MOSCOW, NOV. 11 -- A Connecticut petroleum engineering firm today signed an agreement setting up the first U.S.-Soviet joint venture under a new law designed to lure foreign investment and technology into the Soviet Union.

A spokesman for Combustion Engineering Inc. said the partnership with the Soviet oil refining ministry will involve the installation of instrumentation and control systems at a petroleum refinery plant outside Moscow, and later a joint production facility employing up to 300 people.

William Connolly, vice president for corporate affairs, said that prospects for the new company, known by its Russian acronym Pris, are good.

"We expect earnings of no less than $200 million the first five years, of which 49 percent of the profits will be ours," he said. "The numbers are not staggeringly large, but we believe that the Soviet market is an important part of the future."

Under the terms of the year-old joint ventures law, up to 49 percent of a joint enterprise can be owned by foreigners. Two of the five directors and the deputy manager in charge of production at Pris will be Americans, Connolly said in an interview.

Connolly said the project began as the natural next stage of Combustion Engineering's involvement in the Soviet Union, the world's largest oil producer. The company, which has extensive foreign contracts and last year recorded $2.8 billion in sales, is now finishing work on a $12 million contract for the installation of computerized control systems at an ethylene plant at Nizhnikamsk, south of Moscow.

During negotiations on the followup project for equipping a refinery outside the capital, both sides looked to the new Soviet joint venture law as an appropriate vehicle. "Joint ventures are nothing unique from our standpoint," said Connolly. "So when the Soviet law came along, we found it attractive."

"We will provide products and technology, and our Soviet partners will provide the production facility and engineering," he said. The company will produce sensors, valves and other instrumentation for oil refineries, he said.

Connolly told reporters at a press conference before today's signing ceremonies that capital investment in the joint company would amount to $16 million in the first year, divided between the U.S. and Soviet partners. The joint venture agreement is for a five-year period.

The Soviet joint venture law, reversing longstanding rules against foreign investment, at first met with a cautious response from western companies. One of the principal concerns was how they would retrieve profits made here in Soviet rubles, which are nonconvertible.

According to Connolly, Combustion Engineering will get around the problem by taking out its earnings in the form of products made by the oil refining ministry, namely refined products such as plastic compounds.

However, he stressed that the principal attraction of the joint venture is giving the company a foothold in the large Soviet market. "Before the question of maintaining our participation in this market was sometimes difficult, whereas with a joint venture, we have an established position," Connolly said.