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Investment opportunities of Yakutia


April 23, 2015 in Beijing, Oil Company Tuymaada-neft and Tsing Hua An Tszyu Company signed an agreement on joint investment in the construction of a refinery in Aldan region of the Republic of Sakha (Yakutia) with a capacity of 2 million tons per year.

The following is an interview with Minister of Industry of RS (Y) Andrei Panov, CEO of "Investment Promotion Agency of the RS (Y)" Alexei Zagorenko, the leadership of Tuymaada-neft on the construction of an oil refinery in southern Yakutia, Aldan region.What will be the benefits for Yakutia-China business partnership, and how is it planned to solve personnel issues…?

- What factors determine the close cooperation of the Republic of Sakha (Yakutia) with China?

- The Republic of Sakha (Yakutia) and the People's Republic of China are not only neighbors geographically, but also have a long history of relations.Annual strengthening and development of cooperation between the regions are confirmed by the increasing rates of export-import activity and the number of joint events, mutual interest in the business communities of the regions.Annually, there are joint activities, such as the Russian-Chinese Expo in Harbin, where Yakutia actively participates, Days of Heilongjiang Province in Yakutsk, various forums and conferences.Also at the end of last year the Republic of Sakha (Yakutia), the first of the entities of the Russian Federation, presented the investment opportunities in the Embassy of the People's Republic of China in the Russian Federation.

To date, active state policy of the Government of the Russian Federation is aimed at the regions of Russia and the development of the Far East.Measures to support investment activities positively affect the attraction of foreign investors from the People's Republic of China.Russian-Chinese cooperation is carried out in a wide range of areas, including trade and economic ties.

- What volume of investments was invested in the construction of an oil refinery on each side? Why was Aldan region chosen?

- Tuymaada-neft has prepared investment feasibility study, a declaration of intentions, public hearings, received a land plot, and the Aldan refinery project was registered with the Ministry of Energy of Russia.All of the above is the volume of investment in the project.

At this stage, Tuymaada-neft carries financial assessment of all of the work, and then in the framework of bilateral negotiations they are to determine the share of each party to the joint venture.Aldan region of the Republic of Sakha (Yakutia) was chosen as the most optimal for the construction of an oil refinery on the reasons of developed transport infrastructure and proximity to raw material sources of the future oil refinery and ESPO pipeline.

- What will be the result from the construction of this refinery; do you expect much of it in terms of international cooperation?

- In the event of the project implementation the problem of supply of petroleum products for the needs of the republic will be solved, eliminating the two-stage system of "northern delivery".At the moment, the Republic of Sakha (Yakutia), having large prospected hydrocarbon reserves, does not have its own refinery and has to import petroleum products from the outside in the amount of about 1 million tons from other regions of Russia.It is the cause of increased cost of purchasing fuel prices up to 50% of the price of the manufacturer.

- How is it planned to create jobs and training?

-It is planned to create 970 jobs, of which 740 persons of production staff and 230 of support staff.Job creation will lead to an extension of employment, reduction of unemployment, and as a result, improving the living standards of the population.It will have a positive effect on the improvement of the professional and qualification level of the workforce.On the input stage and the start of operations it is planned to attract highly qualified specialists from the local cadres, regions of Russia and foreign countries.The creation of new high-tech industries will help develop human resources potential of the republic, the opportunity to raise the level of young professionals.

Gradually visiting specialists will be replaced by local staff with suitable expertise and experience.The issue of training is scheduled to implement already at the stage of design work in order to have trained personnel for the launch of the plant.Young professionals from Yakutia will work on probation and study in other areas and plants, which operate outside the republic.Such an exchange of experience is generally accepted in the global practice.

- It has been said that for the implementation of the project (the refinery) Yakut and Chinese parties will create a joint venture.What kind of company is it? What are its functions and tasks?

-During the project implementation the parties plan to establish a joint venture in the Russian Federation, in the legal space and the laws of the Russian Federation with the functions of the management company.

Tuymaada-neft Oil company has a refinery project and "Qin Hua An Tszyu" company has the support of Construction and Engineering Research Institute of the University of Qin Hua, international foundations and consortiumsand enjoys the support of China National Petroleum Corporation (CNPC).