Texaco May Explore for Oil in the Arctic Area of Soviet Union : Energy: It would become the third Western petroleum company to try to enrich itself by helping the U.S.S.R.'s technology- and cash-short industry.


Texaco said Tuesday that it may soon begin drilling for oil in the Soviet Union’s huge untapped western Arctic oil fields, becoming the third major Western oil company to attempt to cash in on the opportunity to help the struggling Soviet oil industry.

Texaco said it will first provide technical assistance to the Soviet industry.

It will begin a study this fall of whether to form an onshore oil-drilling joint venture with the Soviet government in the Timan-Pechora region, an Arctic area west of the Ural Mountains.


The company said if it goes ahead with exploration of the region, oil production could begin by late 1992 or early 1993.

Harold Zimmerman, general manager of exploration and production for Texaco-Europe, said the region has known, untapped reserves of 5 billion barrels of oil.

New oil supplies from the Timan-Pechora region could help offset lost production from Iraq and Kuwait if a long stalemate results from the current crisis there.

“The Timan-Pechora region holds significant potential for early production and for the ultimate development of world-class fields,” added Paul B. Hicks Jr., president of Texaco-Europe.

The Soviets have explored and identified the oil reserves in the region, but there is currently no production there. In fact, although the Soviet Union is the largest oil-producing nation in the world--with massive production in Siberia--its industry is so inefficient that huge fields in other areas have been virtually untouched.

Already struggling from lack of modern technology, Soviet oil enterprises have faced new cutbacks in their research and development funding, as the government scrambles to meet growing demand for consumer goods.

As a result, Texaco, based in White Plains, N.Y., has been asked to help develop the rich northern fields.

“Right now, they need funding and Western technology,” said Zimmerman. “They recognize that they can’t do it themselves and have said, ‘We need your help.’ It’s been hard for them to reach that point because they are proud people.”

As the Soviets have opened their economy to the West, big oil companies have been among the first firms to pour into the country, offering assistance and production-sharing agreements.

In 1989, the Soviet government made the first detailed--and officially sanctioned--geological data on its oil fields available to Western firms, and the oil giants have been negotiating deals with the Soviets ever since.

Earlier this year, both Chevron and Elf-Aquitaine of France announced agreements to begin work in a southern region of the Soviet Union near the Caspian Sea, where known oil reserves are even larger than in the Timan-Pechora area.

Texaco said if it does sign a production agreement with the Soviets, it will provide technology and assistance. Actual production work will be done by Soviet workers. Texaco would be paid through a production-sharing agreement, rather than on a royalty basis.

In May, Texaco took the first step in its efforts to establish a presence in the Soviet Union by agreeing to install advanced computers in Moscow for the Soviet government to help process oil-exploration data.

It has also provided advanced technical training in Houston for Soviet personnel. The export of the computers requires export-licensing approval from the U.S. government.