Soviets, Japanese Sign Pact for Petrochemical Plant

The Soviet Union signed a preliminary agreement Friday with a Japanese-led consortium in a deal that could lead to the building of a huge petrochemical complex in western Siberia.

The project, if completed, would be one of the largest joint ventures the Soviets have entered into with foreign companies since liberalized regulations were implemented last year to make such undertakings possible.

Mitsubishi Corp., a major Japanese trading company that is the lead company in the consortium, estimated the cost at $5 billion, Japan’s Kyodo News Service said.

The award to the Mitsubishi-led consortium was a setback for Occidental Petroleum Corp. of Los Angeles, which had announced in June that it was putting together a consortium of Western chemical companies to do the project at the request of the Soviet government.

“The Japanese offered such attractive terms that the project was awarded to them,” Frank Ashley, an Occidental spokesman, said in a statement Friday attributed to the company’s chairman, Armand Hammer. Occidental later said the company did not know the terms of the Japanese offer.

Occidental said it was still leading two other big petrochemical projects in the Soviet Union.

Also in the consortium along with Mitsubishi are Chiyoda Corp. and Mitsui & Co. of Japan.

There were conflicting reports late Friday about whether Combustion Engineering Inc. of Stamford, Conn., was involved in the consortium. “I can’t tell you whether we’re in or out,” admitted Mark Baxter, a company spokesman.

Located in the area of the Nizhnevartovsk oil fields, 1,500 miles east of Moscow, the proposed complex would include 15 highly automated factories capable of annual production of up to 1 million tons of chemical products, including structural materials and polymers, the official Soviet news agency Tass said. The products would be used in the space, aircraft-building, automobile, electrical engineering and other industries.

Tass said the agreement called for the Soviets and the foreign group to complete by the end of March a feasibility study on building the complex.