The government will offer oil companies tax breaks and preferential access to export pipelines in return for participation in an oil-for-sugar deal with Cuba, a Foreign Trade Ministry official said Thursday.


The deal, set to be signed Thursday, would swap 3 million tons of Russian crude oil for 1 million tons of raw Cuban sugar in 1995. In a similar deal, Russia last year imported 1 million tons of sugar from Cuba for 2.5 million tons of crude, according to Interfax.


Last year only select firms were allowed to export oil, but in 1995 a series of new laws has opened Russia's westbound pipelines to all oil producers. This has sparked fierce competition for access, which is allocated by a government commission and depends on a company's output and its supplies for state contracts.


According to Mikhail Gaykazov, a deputy department head at the Foreign Trade Ministry, the lure of privileged access to export facilities and tax breaks is likely to outweigh the fact that Russian exporters stand to lose roughly $40 million on the deal by selling at lower-than-market prices.


One ton of Russian crude currently sells for between $130 and $133 on international markets, while raw sugar is valued at approximately $350 per ton.


Nevertheless, Gaykazov said Russia's policy toward Cuba has toughened in relation to that employed by the Soviet Union, when the island received more favorable barter deals. Now the exchange is linked to international market prices.


Foreign Trade Minister Oleg Davydov said the oil-for-sugar deal would ease Russia's sugar shortage, expected to reach 2 million tons this year. He added that it would help prevent domestic sugar prices from rising and would keep 100,000 sugar refinery employees in work.


According to Gaykazov, the deal also reflects Russia's broader interests in the West.