Soviet Oil Fields Draw US Interest

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.''

A former oilman from Texas, Mosbacher speaks of the ``prospects of Texans going in to find additional wells, and to make existing production more efficient.''

In the short term, the commerce secretary says US experts may help the Soviets to raise their oil production with ``fracing,'' a technique that increases output of existing wells.

``Quite clearly the Soviets have mismanaged their oil fields,'' says Abraham Katz, president of the US Council for International Business and a former US economic counselor in Moscow. ``A number of our members are over there - they are very interested in Soviet oil and have been negotiating with the Soviets for some time,'' he says.

Chevron Corporation has been at the forefront of negotiations with the Soviet oil industry to explore and develop fields in the Caspian Sea region. ``Chevron is very excited about this prospect,'' Mr. Katz says. ``It's a very big deal in terms of acreage and potential.''

But obstacles to US entry into the Soviet oil industry remain. Katz says that he and other US businessmen anxiously await the passage of a Soviet property and foreign investment law. If Soviet economic reform is to succeed, the Supreme Soviet must pass legislation that is hospitable to the foreign investor. US economic assistance is ``down a rat hole'' without a workable reform plan, he says, adding, ``speed is the issue.''

Among the Soviet officials scheduled to meet the US businessmen were Soviet President Mikhail Gorbachev, chairman of the Russian parliament Boris Yeltsin, and leaders of some the the 15 republics.

Given the civil strife in the Soviet Union and the independence declarations of five of the country's 15 republics, striking deals with the Soviets may become even more complicated. Energy- and mineral-rich republics have already asserted their rights over precious raw materials. Any signed agreements should be with the republics themselves and not the Soviet Union, say some observers.