The World Bank has approved a $500 million loan for Russia's oil producers, bringing total commitments from the World Bank to Russia so far this year to $1.5 billion.


The bank said in a statement Wednesday that three oil-producer associations in Western Siberia will benefit from the loan.


The associations -- Megionneftegas, Tomskneft and Yuganskneftegas -- will use the funds to improve production at existing wells, for environmental training programs and for projects such as replacing pipes to stem oil leaks and environmental cleanups.


Total project costs are pegged at $678 million, with the producer associations providing $178 million.


The loan had been held up by Russia's application of its 23 percent value-added tax to imports of equipment, but the government granted an exemption for the World Bank.


The bank's statement announcing the loan said the Russian government is interested in loans for unemployment and retirement benefits and for transferring social services from enterprises to local governments.


In the past bank officials have said the Russian government was not interested in borrowing for social purposes, but only for projects that directly increased production. Now, a bank spokesman said, they are beginning to talk about housing and social-security projects to ease the economic hardships caused by reform.


In the oilfields, pipelines will be replaced to reduce leakage, pilot projects will start cleaning up damage to the environment and oilfield infrastructure will be rebuilt, among other improvements.


The spokesman, Peter Riddleberger, said that none of the money will go for new wells or exploration but only to rehabilitate old production facilities. Their neglect has been a major cause of the drop in Russian production -- the largest in the world until the collapse of the Soviet Union and still the country's main source of hard-currency earnings.


Riddleberger said production last year dropped by about 12 percent, a little more slowly than the year before. Russia is trying to mobilize about $50 billion in the hope of halting the decline by the year 2000, according to the bank.


Riddleberger said that the loans announced Wednesday should reach their peak effect in about four years, adding 8.2 million tons, or about 58 million barrels a year to Russia's production -- a 2.5 percent boost. Additional revenue was estimated at $900 million.


The loans are repayable in 17 years, including five years during which only interest will be due, at a variable rate now set at 7.27 percent a year. This money comes from a section of the World Bank called the International Bank for Reconstruction and Development, which lends only to governments.


The World Bank's International Finance Corporation, which lends to private industry, announced Wednesday its first loan in Kazakhstan's oil and gas industry: $57.5 million for Kazgermunai. This is a joint venture of a local enterprise and two German partners: Vena Oel AG and Erdoel Erdgas Gommern GmbH.


Another $75-million loan to the project is expected from Germany's Kreditanstalt fuer Wiederaufbau, a government reconstruction bank, and $57.5 million from the European Bank for Reconstruction and Development.


(Reuters, AP, MT)