FIRM NEARS PACT WITH RUSSIA.

Byline: Ben Sullivan Daily News Staff Writer

There's no smog like Soviet smog.

Along the highways and byways of the Commonwealth of Independent States - successor to the former Soviet Union - Eastern European cars and trucks belch thick, greasy exhaust.

In part, that's because few older models have catalytic converters - and most vehicles there are older models.

But even those that are equipped with the chemical filters are generally lubricated with smoky, ``second-generation'' motor oil. Oils used in the United States and Western Europe are fifth-generation products that by comparison burn almost squeaky clean.

That disparity is one J.T. Granatelli Lubricants Inc. hopes to exploit.

From the company's Camarillo headquarters, President Harry Hibler said he is in final negotiations with Los Angeles- and Moscow-based Forward Trading Inc. to begin marketing an oil supplement Grantelli developed that it says will give Soviet-style oil the qualities of a spiffy American lubricant.

Though most of their refineries are outdated and generate highly polluting oil, CIS governments are often reluctant to invest the money needed to retrofit the facilities, allowing them to make more eco-friendly products. Hibler and company say their additive can save them the trouble, or at least postpone the inevitable.

``Refineries utilizing our product within their oil will save billions . . . they would normally have to spend in capital-intensive retrofitting,'' Hibler said.

Under the joint venture agreement, Forward Trading would distribute the additive to CIS refineries through its 2,300-employee trucking and freight-forwarding network. Chris Bromley, executive director of Collier Capital Management Inc., which is advising Granatelli on the joint venture, said that if successful the deal could generate up to $300 million in sales for Grantelli annually.

Bromley said the Russian government is evaluating the Granatelli additive and that because of good relationships between Granatelli management and state officials, should give its seal of approval within the next 60 to 90 days. That approval isn't necessary to market the additive, he said, but a government endorsement will be key to the product's market acceptance.

Shell Oil and Mercedes-Benz have each tried to market similar products in the CIS, Bromley said, but lacking a government endorsement have met with limited success.

``Our leg up is the wide acceptance of government products,'' he said, adding that purchasers for both private and state-owned refineries still look to the state for a nod on which products to carry.

``Even though we've got some heavy companies over there, it's a different kind of market than in the U.S.,'' he said. ``It's strange to say, but anything that's got a government stamp on it sells.''