Russia, Chechnya Trade Charges as Grozny Oil Refinery Blazes : Caucasus: Some fear nearby ammonia tanks could blow; no evacuations ordered. Moscow denies bombing.

Chechnya’s biggest oil refinery complex burned out of control Friday after reportedly being struck by Russian bombers, and Chechen officials warned that the blaze could spread to a nearby tank containing 5,000 tons of explosive ammonia.

“If it catches fire, an ecological disaster will hit the entire North Caucasus,” a Chechen Foreign Ministry official told Interfax news agency.

The “Vremya” television program reported that rivers of oil were on fire, raising the possibility of damage to a critical pipeline built to pump Caspian Sea oil from Azerbaijan to the complex of three oil refineries in the Chechen capital of Grozny.

“The whole refinery complex is on fire, but the situation with the pipeline is unclear,” said Marina V. Rodionova, press chief for the Russian Ministry of Emergencies. She said only 10 to 20 tons of ammonia remain in the storage tank, and no evacuation is needed.

Later, the Russian Defense Ministry said an explosion could endanger human life within a radius of 1.2 miles, depending on wind and weather. Reports from Grozny said the ammonia tank is 800 yards from the burning refineries, but no evacuation plans were announced.

Russian officials insisted that they had not bombed the oil complex.

“All oil refineries have been mined on orders of the Chechen leadership and can be blown up at any moment,” a government press service statement said. “The refineries are protected by reinforced detachments of Chechen militants. Russian units that attempt to reach them will suffer heavy losses.

“Not a single refinery came under bombing or artillery attack,” it added.

Whatever the cause of the refinery fire, Chechen officials said it has deprived nearby residents of one of their only sources of clean drinking water--melted snow.

City water supplies have been turned off for days, and people had been surviving by heating snow that is now covered with a black film of oil.

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President Dzhokar M. Dudayev of Chechnya, reportedly holed up in a bunker under his presidential palace, appealed to Russian President Boris N. Yeltsin for a New Year’s cease-fire starting at 8 tonight Moscow time.

For a second day, Dudayev announced that he is ready for peace talks with the Kremlin, but he told “Vremya” that he has one condition: no disarmament of the Chechen people. Moscow insists on disarming the separatist fighters it refers to as “criminal gangs” and “illegal armed formations.”

For a second day, Russian officials said they had received no communications from Dudayev. Yeltsin’s chief of staff, Sergei A. Filatov, made it clear that Moscow would negotiate only the terms of surrender.

Filatov said the quantity of weaponry in Chechnya also poses a security threat to other North Caucasus regions.

While acknowledging that the war to crush Chechnya’s 3-year-old declaration of independence has become “protracted and ugly” and that “we have made a series of mistakes,” Filatov said the time when the conflict could be resolved without force has passed.

The Kremlin’s horrendous image problem worsened Friday as lawmaker Leonid N. Petrovsky returned from Grozny to report that Russian airplanes were shelling and bombing villages packed with terrified refugees.

Petrovsky said Russian troops had told him that they did not want to fight; Russian POWs told him they believe that their government doesn’t want them back because they were captured after refusing to shoot civilians, and Chechen farmers who had never fought before told him that they were taking up weapons to exact revenge on the Russians who had slain their families.

“Air raids on Grozny have been partially stopped, but at the same time they have intensified in villages packed with refugees,” he said. “Civilians and children are there, and there is no place for them to hide.”

In fighting Friday, two Russian soldiers were killed while foiling two nighttime attempts by Chechen commandos to break out of the encircled Grozny. That brought the official Russian casualty count to 52 dead and 132 wounded.

However, fueling already widespread rumors that the Russian military is hiding the true number of its dead, officers of the elite 34th Regiment Airborne Division in Pskov told reporters that losses were greater than had been announced. They said 17 paratroopers were killed in fighting in Oktyabrskaya, a Grozny suburb.

The Chechens claim about 1,500 Russian soldiers have been killed and 3,000 injured since the conflict began. The number of Chechen casualties is even less clear: By tradition the dead must be buried quickly, and the refugee flight into neighboring republics makes an accurate accounting impossible.

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Bombing and shelling continued throughout the day as Russian forces attacked the Chechen “bandit formations” that continued to strike at the vastly superior Russian military machine.

Chechen sources said the refinery was first bombed Thursday, then struck repeatedly Friday.

Officials in neighboring Ingushetia said sooty smoke from the fire has now blanketed them. Dudayev appealed to the United States, Europe and oil-producing Arab countries for help fighting the fire, Interfax reported.

The message, signed by Dudayev, said oil and gas pipelines have been seriously damaged but the continuing hostilities have made it impossible to tackle the flames.

One analyst suggested that, despite Russian statements that Chechnya has no strategic importance, Moscow is in fact concerned that a rebel Chechnya would marginalize its piece of what Azerbaijanis call “the deal of the century,” a huge multinational agreement signed earlier this year to develop the Caspian Sea’s vast oil reserves.

If the oil is piped out through Iran or Turkey instead of Chechnya, Russia will lose its economic leverage over Azerbaijan, an oil-rich republic that has been building uncomfortably close ties with its Muslim neighbors, wrote Yuri A. Afanasyev, director of the Russian Humanitarian University.

In other developments Friday: * The Helsinki-based Human Rights Watch sent Yeltsin a letter denouncing the bombing of a Grozny orphanage as “part of a demonstrated pattern of Russian forces’ flagrant violation of their obligations under the Geneva Conventions,” which prohibit indiscriminate attacks on civilian targets.

* The prominent Izvestia newspaper named Yeltsin’s estranged human rights commissioner, Sergei A. Kovalev, who has remained in Grozny to describe conditions there, its Man of the Year.

Kovalev, a close friend of Nobel Peace Prize-winning physicist Andrei D. Sakharov, spent 10 years in Soviet gulags and exile for his human rights activities. Last year, he took to the hustings to defend Yeltsin during the election campaign. Now he has become Russia’s leading anti-war activist.

* There was a fresh batch of bad economic news that raised questions about how Moscow could sustain the war without sending inflation rates into orbit.

Finance Minister Vladimir Panskov estimated that the Chechnya war will cost 1 trillion rubles, or $282 million, by year’s end. The bank savings deposits of the Russian people total 11 trillion rubles.

And the State Statistics Committee announced Friday that inflation in December had jumped to 16.4% from 14.1% in November, the worst rate this year.