Soviet republics took a major step forward last week.

A joint US/Italian venture has won the turnkey contract to work with the Caspian Pipeline Consortium (CPC) in the phase one construction that will pump oil from former Soviet republics to the west.

Bermuda Commercial Bank chairman Mr. John Deuss has been a key figure in the scheme as a CPC director and as president of one of the major players, The Oman Oil Company Ltd.

The US/Italian partnership includes Willbros from the US and Saipem from Italy in a construction project that is expected to cost $350 million to $450 million and begin in January.

Mr. Edward Smith, CPC general director and project executive, said "This is a major milestone for CPC and represents the next step toward completion of this vital pipeline project.'' Speaking from his Houston office, Mr. Smith told The Royal Gazette : "We've had a lot of activity going on, on the ground in Russia and Kazakhstan. In Russia, we have been acquiring right of way for the pipeline for the last six months.

"The overall effect of the CPC is to provide a transportation system for the production from the Tengizchevroil joint venture of which Chevron is a 50 percent owner. But we have been unable to come to full agreement with Chevron on terms related to the pipeline.'' "Chevron has been requested to guarantee 50 percent of the debt and to provide a share of the equity. To get their 25 percent interest in the pipeline, we wanted Chevron to contribute a certain level of equity to the company.

"Oman is going to contribute approximately $50 million and Chevron would contribute the balance required to get financing. We expected that to be in the order of $250 million to $280 million.'' Willbros will lead the venture but share equally with Saipem the responsibility for detailed engineering, procurement and construction of the 250 kilometre pipeline.

The plan has been to help Russia, Kazakhstan and Azerbaijan expand their crude oil export capacity. These countries and other former Soviet republics are fighting a 1996 deadline when the current Russian pipeline will be unable to handle the growing export needs.

CPC was formed in 1992 by the Governments of the Russian Federation, the Republic of Kazakhstan and the Sultanate of Oman to build and operate oil pipelines in Russia and Kazakhstan.

PIPE DREAMS -- Construction of phase one of a pipeline which will open up giant oil reserves in Tengiz, Kazakhstan is set to go ahead. Bermuda-based Oil Company, led by local oil magnate Mr. John Deuss, is a member of the Caspian Pipeline Consortium.