October 1999

AN EYE ON THE OIL & GAS SECTOR IN TURKMENISTAN

PROMOTING GOOD PRACTICES

FOR BUSINESSES IN RUSSIA

by Igor Abramov

(continued on p. 5)

(continued on p. 4)

Turkmenistan’s abundant oil and gas resources make

it a country to watch in the next millennium. A country of

only some 4.9 million people, Turkmenistan borders on

Afghanistan, Iran, Kazakhstan, Uzbekistan, and the

Caspian Sea. Its hopes for rapid and lucrative development of its energy resources in the post-Soviet era were

dashed by the dearth of export outlets to hard currency

markets. In March 1997, Turkmenistan’s only paying export route, through Russia’s pipeline system, was shut down

due to nonpayment problems with Ukraine, causing a sharp

drop in export earnings. The Government of Turkmenistan

is now looking to implement several proposed export pipeline projects and to develop its production and refining

capabilities.

Natural Gas

Turkmenistan has the world’s fourth largest known

natural gas reserves—after Russia, the United States, and

Iran—with estimated reserves totaling 13-21 trillion cubic

meters of gas. In 1992, Turkmenistan produced 84 billion

cubic meters (bcm) of gas, but only half of that amount

was produced in 1996. Faced with limited export pipeline

options and nonpaying customers, gas production fell even

further in 1998 to just over 13 bcm. A new but small (8

bcm capacity) gas pipeline to Iran, built in 1997, currently

enables Turkmenistan to export about 3 bcm of gas per

year. To increase exports, Turkmenistan is actively pursuing a project to construct a pipeline to Turkey via the

Caspian Sea, Azerbaijan, and Georgia, and it is also exploring options for exporting gas to China and through

Afghanistan to Pakistan.

Oil

Turkmenistan has significant oil reserves amounting

to 6-8 billion tons. Turkmenistan produced 6.3 million tons

of oil in 1998 and around 4 million tons of oil during the

first eight months of 1999. The country’s two oil refineries—in the Caspian port city of Turkmenbashi and in

the town of Seidi—are both in need of modernization.

The Turkmenbashi refinery, where most Turkmen oil is

refined to meet domestic needs, is currently being upgraded. The Seidi refinery, which is currently running at

6-8 percent of capacity, will also be reconstructed.

Government Energy Policy

The Turkmenistani Government is looking for

foreign investment to develop its oil and gas industry

and export routes to hard currency markets. Eight oil

The U.S. and Russian Governments are taking steps

to draw attention to the importance of good business

conduct and to facilitate change among Russian

businesspeople and officials. Working bilaterally to create conditions for significantly increased trade and investment is a key goal of the U.S.-Russia Business Development Committee (BDC) under the Joint Commission chaired by the U.S. Vice President and the Russian

Prime Minister. The BDC, in cooperation with the Chamber of Commerce and Industry of the Russian Federation and in consultation with Russian and American

businesses, has developed Basic Guidelines for Codes

of Business Conduct to promote good business practices and ethical behavior in commercial relations.

The Basic Guidelines are a set of general principles

that are widely accepted in international business. Key

areas addressed by the code of conduct include:

· Principles in Personal and Professional Relations

by Irina Begjanova

Published by the Business Information Service for the Newly Independent States (BISNIS)

U.S. Department of Commerce • International Trade Administration

BISNIS

BULLETIN
BISNIS BULLETIN - October 1999

2

BISNIS is an information center for U.S. companies doing business in the Newly Independent

States of the former Soviet Union. Operated by the Market Access and Compliance unit of

the International Trade Administration, BISNIS disseminates information in print form, electronically, and through consultations by its staff of trade specialists. For more information,

please contact:

202-482-4655 (phone)

202-482-2293 (fax)

bisnis@ita.doc.gov (email)

To call BISNIS toll free, dial

1-800-USA-TRAD (872-8723)

press 3 and then press 2

or visit the BISNIS Online website at

www.bisnis.doc.gov

BISNIS

The Business Information Service for the Newly Independent States

In This Issue

An Eye on Turkmen Oil & Gas

Promoting Good Practices for

Businesses in Russia

Key Issues in Russian Power

Sector Investments

Tricks of the Trade: Finding a

Security Agency in Russia

Regional Corner: Yaroslavl Oblast,

Russia

Agency Spotlight

Trade Events Calendar

Upcoming Conferences

Articles by non-U.S. Government employees express the views of the authors and

should not be construed as a statement of U.S. Government policy.

Director

Anne Grey

Deputy Director

Trevor Gunn

Managing Editor

 Ellen S. House

Assistant Editors

 Tanya Shuster, Kelly Raftery

Contributors

Igor Abramov, Janna Agasieva,

Olga Ananina, Irina Begjanova,

Maria Rodriguez Valladares

Crowds Descend on the Seventh

Annual BISNIS Open House

SABIT FY 2000 SABIT FY 2000

Program Calendar am Calendar

The U.S.Department of Commerce’s Special American Business Internship Training (SABIT) p ing (SABIT) rogram announces several

new programs forfiscalyear 2000. SABIT

provides funding to U.S. organizations to

conduct stateside management training for

business executives and scientists from the

NIS. SABIT identifies a pool of NIS scientists or managers in specified fields and

awards grants to U.S. companies to help

pay to host and train an English-speaking

NIS colleague.

Northwest Ports

Application Deadline: Sept. 14, 1999

Program Dates: Oct. 25–Nov. 19, 1999

Russian Regional Development -

Novosibirsk Region: Technological

Commercialization

A pplication Deadline: Feb. 18, 2000

Program Dates: A pril 1–29, 2000

Environmental Technologies (ET)

- Mining Industry Cleanup

Application Deadline: Oct. 25, 1999

Program Dates: Jan. 15–Feb. 26, 2000

ET - Pulp and Paper Industry Cleanup

A pplication Deadline: Feb.7, 2000

Program Dates: A pril 1–May 13, 2000

ET - Air Pollution Management

Application Deadline: April 10, 2000

Program Dates: June 10–July 22, 2000

Central Asia Programs (topics TBA)

Session #1

A pplication Deadline: Dec.3, 1999

Program Dates: Feb. 5–March 4, 2000

Session #2

A pplication Deadline: Feb. 25, 2000

Program Dates: A pril 29–May 27, 2000

Session #3

Application Deadline: May 5, 2000

Program Dates: July 8–A ugust 5, 2000

For moreinformation, contact SABIT at

(202) 482-0073, or visit its website at

www.mac.doc.gov/sabit/sabit.html.

BISNIS’ seventh annual Open House, held on September 17 in the lobby

of the U.S. Department of Commerce building, brought together some

400 businesses and organizations from across the United States to network and gather information on doing business in the NIS. All BISNIS

representatives from the NIS were on hand to answer questions about

opportunities in their specific regions and provide insight into doing business effectively in the NIS.

A number of organizations—including finance groups, such as the U.S.

Export-Import Bank and the Overseas Private Investment Corporation,

NIS embassies, and key nongovernmental organizations (NGOs)—displayed information at the Open House and were available to network

with business representatives. This event surpassed BISNIS’ expectations, underscoring that there is still considerable interest from U.S. companies in pursuing trade and investment opportunities in the NIS.
BISNIS BULLETIN - October 1999

3

KEY ISSUES IN RUSSIAN POWER SECTOR INVESTMENTS

by Mayra Rodriguez Valladares

Currently, most Russian power sector analysts and bankers remain neutral to bearish on the power sector. Cash collection rates, although improved over the last quarter, remain

relatively low by Western standards. Also, with upcoming

parliamentary and presidential elections, officials are not focusing on necessary reforms in the power sector. Despite the

weakness of the sector, now is a good time for U.S. investors

to conduct significant due diligence on the Russian electricity sector, which is the country’s second largest in terms of

market capitalization and daily trading volumes. Investors

need to approach the Russian Ministry of Fuel and Energy,

United Energy Systems (UES), and the regional utility companies (energos) if they are interested in electricity sector investments. Also since regional governors exert significant influence on companies, particularly utility companies, in their

regions, visits to regional governors and their staff are an

important part of the due diligence process.

One key for any investor contemplating investments in

the Russian power sector is to understand the sector’s reform

process as it is currently being undertaken.

The Status of Reforms

Despite talk about reform, the power sector has not been

restructured or privatized. Generating, distributing, and transmission assets have not been separated. The United Power

Grid of Russia, which is the world’s largest power pool with

centralized management, is one of the most controversial aspects of the Russian power sector, since it is controlled by

UES. UES has stakes in most of the country’s regional utility

companies, and it establishes the prices at which these utility

companies can buy and sell electricity from the grid, posing a

significant conflict of interest. Also, industrial customers are

not able to buy directly from the grid as can customers in

emerging markets such as Hungary. This restriction hinders

industrial customers from having a choice of electricity providers and means that there is no incentive for utility companies to compete. In addition, industry continues to subsidize

consumers for their electricity use.

Electricity tariffs for industrial or residential users only

cover about 50 percent of costs. Given that parliamentary and

presidential elections will take place this year and next, respectively, tariff realignment is unlikely before 2001. It is not

surprising that Russian power companies have a significant

nonpayments problem, recovering anywhere from 70-80 percent of their revenues. Only between 15 and 30 percent of

these revenues are in actual cash. The rest is barter, which

takes the form of actual goods exchange or tax-offsets where

electricity companies do not pay taxes to the government because government entities such as hospitals and schools often do not pay their electricity bills.

Challenges to Reform

Five major challenges exist in reforming the Russian

power sector. First, the obvious, the scope and size of the

sector are enormous not only because of the size of country

and the extent of the networks, but also because of the great

differences in fuel type capacity throughout the country. Domestic and international government officials must have great

patience in instituting reforms and must be aware of the vast

differences between Russia’s 89 regions.

Second, because the ownership of the sector is so diversified, reform becomes even more difficult. When the Russian Government began electricity reforms, the sector was

already partially restructured and privatized. Most developing countries usually begin reforms by already having one

fully integrated state-owned electricity monopoly and then

move from there to separate distribution and generation and

to privatize the whole sector.

Third, the nonpayment problem needs to be tackled at

the source. That is, insolvent government entities and companies should be made bankrupt and their power supplies

cut. This is a challenge to which the government has not risen

because of the potential for political backlash. Moreover, the

country would need significant funds to restructure the sector

and to provide a social safety net during the reform process.

Fourth, from the government to the worker on the ground

at a power plant, a commercial mentality needs to be encouraged. The Russian Government and even UES see UES’ role

in the sector as insuring stable power supply throughout Russia and investing to meet future needs, but not in maximizing the investment value of UES or of the energos. Decisions

are often made without considering how the value of the sector can be increased. In essence, profit margins practically

do not exist.

Fifth, the power sector is extremely politicized at both

the national and regional level. Moreover, Gazprom has been

increasing its influence by acquiring electricity assets in exchange for utilities’ bad debts to the company. Because of the

intertwined nature of the power sector with every facet of

Russian life, whatever party or business entity that controls

UES controls Russia. As such, until after the presidential

elections, officials will spend their time trying to control UES

and the regional utility companies, rather than reforming and

improving this vital sector.

Mayra Rodriguez Valladares is an emerging market energy

specialist and author of Reforming the Russian Electricity

Market recently published by Financial Times Energy. FT

Energy, tel: +44 (207) 463-8184, fax: +44 (207) 896-2121,

or visit www.energy.ft.com and reference 29224C.

.
BISNIS BULLETIN - October 1999

4

(TURKMENISTAN, continued from p. 1)

and gas resource areas have been made available for joint

venture projects and production sharing. The government is

also interested in developing offshore oil fields in the Caspian

Sea. An international tender for bidding on Caspian Sea offshore oil field development was held in 1997. However, an

unresolved dispute with Azerbaijan on the Serdar oil field

has discouraged the winners of the tender from developing

their concessions. Currently, Western Atlas (U.S.) is conducting a geological study of the shallow water area and the

Karabogazgol Gulf of the Caspian Sea. An international tender for the right to explore and produce oil in the Caspian

Sea is expected to be announced by year-end.

The Law on Hydrocarbon Resources adopted in March

1997 provides a detailed legal framework for conducting oil

and gas activities in Turkmenistan. Under this law, three types

of licenses can be issued on the basis of tender results or direct negotiations: an exploration license, an extraction license,

and a single exploration and extraction license. Two types of

agreements can be signed for oil production: a productionsharing agreement (PSA) and a joint venture agreement. A

few foreign companies have already begun operations by signing PSAs in the oil sector. The government expects more foreign oil and gas companies to come to Turkmenistan in the

near future.

Foreign Investment Projects

Thus far, U.S. direct investment in Turkmenistan has

not been significant. In 1998, Mobil Oil, in alliance with

Monument Oil (Great Britain), signed a production-sharing

agreement with the state Turkmenoil company and invested

more than $40 million in the development of the Burun oil

field in western Turkmenistan. In summer 1999, Mobil received a license to explore the Garashsyzlyk oil field, and

planned to increase its investment in Turkmenistan.

Several other foreign companies have invested in

Turkmenistan. Since 1996, the Malaysian oil company

Petronas has invested around $60 million to explore and develop three offshore oil fields in the Caspian Sea (block 1—

the Gubkina, Barinova, and Vostochny Livanova fields). The

Chinese Oil Corporation invested $14 million to restore and

overhaul 30 oil wells. Monument made some investment in

1997-1998, and planned to invest $55 million in 1999 in the

development of the Burun and Garashsyzlyk oil fields. Since

1993, Dragon Oil, an Irish-registered company whose major

shareholder is Dubai-based Emirates National Oil Company,

has invested around $125 million in the Larmag Cheleken

joint venture with Turkmenoil to develop two offshore oil

fields in the Caspian Sea (block II—Lam and Zhdanova fields).

On February 19, 1999, the Government of Turkmenistan

chose Pipeline Solution Group International (PSG), a joint

venture between U.S. companies Bechtel and GE Capital,

to lead the Trans-Caspian Pipeline Consortium (TCP). An

agreement concerning the sale/purchase of Turkmen natural

gas has been signed between Turkmenistan and Turkey. The

TCP will transport natural gas 1,800 kilometers from

Turkmenistan westward under the Caspian Sea across

Azerbaijan and Georgia to Turkey. PSG and its 50/50 consortium partner, Royal Dutch/Shell Exploration, are expected to arrange financing and manage construction of the

estimated $2.5 billion project.

Caspian Finance Center Support

In 1999, the U.S. Caspian Finance Center was opened

in Ankara, Turkey, to assist American companies in entering

the energy rich markets of the Caspian region. The center is

run by three U.S. agencies: the Trade and Development

Agency, the U.S. Export-Import Bank, and the Overseas

Private Investment Corporation. Working with the commercial and economic officers of the Departments of Commerce and State, the multiagency trade finance team offers

services designed to maintain U.S. commercial interests in the

region and better position U.S. firms over foreign competition.

To contact the Caspian Finance Center, call Deborah Forhan,

Director of Business Development for TDA in the Caspian

Region, at tel: +90(312)468-6110; fax: +90(312)466-6082;

or email: dforhan@tda.gov.

Irina Begjanova is a Commercial Assistant in the U.S. & Foreign Commercial Service at the U.S. Embassy in Ashgabat.

For more information on doing business in Turkmenistan,

see the 2000 Country Commercial Guide, prepared by the

U.S. Embassy in Ashgabat, at BISNIS Online

www.bisnis.doc.gov/bisnis/country/cntasia.htm#Turkmenistan.

SELECTED PRIORITY INVESTMENT

PROJECTS IN TURKMENISTAN

1. Construction of a Trans-Caspian gas pipeline (1,800

km) to transport natural gas from eastern Turkmenistan

via the Caspian Sea, Azerbaijan, and Georgia to Turkey

(Erzurum). The projected capacity of the pipeline is 16-

30 billion cubic meters (bcm) of gas per year. Estimated

cost: $2-3 billion.

2. Upgrading the Seidi oil refinery (commissioned in 1991)

to an overall annual capacity of 6 million tons of oil.

Estimated cost: $300 million.

3. Construction of a gas and chemical production complex

in Seidi with an annual capacity of 200,000 tons of

polyethylene. Estimated cost: $800 million.

4. Installation of gas collector at the 94 km BeshkyzylYelkui-Uchadji route. Estimated cost: $50 million.

5. Development of oil fields at Eastern Cheleken, Northern

Erdekli, and Southern Kamyshldja. Estimated cost: $30

million for each oil field.

6. Rehabilitation of the Shatut, Ekerem, and Nebitlidje

 oil fields. Estimated cost: $50-60 million.
BISNIS BULLETIN - October 1999

5

(GOOD PRACTICES, continued from p. 1)

· Corporate Governance: Relationships with

Shareholders

· Relationships with Employees

· Relationships with Other Enterprises

· Relationships with the Global Community

· Relationships with Government Authorities

· Proper Checks and Balances

· Prevention of Extortion and Bribery

Recognizing that laws, regulations, and other

circumstances specific to an industry or company might

require special adaptation in implementing the Guidelines,

they are offered as a tool that can be used by businesses as a

foundation for developing their own codes of conduct and

professional standards.

The BDC is also working on several other commercial

rule of law projects, including (1) a handbook on commercial

dispute resolution in Russia to assist companies and practitioners in better understanding the existing mechanisms for

resolving commercial disputes in Russia, which is expected

to be ready for distribution before the end of this year; (2) a

handbook on corporate governance to encourage fairness and

transparency for shareholder rights and best business practices; and (3) a manual of recommendations on recognition

and enforcement of foreign and domestic arbitration awards

and court judgments as a means for improving mechanisms

for arbitral awards and court judgments.

Novgorod as Pilot Program Region

As part of implementation of the Guidelines, the BDC

reached an agreement with the Novgorod regional government, city, and businesses to implement the Guidelines in

Novgorod as a pilot project. Understanding that foreign investment is critical to developing and fostering an open

economy in the region, the government adopted investor

friendly legislation in 1996. Currently, some 200 joint venture companies with foreign capital are active in the region.

Novgorod’s efforts to prove itself an investor friendly

environment make the region an attractive site for testing the

Guidelines. The region of Novgorod views implementation

of this project as an important tool to attract additional foreign and domestic investment. Having a reputation as a

noncorrupt region where business is done legally and ethically gives the Novgorod region a better image than an expensive public relations campaign.

OECD Conference in Novgorod

A number of international organizations are working to

promote integrity, accountability, and transparency in business in Russia. The Organization for Economic Cooperation

and Development (OECD) and other international organizations have expressed keen interest in the Guidelines, and the

BDC is working with these organizations to establish cooperation on implementing the Guidelines through privatepublic partnership initiatives. As a first step in this cooperation, the OECD held a two-day conference, “Integrity in Private Sector Development in the Russian Federation,” in

Novgorod on July 22–23, 1999. The conference concentrated

on the issue of ethical behavior for the private and public

sectors, establishing codes of conduct within companies, administrative barriers to doing business, and adhering to the

principles of rule of law in conflict resolution. Attended by

approximately 90 participants, the event attracted Russian

federal and regional officials, Russian private sector executives, and nongovernmental organizations (NGOs).

Next Steps—Creating an Enabling Environment

The BDC wishes to provide a long-term, sustainable initiative that can be institutionalized over time and that will

best serve the business community in Novgorod and Russia’s

other regions. To achieve this purpose, the BDC has developed a pilot program to train individuals from Moscow, St.

Petersburg, and Novgorod in the United States as consultants

for three months. Following the training, these individuals

will return home to help local companies design and implement business codes of conduct and professional standards.

Implementation of the Guidelines through broad-based

participation of multilateral and lending institutions,

goverments, the private sector, and NGOs—such as the U.S.

Export-Import Bank and the Organization for Security and

Cooperation in Europe (OSCE)—is a key goal of the BDC.

As part of this effort, there are plans for a follow-up workshop in summer 2000 in another region of Russia to demonstrate the results of implementing the Guidelines in Novgorod

and other regions. The OECD will organize the workshop in

cooperation with multinational institutions, Russian federal

and local governments, and NGOs.

The Basic Guidelines for Codes of Business Conduct can be

found, in both Russian and English, on OECD’s website at

www.oecd.org/daf/psd/acnetwork.htm and BISNIS’ website

at www.bisnis.doc.gov/bisnis/country/codebusen.htm.

Igor Abramov is Special Advisor for Trade and Commercial

Projects in the U.S. Department of Commerce’s Office of

Russia and Independent States.

The BDC encourages companies to provide feedback on the

Guidelines. Please address your comments to: Igor Abramov

at tel: 202-482-2042 or igor.abramov@ita.doc.gov.

NOTICE

BISNIS Online has a new address:

www.bisnis.doc.gov
BISNIS BULLETIN - October 1999

6

TRICKS OF THE TRADE

Choosing a Security Services Firm in Russia

by Janna Agasieva

Security companies appeared on the Russian market in

the mid-1990s, when Russia began its transition to a market

economy and experienced a vast growth in private business.

At that time, a tremendous need for professional security services arose and resulted in the establishment of a large number of agencies and bureaus providing a wide range of services connected with protecting business. However, the

August 1998 financial crisis sharpened competition on the

local market and forced local and foreign businesses to adopt

new strategies and provide more sophisticated security.

The Russian commercial environment provides many

reasons for requiring the services of a security agency: the

imperfection of the local banking system and, as a result,

risk of dealing with cash flow payments; high competition in

the market; and insolvency of business partners are just some

problems faced by businesses. For these and other reasons, it

is necessary to guard business commodities, protect intellectual property, request information support in selecting business contacts, and use other security agency services.

Currently, the main security services required by most

businesses—guarding property, freight escort, and personal

security—are offered by the majority of agencies. One of the

new trends in the security industry that only advanced security firms provide is information support. This service includes background checks of potential partner companies and

potential employees, and checks on a bank’s status, among

other information.

In the past, security firms specialized in providing one

or two specific services. However, the latest developments in

private business in Russia show the market is maturing. As a

result, well-developed businesses tend to deal with one reliable agency that provides a full spectrum of services.

Choosing the Right Security Firm

When choosing a security service, it is important to be

careful and well informed. For example, according to one

security services expert, among over 800 security companies

registered in St. Petersburg, only about 80 are “dependable.”

This can be explained by the fact that there is no strict law in

Russia on registering a security agency and there are no requirements that an individual must meet to establish such a

company. Important steps include:

Ø Fit Services to Needs. Carefully select the agency that

best meets your needs. Good sources of information are

professional catalogues and specialized magazines where

services of security agencies are reviewed and analyzed

in detail. Examples of these magazines include Security

and Safety and Security World, monthlies published in

Moscow that cover all of Russia. It is important to check

if the company has all necessary licenses allowing it to

provide a full range of services. All security companies

must have a License for Security Services, which needs

to be renewed every 5 years. Also, if the agency claims to

undertake detective research, a special license for this

type of activity is required.

Ø Look for Availability of Qualified Personnel. Make sure

that the prospective agency’s staff has been carefully selected. Managers of highly reliable local agencies prefer

to hire former employees of the Ministry of Internal Security or the Federal Security Services because they have

many years of experience and are physically and psychologically prepared.

Ø Check for Solid Financial Background. Ensure that the

security agency can meet its financial responsibilities toward its clients. A professional security firm should be

responsible for reimbursement of a client’s expenses in

case of a failure to provide services. A statement on this

matter should be included in the agreement. Also, a solvent company normally has an agreement with an insurance company. If the limit of the insurance is not less

than $1 million, it guarantees the company’s solvency.

Local Entities Can Assist the Search

As it is difficult to find a reliable company able to provide professional security services, local entities are taking

steps to provide information on the business security and safety

market. Professional security associations, the Federation of

Safety Services and Security Enterprises in Russia, and city

and oblast administrations organize specialized exhibitions

and hold competitions and contests between security firms.

For example, the third international open contest, “AntiCrime,” was recently organized by the Federation of Safety

and Security Enterprises and held in St. Petersburg in the

framework of the regional safety program.

Janna Agasieva is a Commercial Assistant in the U.S. &

Foreign Commercial Service (FCS) at the U.S. Consulate in

St. Petersburg, Russia.

For more information on FCS St. Petersburg services or the

Russian security and safety equipment/services market, U.S.

firms can visit BISNIS Online at www.bisnis.doc.gov, or contact Janna Agasieva at tel: +7 (812) 326-2560; fax: +7 (812)

326-2561/62, or email: Janna.Agasieva@mail.doc.gov.
BISNIS BULLETIN - October 1999

7

AGENCY SPOTLIGHT

REGIONAL CORNER: Yaroslavl Oblast, Russia

by Olga Ananina

Yaroslavl oblast is situated 175 miles northeast of Moscow at the crossroads of important Russian auto and railroads, river ways, and air routes. Nearly 1.5 million people

inhabit the region, which is the size of Massachusetts, Connecticut, and Rhode Island combined. The oblast is abundant

in forests and lakes. The oblast has a major water reservoir,

is a source of fertilizer, quartz, sand, gravel, peat, mineral

waters, limestone, and clay, and is an industrial center.

Although Yaroslavl’s telecommunications need significant improvement—only 16 out of every 100 homes have a

telephone—the transportation system is adequate. The

region’s transportation infrastructure and convenient location facilitate connections and business with the rest of Russia and beyond. Vehicle transportation is the most popular

mode of freight traffic, but rail and river routes are also used.

Industrial Activity

In 1997, Yaroslavl Oblast achieved 7 percent industrial

growth and its industrial output per capita was the largest

among the Central Russian regions. Located on nonfertile

lands, the oblast is famous for its heavy machinery (diesel

engines and electrical equipment), refined petroleum products, textiles (one of the oldest and largest textile mills in

Russia is located in Yaroslavl), aviation equipment, and synthetic rubber and tires.

The region’s machine-building sector plays an important role in Russia’s economy. Leading subsectors of the local machine-building industry include chemical and petrochemical machinery (polymeric machines, refrigerating

equipment, and gas-purifying equipment), machine tools

(wood-processing and metal-cutting equipment), instruments

(for defense, aviation, and shipbuilding, and radio equipment),

diesel engines, and road machinery.

The chemical and petrochemical industry and the fuel

sector (oil and gas refineries) are also of major importance

for the regional economy.

Investment Activity

The Yaroslavl administration has taken steps to promote

the oblast as an investment friendly region. The regional law

“On State Support of Investments on the Territory of the

Yaroslavl Oblast” provides various tax breaks to companies

operating in the region. The regional Duma is currently working on the creation of an investment guarantee fund. A local

organization, the International Investment Center (IIC), led

by a former Russian Federal Duma deputy and U.N. consultants, is very active in supporting local businesses.

The United States and Sweden are reportedly the leading investors in the Yaroslavl Oblast, but Denmark, Italy,

and Germany also have a presence in the region. General

Electric (USA) and Aero Support Corporation (Canada)

have set up joint production of airplane engines together with

Rybinsk Motors company. Baltic Beverages Holding (Sweden) is participating in the reconstruction of a brewery. French

company Eurobach is jointly producing environmentally safe

varnishes and paints with local company Lakokraska. A Belgian company is involved in milk processing.

Olga Ananina is a BISNIS representative in Moscow.

For more information on Yaroslavl Oblast, including contacts, visit BISNIS Online at www.bisnis.doc.gov/bisnis/country/regions.html#Central. Additionally, BISNIS distributes

news updates on Central Russia to interested U.S. companies. To receive this information, send an email with name,

company, and address to bisnis@ita.doc.gov.

The U.S. Agency for International Development (USAID)

and the International Research and Exchanges Board

(IREX)—USAID and IREX have announced round IV of a

grants competition in support of strengthening existing partnerships between U.S. and Russian organizations as part of

the Sustaining Partnerships into the Next Century (SPAN)

program. The request for proposals (RFP) is available online

at the SPAN websites both in the United States, www.irex.org/

programs/span, and Russia, www.irex.ru/span. The websites

feature a frequently asked questions section to help answer

any questions concerning the RFP. Additional questions can

be addressed to Natasha Savicheva of IREX/Moscow at

natalya@part.irex.ru or Rebecca Liston of IREX/ Washington at rliston@irex.org.

International Center for Accounting Reform (ICAR)—

ICAR, assisting Russia’s transition to International Accounting Standards (IAS), is funded by various organizations including USAID. It is organizing the 1999 Moscow Fair Value

Accounting Week, November 1–5, which will include a series of events concerning fair value accounting and IAS valuation and audit implications. It will feature a major international conference on Friday, November 5, with headline international speakers and Russian Government officials and

the release of the 1999 official Russian-language translation

of the IAS bound volume. Most events will be in Russian and

English. For more information, contact Helen Zakrevskaya

at tel: +7 (095) 937-7046, fax: +7 (095) 937-7040, or email:

helen@icar.ru.
Penalty for Private Use, $300

Sender ________________

U.S. DEPARTMENT OF COMMERCE

International Trade Administration

Washington, D.C. 20230

BISNIS- RRB

OFFICIAL BUSINESS

FIRST-CLASS MAIL

PRE-SORTED

POSTAGE & FEES PAID

ITA/DOC

PERMIT No. G-54

This notice is provided solely as an informational resource and does not constitute U.S. Department of Commerce endorsement of these events. For a more

complete listing of NIS trade events, visit BISNIS Online at www.bisnis.doc.gov/bisnis/leads/tradecal.htm. All information published in the BISNIS Bulletin

regarding trade events is subject to change without notice by the organizers of those events.

Consumer/FoodExpo

 Uzbekistan

Travel & Tourism

Ukraine-99

October 19–23, 1999 Kyiv

Organized by:

Telephone:

Facsimile:

Sectors:

AutoExpo

+380 (44) 462-5930

+380 (44) 462-5736

Travel, tourism, sports facilities,

sports equipment

 November 9–12, 1999

Organized by:

Telephone:

Facsimile

Email:

Website

TNT Productions

(703) 406-0010

(703)406-8543

tntprod@dgs.dgsys.com

www.tntprod.com

Tashkent

TRADE EVENTS CALENDAR

St. Petersburg

Organized by:

Telephone:

Facsimile:

Email:

Website:

Sectors:

ITE Group

+7 (3272) 50-93-91

+7 (3272) 50-93-90

strax@online.ru

www.online.ru/people/strax

Food & beverage technology,

processing & packaging machinery

Inwecom/Networks

Interfood/Foodpak-99 November 3–6, 1999

Organized by:

Telephone:

Facsimile:

Email:

Website:

Sector:

Almaty

Upcoming Conferences

Azerbai Azerbaijan in the

21st Century

October 2526, 1999

Washington, DC

FOR MORE INFORMATION, VISIT WWW.USACC.COM

OR CONTACT U.S.-AZERBAIJAN CHAMBER OF COMMERCE

AT 202-898-0900 202-898-0900 OR CHAMBER@USACC.COM

1999 CIS & Eastern Europe

Business Forum

November 1214, 1999

University of Arizona at Tucson

FOR MORE INFORMATION, CALL OR FAX

ROZA SIMKOVICH AT 520-626-4007 OR VISIT

HTTP://GG.RUSSIAN.ARIZONA.EDU/FORUM99/

RESTEC

+7 (812) 320-6363

+7 (812) 320-8090

root@restec.spb.ru

www.restec.ru/exhibitions

Databases, info. networks, multimedia, the

Internet, teaching software

 November 23–27, 1999