The U.S. giant General Electric and St. Petersburg's Kirov engineering factory are planning to form a joint venture to produce gas turbines, spokesmen for the two companies said Thursday.


Under the deal, the Kirov joint-stock company, which owns Russia's largest engineering complex, would build turbine engines for generating electrical power using General Electric's components.


If the deal goes ahead, General Electric would be going into battle with at least one foreign competitor. Siemens signed a $600 million deal with the Leningrad Metal Factory last year and that joint venture has already produced its first turbine.


An initial protocol of intent was signed in July by Kirov's general director Vladimir Ognev and U.S. Consul in St. Petersburg Jack Gessel.


The project has won funding for a feasibility study from the U.S. Trade and Development Agency, which has pledged to provide half of an estimated cost of $1,200,000, with General Electric footing the bill for the remainder.


A final decision on the formation of the joint venture is expected by the end of this year, representatives for both sides said.


The turbines would be produced at Kirov's Energomash plant, the military conversion department of the Kirov complex.


If a contract is signed, General Electric will deliver a U.S. assembled engine to the St. Petersburg factory. The turbine will then be studied by Kirov's engineers who will assimilate the technology and make preparations for its production, Kruglov said.


General Electric intends to supply equipment to the value of at least $10 million if the deal goes ahead, said Thomas Crozier, the U.S. firm's chief representative in Moscow. But the level of further investments hinge on the results of the feasibility study, he added.


Kruglov said that the Kirov plant hoped to take over all aspects of turbine production at a future stage.


The joint venture's turbines will be sold mainly in Russia, and the Kola nuclear power station in the Far North has already said it will buy three engines, according to Interfax. Kruglov said he also hoped to attract customers like the huge Gazprom company and the Fuel and Energy Ministry.


Crozier said that General Electric is already active on the Russian market, marketing a variety of medical equipment, refrigerators and other electrical goods.