Soviet energy

As it moves from a centrally planned economy toward a market-based system, the Soviet Union will need to produce and export large quantities of oil to help finance industrial development and to purchase consumer goods from the West. Since 1988, however, Soviet oil production has fallen by about 8.8 percent. Oil exports also have declined, falling by about 15 percent from 1988 to 1990. The main reasons for the production decline are the lack of enough capital for exploration and production and the use of outdated and inefficient production practices. While U.S.-Soviet joint ventures could potentially help reverse this situation, both the United States and the Soviet Union maintain policies and practices that hinder U.S. trade and investment in Soviet oil exploration and production. Despite such difficulties, several U.S. multinational oil companies are proceeding with joint venture agreements, and progress is being made on overcoming some of the obstacles. For example, training programs in western business practices are being offered b the U.S. government, private companies, and universities. In addition, the U.S. and Soviet governments are now negotiating a tax treaty. GAO summarized this report in testimony before Congress