Soviet Union offers new pipeline contracts
Wanted: Western technology to develop a huge gas field at Astrakhan in the Volga region of the Soviet Union.
The stakes: $1 billion in contracts.
Sound like a repeat of the Siberian pipeline deal? It is, except for one crucial difference: The Soviets don't intend to export the gas but to use the expected annual production of 1.7 billion cubic feet domestically.
Still, French, West German, and Canadian firms are competing furiously for the lucrative contracts, which are expected to be signed soon. At the same time diplomats from these countries were sitting down in Washington negotiating with the United States and the other allies an agreement to tighten trade with the Soviet Union.
Although the deal would not break the broad outlines of that announced trade agreement precisely because the gas is intended for domestic use, the competition over the contract shows how eager Western countries continue to be to sell to the Soviets.
France is particularly anxious for its bidders, Creusot-Loire and Technip, to fare well in the contract stakes in order to reduce its yawning trade deficit with the Soviets. As a result, American diplomats here speculate that sensitivity over the Astrakhan contract may have been a key hidden reason for France refusing so far to join the other allies in tightening trade with the Soviets.
French foreign trade officials confirm that they have high hopes for the Astrakhan contract. The Russians could satisfy Michel Jobert's recent demand that they buy more French goods or face unilateral French cuts in Soviet imports by buying French to develop the Astrakhan field, they say.
But this does not necessarily mean the French have the edge on the contract. Because of low West German inflation, the German firms involved, Lurgi and Mannesmann, can offer single-digit credit. Even after government export subsidies, the French can offer only 12.5 percent due to a new Organization for Economic Cooperation and Development rule on government-subsidized credit to the USSR.
''And the Russians don't like double-digit interest rates,'' an American diplomat here said.
The Canadian firm Parteca should not be counted out either. It has an experience edge on both its French and German competitors, International Energy Agency officials say.
Astrakhan gas has a high sulfur content and Western companies are being asked to construct a desulfurization plant. Parteca has considerable experience in this field because of its work in Alberta, where the natural gas also has a high sulfur content.