Mr. A.D. Ruzankin, head of Department of Economic Development of Murmansk Region

Almost in all of the variants of the development of hydrocarbon fields of the shelf of arctic seas the Kola Peninsula is the basic region. This is not by chance. Advantageous geographical location and well-developed infrastructure make it attractive for placement of enterprises of logistical support to drilling activities, exploitation of fields, transportation of oil, gas and gas condensate, assemblage and repairments of platforms and equipment, maintenance of fleet and social provision using the existing industrial and human resources.

In November 2005 a cooperation agreement between Murmansk Region Government and "Gazprom" joint-stock company was signed. Taking into consideration the interest of the parties in development of mutually profitable economic, scientific and technical cooperation on long-term and stable basis, the agreement specifies primary strategies of the activity of "Gazprom" joint-stock company on the territory of Murmansk region including preparation to the implementation of programmes connected with the development of oil and gas fields of the Barents sea shelf, including Stockman field. The value of investments which are planned to be expended in 4 years make approximately 30 milliard USD, of which 17 milliard USD—on the territory of Murmansk Region.

Murmansk Region is an industrial and economically developed region of the European North of Russia.

In the basis of economy lies the industrial production, which involves 25 per cent of working population, 22 per cent of general funds, creates 51.2 per cent of gross regional product, provides over 97 percent of export.

In the structure of the industrial production the maximum share lies with the mining complex, power engineering and fish branch. In the year 2005 the yield of industrial products by the enterprises reached 100,2 milliard rubles. The increase of production volumes to the level of the year 2004 has been made in almost all basic branches and on the whole industry made 102.2 per cent.

The potential supplier of goods, works and services for the oil and gas field is ship repair as well as repair and engineering work of the region. The share of ship repair in overall industrial production of Murmansk region is 4 per cent. The shipyard "Nerpa" is situated in Kut bay of Kola peninsula in 30 kilometers to the northwest of a large seaport and railway station Murmansk. Due to the Gulfstream flow the Kut bay and access ways to it are free from ice even in conditions of severe polar winters. The shipyard "Nerpa" has a way out not only to the Northern shipping lane, but also the possibility of all-year-round way out to the Atlantic. Besides shipping lanes, the shipyard is connected to motor roads to all industrial centers of the region and has a way out to international highways that connect Murmansk region to Scandinavia.

The industrial possibilities of shipyard "Nerpa" allow to build water crafts with launch weigh up to 10 000 tons and length of over 100 meters - from floating dock structures and barges to fishing and cargo boats and tugboats.

The shipyard has a well-equipped production base for ship repair works, including to floating docks, parameters of which allow to perform docking of vessels of up to 13.5 thousand tons displacement, slipways, equipped workshops, specialized departments, sea tugboats and other water crafts. An important direction of shipyard activity is the utilization of submarines, ships, and vessels, which have already served their time. Starting from the year 1994 shipyard "Nerpa" has been defined as the main enterprise on the Kola peninsula for the utilization of submarines, excluded from Fleet.

"Shipyard 35" of Russian Ministry of Defense is the Federal State Unitary enterprise of the Russian Ministry of Defense. The industrial powers, deep-sea terminals, graving docks allow to repair of civic vessels, perform the orders of mining enterprises, participate in the programmes of development of hydrocarbon fields.

Federal State Unitary enterprise of the Russian Ministry of Defense "Shipyard 82" possesses a unique floating dock PD-50 with tonnage of 80 000 tons, able to place on its slip deck vessels of any class and rank, which are adopted by Russian Navy as well as civic vessels. It has been created for the performance of ship repair works of high technical complexity. The shipyard staff performed docking repair works of atomic icebreaker "Lenin", atomic lighter-aboard ship "Sevmorput" as well as of large surface ships of the Northern Fleet. The enterprise has convenient water area, berth with sea deeps for the access of any vessel and is situated off Murmansk.

Out of 52 enterprises of North-West of Russia, which applied for the entry to "Achilles" system as suppliers of equipment for oil and gas branch of Northern region, only four have been approved. One of these four is "Murmansk shipyard" joint-stock company. This confirms high evaluation of the enterprise's work not only by Russian, but by international experts as well.

The main activity of "Murmansk shipyard" joint-stock company is the performance of current, mid-life and capital repair works for the vessels of fishing fleet, Federal Security Service and Navy of Russian Federation. Technical and technological equipment of the production allow carrying out not only all kinds or repair works, but also modernization and reequipment of vessels: change of power plants, refrigerating equipment, fish factories and fish processing complex. The enterprise has all the necessary general purpose and special equipment for its activity, production tools, which allow performing metal working on contemporary level, production of general mechanical rubber goods and plastic goods, wood processing, electroplating, reconstruction of details by welding, facing, spraying etc., as well as the mechanical engineering works (production of replacement parts, metal constructions, optional equipment etc).

In 2005 on the territory of former shipyard there has been opened a Russian-Norwegian enterprise on production of metal constructions for oil and gas field, which allowed to additionally create scores of working places. The enterprise has been created jointly by "Murmansk shipyard" joint-stock company and the Norwegian company "Reinertsen".

The main products of "Olenegorsk Mechanical Plant" joint-stock company are replacement parts and optional equipment for mining and metallurgical enterprises of Northwestern region of Russia, cast-iron and core-mold casting, casting of nonferrous alloys, welded metal constructions.
The enterprise is a full-fledged mechanical plant, which includes 3 main workshops: foundry, mechanics assembly shop and metal constructions workshop.

Production of "Kandalaksha Pilot Engineering Plant" Ltd — removable replacement parts to diesel engines, oil pumps, and rotary pumps. Kandalaksha Pilot Engineering Plant is an enterprise with full technological cycle that includes the following workshops: foundry, forge and press shop, machine-assembly department, assembly shop for metal and metal-plastic constructions, and service departments. The enterprise was certified with international quality system. Flexibility of technological process and productive powers of the enterprise allow performing foundry, blacksmith's work, and metal working of any complexity and precision. During the year 2005 the production volume has increased in two times and made over 100 million rubles per year.

Construction complex of Murmansk region is presented with a number of enterprises and organizations with employment of 19 000 people and they give 6 per cent of gross regional product. Thus, 867 organizations have the right to perform construction works, 404 of them are really doing construction works, and 380 of them simultaneously have the right to designing work. The degree of load of productive capacity is 67 per cent.

In the year 2005 in building activity (volume of contract building and installation works) there have been performed works and services by own power of enterprises and organization for the sum of 10.4 milliard rubles, which made 122.7 per cent to the level of previous level. The volumes of bad debts and the number of unprofitable enterprises in construction complex have significantly decreased.

The Government of the Region has approved of the development strategy for construction complex up to the year 2015, which will allow to receive well-grounded long-term perspectives for the development of regional construction complex.

Development of construction enterprises of Murmansk region stipulates for decrease of the share of ineffective productions and creation of profitable enterprises able to produce high-tech types of output based on new technologies, having a high competitive ability on the world market.

Implementation of the planned tasks requires significant investments. Already in the coming years it is necessary to invest into regional construction works over 20 milliard rubles that is in 1.2 times more than current level.

The construction enterprises have the task to annually intensify the volume of contract works by 10-15 per cent and by the year 2010 to provide the growth in 2.4 times, year 2015 — in 2.8 times in comparison with the year 2006.

Putting these projects into practice will give a powerful impulse to further development of the region overall and constitution industry in particular.

Transportation complex is one of the leading in growth pace fields of Murmansk region.

Transport together with other infrastructure fields play a significant role in regional economy. Overall extension of railway network is 1046.7 kilometers of lines, extension of motor roads on the territory of Kola peninsula is 4359 kilometers.

Murmansk region has two large airports: "Murmansk Airport" joint-stock company (in Murmashi settlement) and "Airport" joint-stock company (in the city of Apatity). Murmansk airport has international lines as well. In the nearest future, it is planned to create an international transport air junction.

Freight service carriage of passengers is performed by Murmansk Shipping Company. It exploits the state-owned unique in their possibilities atomic icebreakers, which provide piloting in Northern shipping lane.

Murmansk transport junction has already become competitive. There is no other port in European part of Russia, which has the possibility to receive vessels of over 200 thousand tons displacement. Here they have new freight terminals, facilities r for transshipping of almost 20 million tons oil per year. The turnover of goods of Murmansk ports is constantly growing. Nine years ago the commercial port shifted 5 million tons of cargo, now it is over 24 million, through raid collecting terminals up to 9 million tons of oil are exported.

The general layout for the development of Murmansk transportation junction stipulates for the increase of freight turnover up to 49.2 million tons by the year 2010 and by the year 2015 up to 60-70 million tons freight. The costs for reconstruction and creation of new facilities are estimated as 40-50 milliard rubles. For the region this is also 24 thousand new working places.

Large-scale formation of Murmansk transportation junction stipulates for harmonious development of all kinds of transport, including pipeline system, creation of unified telecommunication system. For the increase of transport and export potential of Russia there is a project developed for the organization of Murmansk multimodal logistical complex.

In the year 2005 in the region there operated over 3000 small-scale business, including about 1000 in wholesale and retail trade, 420 in industry, 350 in building, 120 in fishery, forestry and farming, in the human services — about 500. Besides, there are about 18 000 individual entrepreneurs registered with tax bodies, the major part of which use hired labor.

The investments of small-scale enterprises into the economy of the region are constantly increasing. For the year 2005 the volume of shipped freights of own production, performed by the forces of small-scale enterprises has approximately made 13.5 milliard rubles (14 percent in overall volume of shipped freights and services in the region). Besides, the enterprises of small-scale business sold goods of improper production for 35 milliard rubles.

In 2005 the investment of small-scale enterprises into construction industry made about 20 percent, the turnover of retail trades —18.8 percent, wholesale — 74.9 percent. The turnover of small-scale enterprises of catering services has exceeded 140 million rubles. Their share in overall turnover of catering services is 5.5 percent.

Summing this up, one can say that Murmansk region has significant potential for supply of goods, works and services for oil and gas filed. The "Association of Suppliers of Oil and Gas Field "Murmanshelf" is able to open up and increase this potential in many times.

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