Have you looked into using the Remote API

https://developers.google.com/appengine/docs/python/tools/remoteapi
https://developers.google.com/appengine/articles/remote_api

You use your local machine to parse the file [no memory problems],
create the needed objects, and put them in the datastore in batches.

You can use a modified class Mapper to do the batch write as found in

https://developers.google.com/appengine/articles/deferred

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