Sakhalin Region Is 02
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Investment Potential of the Sakhalin Region 2015 Sakhalin Region is 02 The only island region of Russia Area: 59 islands 87,1 The largest - the Island of Sakhalin square kilometers Time Zone Administrative Center Distance (by plane) VLAT MKS City of Yuzhno-Sakhalinsk +7, UTC +11 9,600 kilometers New York (11 h 24 min) Population 489,7 тыс. 6,600 kilometers people Moscow (7 h 53 min) More than 1,700 kilometers 100 Seoul (1 h 58 min) nationalities investinsakhalin.ru Key Advantages of Sakhalin Region 03 14 bln tons of coal 1,6 4,1 bln tons trillion cubic of oil and oil 4,8 meters of gas condensate bln tons of peat 102 280 mln tons mln tons of sulfur 64% 81% of gold 93% Export by country Bulk business Export per volume in 2014 commodity group - USD 18 bln 31% 1,6% 1% 16% 7% 4% 1,4% Coal Other Import Seafood China Export LNG Republic of Korea 1 млн. 7 млн. 3 mln tons of fish and mln hectares 56,6 км cubic km of water seafood per year of forest Oil Japan Natural Resources Closeness to markets of Pacific Asia investinsakhalin.ru Sakhalin Region Economic Structure 04 Sakhalin Region in the rating of socio-economic positioning of Russian regions in 2014* - rating position: Integral Rating - 13 Sakhalin Region Integral ECONOMY DEVELOPMENT SCALE BUDGETARY SPHERE Rating Position in terms of Products and Services 24 Consolidated budget revenues per capita 4 Investment Development Consolidated budget revenues 23 Share of tax and non-tax budget revenue 5 Workforce 71 Consolidated budget deficit 10 ECONOMY EFFECTIVENESS Level of debt load 8 Products and services per capita 4 SOCIAL SECTOR Investments into fixed capital per capita 4 Ratio between population income Foreign investments per capita 4 and cost of products and services 9 th place Share of profitable enterprises 36 Unemployment level 63 8 Tax collection 21 Life expectancy at birth 70 Infant death mortality rate 10 * RIA Rating investinsakhalin.ru Major macroeconomic indicators of socio-economic development of Sakhalin Region 05 1996 2000 2005 2010 2014 2015 2020 Investments into Fixed Capital RUB bln 1,04 8,07 110,244 135 210,3 215,9 232,5 Gross Regional Product RUB bln 9,6 35,4 121 487,7 792,7 844 1131,1 Industrial Production Volume RUB bln 6 30,2 54,4 302,2 771,8 791 1037,4 Regional Budget Revenue RUB bln 2,1 6,1 16,6 45,3 134,7 116,3 160,8 Average income per person RUB thousand 0,98 2,79 12,55 30,7 45 47,4 59,3 per month Registered unemployment rate % 4,1 2,4 1,6 1,2 0,6 0,7 0,7 investinsakhalin.ru Oil and gas sector is a driver of regional economic development 06 147,1 Share of oil and gas recovery in: Investments into Fixed 110,8 Capital of Oil and Gas 116,3 Investments Sector and Transport, RUB bln into fixed capital 71% 85 67,5 87,2 51,2 36,5 40 35 31,9 28 41,8 11,7 2,9 22,2 6,3 2,9 19,7 7,9 Oil and Gas Sector 2,9 Transport Gross regional 65% Other product 2000 2005 2010 2011 2012 2013 2014 Oil and 33,6 gas recovery 31,1 33,3 Volume 26,8 27,6 28 17,9 of industrial 91% 15 17,1 production 14,1 13,9 14,3 Gas recovery, bln cubic meters Oil recovery, mln tons Regional Budget 82% 2012 2013 2014 2015 2016 2017 Revenue investinsakhalin.ru Economy diversification is the foundation of regional investment policy 07 71% By 2025 the share of other real econo- my sectors will increase to 30% of the volume of investments into fixed capital 11% 6% 3% 2% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% Recovery of oil, Distribution Education Public Construction Health Care Trade Agribusiness gas and of electrical Administration and Social Sector condensate energy, gas Services Transport and steam Distribution Other Coal and Forestry Fishing and Processing and communications of water peat prospecting Fish Farming industries investinsakhalin.ru Outrunning growth of priority sectors 08 PRIORITY SECTORS EXPORT ORIENTATION REGIONAL MARKET ORIENTATION FISHING COAL TOURISM AGRIBUSINESS CONSTRUCTION INDUSTRY MINING (cluster) SECTOR INDUSTRY (cluster) INDUSTRY (cluster) investinsakhalin.ru Investment potential – what has already been implemented? 09 Financing Sources Effects including contribution new Jobs high to Russian contribution of GRP Number Cost, RUB mln non-budgetary Created performing Federation of Sakhalin Region, of Projects budgetary jobs budgetary system, RUB mln RUB mln TOTAL FOR SAKHALIN REGION 75 2 039 895 2 010 608 29 288 16 201 9 764 321 403 945 458 Economics (production and services) 56 1 255 981 1 244 451 11 530 8 440 5 331 282 389 662 249 Infrastructure 14 777 768 760 510 17 258 7 606 4 401 38 303 280 990 Social Sector 5 6 147 5 647 500 155 32 711 2 219 ECONOMY SECTOR 56 1 255 981 1 244 451 11 530 8 440 5 331 282 389 662 249 Oil and Gas Sector 4 974 541 974 541 - 2 934 2 050 232 196 462 788 NOT Oil and Gas Sector 52 281 440 269 910 11 530 5 506 3 281 50 143 199 461 Coal Sector 8 237 912 237 912 0 1 226 734 23 731 126 965 Fuel and energy sector processing 2 228 336 228 336 0 45 25 190 312 Construction Sector 3 13 724 11 834 1 890 1 212 812 1 910 1 500 Forest Industry 1 7 367 7 167 200 686 686 14 030 35 587 Agribusiness Sector 20 6 883 2 320 4 563 605 572 4 856 27 292 Fishing Sector 15 5 168 4 330 838 1 253 251 4 304 4 173 Tourism 2 8 727 4 688 4 039 446 181 997 3 319 Household services 2 1 090 1 090 0 33 20 176 313 investinsakhalin.ru Mechanisms of State Support of Investment Activities 10 1 2 3 4 STATE SUPPORT OF INVEST- INVESTMENT FUND OF GREEN FIELD PROJECTS ARE OTHER MECHANISMS OF MENT ACTIVITIES SAKHALIN REGION GIVEN TAX PREFERENCES IN STATE SUPPORT OF (LAW NO. 16-30) (LAW NO. 54-30) THE FAR EAST INVESTORS • Budgetary investments in registered • Budget investments into creating (TAX CODE, LAW NO. 51-30) (LAW NO. 362) capital of economic entities infrastructural objects of Business income tax rate: • Lower business income tax rates: • Budgetary subsidies state and municipal property • 0% over the first five years of the From 18 to 15% for companies • Tax breaks: Investment projects are being project financing construction of social Income tax, decreased from 18 to implemented with use of the • 10 % over the next five years of the projects (at least RUB 150 mln per 13.5% public-private partnership principles project year) Property tax, decreased from 2.2 to PPP Principles: Conditions: • Lower business income tax rates: 1.1% Infrastructure projects are financed by - Volume of investments: at least RUB From 18 to 13.5% for organizations Investment tax credit, 5 year grace the budgetary sources 50 mln over carrying out electricity generation period Production facilities are financed by 3 years and RUB 500 mln over 5 years project valued at minimum RUB 7.5 bln • State guarantees private investments of the project and with capacity of 50 MW, by means • Comprehensive support of investment - The project must not be related to oil of deposits to regional credit projects and gas recovery or processing, or organizations production of excisable goods investinsakhalin.ru Mid-range investment projects 11 Investment projects being Investment projects, imple- AGRIBUSINESS SECTOR CONSTRUCTION BUSINESS implemented with mented with state financ- (∑ > RUB 6 BLN) (∑ ~ RUB 6.5 BLN) state-sponsored support of ing support in 2015-2018 1. Animal Feed Farm with annual 9. Metal Rolling Plant the Government of Sakha- output of 50 thousand tons in the 10. Housing Construction Company lin Region Village of Troitskoe 11. Modern Construction Technologies 2. Pig Farm with annual output of 50 Technopark thousand tons, Village of Taranay 3. Dairy Farm in Penzenskoe Village TRANSPORT (∑ ~ RUB 5.5 BLN) Number Cost, 4. Agribusiness Park 12. Nevelsk Seaport of Projects: RUB bln 5. New projects in the Ministry of 13. Alexandrovsk Seaport Agriculture 14. Korsakov Seaport 2010 1 1,07 SERVICE NATURAL RESOURCES 6. Oil Sector Services Industrial Park (~ RUB 1 BLN) 2011 1 0,81 7. Industrial Logistics Center 15. Production of Peat Bricks 2012 3 9,14 FISHING SECTOR 2013 3 3,63 (~RUB 1.98 BLN) 8. Biotechnopark 2014 13 2,32 total 21 16,97 - Industrial Park Development investinsakhalin.ru Coal Sector 12 CURRENTLY OPERATING COAL INDUSTRY FUTURE OF COAL RECOVERY: ENTERPRISES: - Alexandrovskie Coal Deposits - Shebuninsky Coal Deposits A 2001 feasibility study found that 23.3 mln tons of ООО Gornyak-1, ООО Gornyak-2 coal could be recovered by open pit mining, and 94.5 Alexandrovsk-Sakhalinsky Cost: RUB 4,888 mln, incl.: mln tons of coal - by deep mining. - Open cut excavating: RUB 728 mln - Nevelsk Port: RUB 4,160 mln - Southern pad (Lopatinskie 1, 2, 4, 5, Dolinskaya Investment schedule: 2012-2016 Mining Field, Zagorskaya Mining Field) Sakhalin Island Recovery: 1 mln tons No feasibility studies had been done for recovery oper- Smirnykh Export: 500,000 tons ations. Total deposits estimated at 462.8 mln tons of coal. Uglegorsk SOLNTSEVSKY COAL DEPOSITS Shakhtyorsk OOO Eastern Ore Mining Company OOO Refinery Plant Cost: RUB 3,157 mln, incl.: - Open cut excavating: RUB 2,400 mln Yuzhno-Sakhalinsk - Mining Port: RUB 757 mln Nevelsk Investment schedule: 2013-2018 Market: Export Recovery: 5 mln tons Cargo Turnover: 5 mln tons investinsakhalin.ru Fuel and energy sector Processing facilities 13 CREATION OF AN ENTERPRISE TO INCREASE RE- CREATION OF A COAL CHEMISTRY PRODUCTION COVERY AND PROCESSING OF PEAT BY 1 MLN TO PRODUCE 2 MLN TONS OF METHANOL, FUEL PELLETS IN TYMOVSKY DISTRICT ABOUT 700,000 TONS OF POLYOLEFINES.