Newspaper article The Christian Science Monitor

Soviet Oil Fields Draw US Interest MOSBACHER IN MOSCOW

Newspaper article The Christian Science Monitor

Soviet Oil Fields Draw US Interest MOSBACHER IN MOSCOW

Article excerpt

WITH world oil supplies disrupted by the Persian Gulf crisis, the United States Commerce Department is accelerating efforts to put American expertise to work in Soviet oil fields.

Today, 15 chief executive officers of major US corporations wound up a week-long visit to the Soviet Union, which included talks with government officials, trips to energy and chemical processing plants, and a possible trip to an oil field.

Commerce Secretary Robert Mosbacher who led the delegation, says the order of business is "how US companies can invest, sell, trade, and do joint ventures."

In addition to oil companies such as ARCO and Texaco Inc., this week's visitors included Pepsico Inc. and United Telecommunications Inc. "Energy is a major priority," Mr. Mosbacher says. An increase in Soviet oil production for the international market would reduce world dependence on oil from the Persian Gulf.

The Soviets value oil exports because they reap precious foreign exchange for the country. With a $64 billion external debt and a rapidly deteriorating credit rating due to unpaid bills to suppliers, Moscow is anxious to increase its energy sales to the West. Its barter-trade deals with East European consumers of Soviet energy will soon end, and Moscow will demand hard currency for these exports at world prices.

The Soviet Union is the world's premier producer of oil. Given its 60 billion barrel reserves, says Mosbacher, it should be able to take advantage of the oil shortfall caused by Iraq's invasion of Kuwait Aug. 2.

But Soviet production, now around 12 million barrels per day, has been declining for the past several years due to poor equipment, outmoded technology, and lack of capital.

"Unless the Soviets do additional work, they will suffer at least a 5 percent decline (in oil ouput) per year," Mosbacher says. "We see this as a real opportunity to get real (US) experts in ... to assess the necessary steps the Soviets need to take. The Soviets appreciate this. …

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