since production plans to combine up to 20–40 strata into a single site were predicated on that type of equipment.
A serious shortcoming in the industry’s activity during that period was the lack of a clear, objective vision of the future. There was no substantiated response to the question of what was in store for the industry over the near term and in the future, or how to prepare for change. This key issue was adversely affected by the monopolization of petroleum science by the dominant scientific school of Academician Aleksandr Krylov, which advanced an original and semitheoretical foundation for the Party political leadership’s short-sighted plans to sharply increase oil production in the country by stimulating production, with minimal outlays.
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