Soviets Offer Drilling Deal to Occidental

The Soviet Union has offered an oil-drilling concession to Occidental Petroleum, its first to a private company, Occidental Chairman Armand Hammer said Friday.

The project would be carried out at an Arctic site where Soviet technology isn’t good enough to raise oil, Hammer said.

Hammer, the industrialist whose ties with the Soviets date to business activities there in the 1920s, said Occidental is negotiating terms of the project. He said one possibility is a 49% Occidental ownership, with Soviet payment in the form of an oil swap. In such a venture, Occidental would produce the oil for the Soviets, who would pay Occidental with oil from some place else.

Hammer described it as a “rather modest” project that might produce 120,000 barrels of oil a day. But he said the Soviets are discussing a “much larger” venture with Occidental and British, French and German interests in the Urals.

“There’s a lot of undeveloped oil and gas in Russia, and with our know-how and methods we might be able to get it out,” Hammer said.

Hammer described it as an example of the new economic directions being taken by Soviet leader Mikhail Gorbachev. His remarks confirm statements by Russian energy officials at a meeting in Houston this week.

“They’re trying to get other oil companies interested,” Hammer said. “I imagine that’s why they’re talking about us. They’re probably looking for some competition.”