August - September 1998

by Michael Trainor

The Astrakhan region of Russia occupies 44,000 square kilometers of territory adjacent to the northeastern shoreline of the Caspian Sea. The region's center is the city of Astrakhan, with a population of over 500,000 (half of the region's total). Maritime activity and related industries are an important part of the region's economy, while the agricultural and petrochemical industries are also prominent economic features.

Astrakhan's location at the mouth of the Volga River where it enters the Caspian Sea makes it an important hub, linking Russia to Central Asia and the rest of Europe via the Volga River and the Black Sea. Astrakhan is linked to other cities of the region via roads and railroads. The region's international airport is undergoing refurbishment and modernization, a project which represents investment and export opportunities for foreign companies.

Industry
Astrakhan's industrial base is dominated by the petroleum and chemical sectors, agriculture, and shipbuilding. The region's electricity production levels are also substantial, accounting for nearly 20 percent of industrial output for 1997. The region's output, however, does not entirely meet local heat and electricity requirements. The local power generation company, Astrakhanenergo, has plans to upgrade its capacity in the immediate future.

Over the next few years, Astrakhan's oil and gas industry is set to develop most quickly among the region's sectors. The region holds Europe's largest gas condensate deposit. Oil deposits in the region are also significant. While deep, these deposits are attractive for their location and the relatively well-developed local infrastructure.

Astrakhan's chemical industry also has great potential for development. Astrakhan is the site of a large fiberglass production facility, Astrakhanskoye Steklovolokno, capable of producing a range of fiberglass products and fiber optic cables. Presently, the enterprise is seeking investment in the modernization of its production facilities. An investment of US$10 million is sought, with an estimated break-even period of three years.

The region's agricultural sector is dominated by fishing, particularly of sturgeon. The Caspian Sea holds approximately 70 percent of the world's sturgeon stocks, and 40 percent of all sturgeon harvest from the Caspian is generated by Astrakhan. Crops, notably melons and grains, are also harvested in the region. The land of the Volga River Delta is very fertile, capable of supporting crops without extensive irrigation.

The shipbuilding industry in Astrakhan is very well developed and has received considerable attention in the past few years. Production in recent years has increased (by 67 percent in 1997 over 1996) through several new orders for tankers and oil platforms, a reflection of the international competitive advantage of the region's shipbuilding industry.

Opportunities
Several high-profile direct investment projects have been announced in the food-processing, construction, shipbuilding, and textile industries. The region's government has also adopted measures including tax cuts, exemptions, financing, and guarantees to encourage foreign economic activity in Astrakhan. Germany, the United States, France, and Japan are among Astrakhan's leading trade partners, providing foodstuffs, metals, industrial equipment, organic chemicals, plastics, and furniture.

Contact information for companies highlighted above:

Astrakhanenergo
Aleksander I. Svitich, Director
Tel: +7 (8512) 33-39-77
Fax: +7 (8512) 34-80-08

Astrakhanskkoye Steklovolokno
Georgiy M. Kapitov, Director
Tel: +7 (8512) 25-26-28, 25-26-18
Fax: +7 (8512) 25-26-27

More information on Astrakhan and the surrounding area is available via the internet at: www.astranet.ru

Michael Trainor works with BISNIS in Washington, D.C.

This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)