Russia will continue to develop

newsletter 01/12/2015

The outgoing year was quite complicated: the consumer demand and real income of the population have decreased; capital outflow came amid high bank credit rates and closing up of many investment programs; reduction of the GDP and industrial production was recorded for the first time since 2009; inflation was significantly accelerated. However, sanctions and devaluation of the ruble resulted in net profit double-valued growth of many domestic companies. Expensive import and low ruble smoothed path for the Russian manufacturers to the domestic market; now there is an opportunity to push export more efficiently.

Moreover, a number of major investment projects are at the final stage. The next year we expect them to be completed or to be in a startup phase of first priority (see table 1).

Table 1. Major investment projects of Russia expecting to be completed (in full/alternately) in 2016, investment volume exceeds 100 bln RUB.

ProjectRegion, city/townInvestorInvestment declared, bln RUB
1 Construction of “Western High-Speed Diameter” high-speed motorway. The central section Saint-Petersburg Northern Capital Highway, LLC 213
2 Unit for petrol production on Kirishi oil refinery The Leningrad region, Kirishi OJSC Surgutneftegas 170
3 Gas chemical complex in Budennovsk The Stavropol Territory, Budennovsk LUKOIL oil company 140
4 Boguchansky aluminum plant The Krasnoyarsk Territory, Tayezhniy settlement OJSC RUSAL 122
5 Reconstruction of Komsomolsk oil refinery The Khabarovsk Territory, Komsomolsk-na-Amure OJSC ROSNEFT 119

Western High-Speed Diameter. The central section is a toll high-speed motorway aimed at transport connection of the Big port Saint-Petersburg with the federal ways to Moscow, regions of Russia, the Baltics and Northland countries through the ring road. The motorway will also reduce traffic load in the historical part of the city.

Kirishi oil refinery will raise the oil refining ratio. A unit for the production of Euro-5 high-octane gasoline and the capacity of 2 bln t/year is constructing.

Gas chemical complex in Budennovsk (as a part of OOO “Stavrolen”) will process up to 5 bln cubic meters/year of gas from the North Caspian fields. The complex will be the largest center in Russia for manufacture of polymers (along with OOO “Tobolsk-Polimer”). Considering that there was almost no modern polymer production in Russia until recently, the mentioned event will be momentous for the whole Russian industry.

Boguchansky aluminum plant is one of the most modern and the largest metallurgical enterprise in Russia. In terms of full capacity, the plant takes the 3rd place following the Krasnoyarsk and Bratsk aluminum plants. Boguchansky plant is able to manufacture about 600 th tons of aluminum per year.

Komsomolsk oil refinery will be modernized. This will help to raise the oil refining ratio. The high value added products are always of high demand, for example for the PRC, our neighbor from the East.

In addition to the infrastructure projects mentioned above, many other programs are implemented despite of all difficulties. The outside observer will be quite surprised after exploring them: the stereotype about the country trading with raw materials without recycling and “manufacturing nothing” for the self-use is just a frustrated affirmation.

Absent circumstances of insuperable force, the GDP and industrial production growth are expected to raise in the medium-term. The reduction of the Central Bank key rate will revive the credit market.

Information agency Credinform congratulates you with the forthcoming New Year! May the 2016 year give you new business prospects, investments for the development and new clients!