U.S.-Japan Group Wins Soviet Oil Bidding War : * Energy: The deal to explore big gas and oil fields off the Siberian coast is the largest of its kind to date.

In the largest potential deal so far between foreign energy companies and the Russian energy industry, a U.S.-Japanese consortium has won the international competition to explore two big oil and gas fields on Sakhalin Island, off the Siberian coast.

After months of rumors and speculation, the MMM Group--comprised of Marathon Oil Co. and McDermott International Inc., both U.S. firms, and Mitsui & Co., based in Tokyo--announced Tuesday that it had received a letter of intent from the Republic of Russia to begin feasibility studies of the fields.

“It could be a big deal if the reserves prove to be there,” said Philip K. Verleger Jr., an energy economist at the Institute for International Economics in Washington.

Others saw the move as a sign of serious intent by the Russians to improve a chaotic scene in the Russian oil patch that has frustrated several foreign companies in efforts to build joint ventures there.

“It’s an indication that they’re very serious about getting foreign partnerships,” said John H. Lichtblau,, chairman of the New York-based Petroleum Industry Research Foundation.

Preliminary estimates of the total reserves of both fields, according to a Marathon spokesman, are 750 million barrels of oil and 14 trillion cubic feet of natural gas. This is just below what is known as “elephant” class, the largest fields, and less than a tenth the estimated size of Alaska’s Prudhoe Bay reserves.

The Sakhalin Island Governmental Tender Commission, the local authority, chose the MMM Group to work with the Russian oil-production agency Sakhalinmorneftegas. The two fields to be studied, Piltun-Astohskoye and Lunskoye, are offshore tracts just east of Sakhalin Island.

Should the oil and gas be successfully developed, much of it would likely be sold in Japan. The Japanese have long wanted to lessen their dependence on the Middle East for their oil and gas imports. Some of the gas and oil is likely to be used on the nearby Siberian mainland as well, to power new electric-power projects.

“This project is for diversification of energy sources for our country and contributes to the development of energy production and (the) economy of Russia,” said Naohiko Kumagai, president of Mitsui & Co., in a statement released from Tokyo. Mitsui would bankroll the joint effort, while McDermott would build oil platforms and other facilities and Marathon would operate the wells.

Mitsui expects the group to finish negotiating details of the feasibility-study agreement with the Russians by the end of March and the study itself by the end of the year. It foresees production of crude oil and natural gas to be used in Russia by the end of 1995 and production of liquified natural gas, or LNG--which is natural gas cooled to liquid form for easier transport--by 1999.

That is, if all goes well. Smaller foreign ventures in the Russian energy industry have been frustrated by mid-stream rule changes. The Russians recently imposed, for example, what amounts to a 20% tax on companies already operating there. And the diversity of authorities makes negotiations difficult.

“Prior experience says that they will be very long and very messy,” Verleger said.

Local Siberian officials also have pressed for foreign oil firms to build roads, schools and other facilities not directly tied to oil.

“I think every one of these small towns is going to extract whatever they can,” Verleger said, “because they know they are going to get nothing from the central government.”

Russian Oil

A consortium of U.S. and Japanese companies has won the rights to begin development of two large offshore oil and gas fields near Russia’s Sakhalin Island, off the Siberian coast north of Japan. The group will explore the Piltun-Astohskoye and Lunskoye fields-- estimated by Marathon Oil Inc., one of the companies involved, to hold reserves of more than 750 million barrels of oil and 14 trillion cubic feet of natural gas.