With the largest petroleum reserves in Eastern Europe, Romania was a major oil producer and exporter throughout much of the twentieth century. The oil extraction industry, developed primarily by German, United States, British, and Dutch companies, was the forerunner of the country's belated industrialization. In 1950 oil satisfied nearly half of total energy needs. Peak production was reached in 1976, gradually declining in subsequent years, as many of the country's 200 oil fields began nearing depletion and discovery of new reserves waned. Increasingly large quantities of crude had to be imported, and in 1979 imports surpassed domestic production for the first time. Despite an accelerated exploration program, with average drilling depths increasing to 8,000 to 10,000 meters, oil output declined from 308 barrels per day in 1976 to 227 in 1986.

Beginning in the late 1970s, Romania became one of only ten countries producing offshore oil-drilling rigs. In 1988 seven such platforms were operating in the Black Sea under the supervision of the Constanta-based Petromar enterprise to develop hydrocarbon reserves in the continental shelf.

During the 1970s, Romania invested heavily in developing an outsized oil-refining industry just as domestic petroleum production was beginning to decline and the world market price for crude was skyrocketing. Some observers estimated that by 1980 the country was losing as much as US$900,000 per day by exporting oil products derived from imported crude. But because these products found a ready market in the West--they accounted for 40 percent of exports to the West in the late 1980s--Romania continued largescale processing of imported crude to earn hard currency. By 1988 domestic crude output had fallen to 9.4 million tons, while refining capacity stood at some 30 to 33 million tons annually. To keep the refineries running, ever larger volumes of crude had to be imported--first from members of the Organization of Petroleum Exporting Countries (OPEC), but after the outbreak of the Iran-Iraq War, from the Soviet Union. Soviet crude deliveries reached about 6 million tons in 1986. Under the terms of a barter arrangement, Romania was to receive at least 5 million tons of Soviet crude annually during the 1986-90 period in exchange for oil-drilling equipment and food products.

The natural gas industry was unable to offset depletion of known reserves, and output declined from 1,216 billion cubic feet in 1976 to 940 billion cubic feet in 1986. Some Western experts believed that Romanian reserves could be exhausted as early as 1990. After it had begun importing gas from the Soviet Union in the mid-1970s, Romania obtained incrementally larger shipments in 1986 it imported 2.5 billion cubic meters of Soviet gas. For its participation in projects to develop Soviet gas resources, Romania was expected to receive shipments of at least 6 billion cubic meters annually after 1989. In addition, as payment for transit rights for a 200-kilometer gas pipeline across Dobruja to Bulgaria, Romania would be receiving an unspecified amount of Soviet gas for a twenty-five-year peri12e riod.

Data as of July 1989