Venture With Italian Firm : Occidental Plans Huge Plant in Soviet Union

Occidental Petroleum Corp. and the Italian firm Montedison announced Thursday the signing of a memorandum with the Soviet Union to develop a petrochemical complex at the Tengiz oil field near the Caspian Sea.

Armand Hammer, the 89-year-old chairman and chief executive of Occidental, said it eventually would be the largest joint venture ever created in the Soviet Union.

Hammer, who has been doing business with Moscow since he met the first Soviet leader, Vladimir I. Lenin, in the 1920s, said the parties agreed to meet before Jan. 31 to speed execution of an agreement.

The deal was signed with the Soviet Ministry of Oil Industries and announced by Hammer at a news conference. He said a Japanese firm, Marubeni Corp., also agreed to join the international consortium and that other firms may join later. The project is expected to cost $5 billion to $6 billion.

The consortium’s aim is to use the gas liquids produced at the Tengiz field to make plastic materials and also process commercial grade sulfur.

The complex will have facilities for production of such finished products as pipe, insulation films, non-woven textiles and pure sulfur for fertilizers, the announcement said.

“The complex would produce annually 500,000 tons of polypropylene, 500,000 tons of polyethylene and 1 million tons of commercial grade sulfur,” the Occidental statement said.

Hammer, a prime mover in Soviet-American art exchanges and occasionally an unofficial intermediary for American presidents and Kremlin leaders, on Wednesday presented a famous Russian painting to the Soviet Cultural Foundation as a gift.

On Thursday, he put on his foreign trade hat and presided over the birth of the Tengiz joint venture.

“The implementation of this joint venture will combine the great natural resources of the Soviet Union with Western technology, therefore making the benefit of these products available to all the world,” Hammer said.

The Soviet and foreign partners agreed that at least half of the commercial products made at the complex will be sold on the world market, thus providing the Soviet Union with badly needed hard currency.

Hammer, who flies to Moscow aboard his corporate jet, Oxy 1, has special status among the many foreigners trying to do business in the Soviet market.

His brief acquaintance with Lenin--which has now become almost legendary and has been dramatized in the Soviet theater--has given him the role of the “good capitalist” who believes in peaceful coexistence.

Hammer, a supporter of U.S.-Soviet summits, has said next month’s meeting between Soviet leader Mikhail S. Gorbachev and President Reagan will open a “new epoch” in Soviet-American relations.