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SOVETSKAYA
GAVAN regional update SUMMARY The
Sovetskaya Gavan District is one of the most dynamically developing
regions of the Khabarovsk Krai. In
2003, the District's gross production has increased 15 percent while the
Khabarovsk Krai overall industrial output grew 7.2 percent.
District's
timber and fish producing enterprises play a significant role in the
Krai's international trade and provide a number of commercial and
investment opportunities that may be of interest to U.S. businesses.
This report gives a brief overview of the District and covers
primary industry sectors. Key
contacts are listed at the end of the report.
End Summary. GENERAL
INFORMATION The
District of Sovetskaya Gavan (Sovgavan), established in 1925 occupies 15.6
thousand sq. km. on the west coast of the Tatarskiy Channel on the eastern
slope of the Sikhote-Alin Ridge.
As of September 2003, its population was 51.4 thousand people.
The primary share of the population lives in the city of Sovetskaya
Gavan - the District's administrative center (34.7 thousand people),
located 541 miles to the north from Khabarovsk.
The District is predominantly mountainous and covered with
coniferous forests. The
climate is monsoon with an average precipitation of 650
- 1,100 mm. The
average January temperature is – (-18C), August – (+16.4C); the
average annual temperature is +0.3C. Sovetskaya
Gavan is an important regional transportation hub providing access to both
the Baikal-Amur and Trans-Siberian railroads.
A one track, 500 kilometer railroad connects Sovetskaya Gavan with
Komsomolsk-on Amur, the major industrial center in the Russian Far East,
from which the trains have access to all destinations in Russia. The trip
by train from Khabarovsk to Sovetskaya Gavan takes 23 hours. A domestic
airport located 20 miles from the city provides regular flights to
Khabarovsk. The new pavement
of the Lidoga-Vanino gravel high way will soon provide decent automobile
transportation between Sovetskaya Gavan, Vanino and Khabarovsk and will
thus include Sovgavan in to the Russia's overall automobile network.
The
District has mineral deposits of construction stone, brick clay, sand and
gravel materials and minor deposits of tin and copper. Sovgavan's forests
are rich with spruce, white fir, Mongolian oak, ash, birch and larch.
Its fish resources include river species - primarily salmon types
and sea species - flounder, navaga, rasp, polack, herring, squid, etc. The
Sovetskaya Gavan gulf is 1.4 miles wide and 7.5 miles long. Its depth
ranges from 22 to 37 feet. The
gulf is ice-free from late March until January and partly serves as a
naval base. In January 2000,
a boarder guard post was established on the basis of Yakor plant so that
the local enterprises will have additional opportunities to operate
internationally. A number of
industrial enterprises in Sovetskaya Gavan have mooring lines, which they
use for transshipment services. INDUSTRY The
District's major industries are shipbuilding and ship repair, fishery and
timber and wood processing. The
August 1998 crisis stimulated the resource sectors of the Krai economy.
Since forestry and fishery are the key sectors in Sovgavan, these
industries began to play a more significant role in the district economy.
Due to their successful operation the consuming capacities in
Sovetskaya Gavan did not fall as opposed to many other districts of the
Krai. The timber and fish
producing businesses are the largest contributors into the budget of the
District. During the past six
years, the Sovgavan District enjoyed stable industrial production growth.
In 2003, its overall
production increased 15 percent, compared to 2002 and totaled $ 117
million. Construction
industry enjoyed a 450 percent production growth, fishing industry - 200
percent, electric power engineering - 30 percent, timber and wood
processing - 25 percent, trade - 15 percent increase. Machine
building For
decades, Sovetskaya Gavan was a ship repair center for Khabarovsk Krai.
Its two ship repairing plants, Yakor and Severniy were the most
important industrial enterprises of the district and the largest employers
in Sovetskaya Gavan, handling almost all the municipal infrastructure.
Sovetskaya
Gavan Shipyard (SGS) is a successor of Yakor Ship Repairing Enterprise
went bunkrupt in 2002. Currently
SGS is a sustainable operation providing foreign and domestic marine
vessels (mostly fishing boats) with diversified repair services.
In 2003, the company repaired 24 vessels for the total amount of 73
million rubles ($ 2.5 million). SGS
is also a founder of Les Prom Kombinat, (woodworking combine) which
harvests timber and using Korean and Japanese equipment manufactures high
quality sawn good for export. The
company seeks foreign partners for further expansion of its wood
processing facility and marketing its products in the Pacific Rim
countries. Severniy
Shipyard/ Pallada The
Severniy (Northern) joint stock shipyard was traditionally engaged in
repair of large ships and manufacturing of smaller auxiliary ships (hulks
and lighters of up to 500 tons) and mechanical equipment for the fishing
fleet. The Plant has
well-equipped moorings, depots and warehouses with rail access.
At this time, Severniy is undergoing bankruptcy procedures.
During the past two years, Pallada Company - a branch of the
Amurskiy Shipbuilding Plant (Komsomolsk-on-Amur) has been operating on the
base of Severniy, utilizing its production facilities for modernization of
the Orlan Platform under contract with Exxon.
Reconstruction of Orlan is one of essential components of the
program for Sakhalin shelf development.
Since the start-up of its activities in Sovgavan, Amurskiy
Shipbuilding invested over $5 million into the Severniy infrastructure.
The primary share of funds was used for reconstruction of the
Plant's power system, boilers, production facilities and auxiliaries.
In the future, Pallada tends to expand its activities in the
Sovetskaya Gavan in the areas of military and civil marine vessels repair. Amurskaya
ERA Amurskaya
ERA Company is a Sovgavan subsidiary of a Komsomolsk based company, which
provides the following services: -
vessel electrical mounting service -
repair of electrical equipment -
customs warehouse for temporary storage The
Company is strongly interested in becoming a subcontractor for Sakhalin
oil and gas projects. Fishing
Industry Both
the Tatarskiy Channel and the Sea of Okhotsk are rich in fish and such
“hard currency generating” sea products as crab, shrimp and octopus.
The share of fishing industry in the District economy exceeds 40
percent. In 2003, the volume
of fish and sea products caught by the District fishing enterprises
increased 59 percent and totaled 1,811 million rubles ($ 60 million). The
bulk of their production, approximately 85 percent, is exported directly
to foreign countries, outside of Russian customs border. Despite
overall production increase, more than half of all fishing enterprises are
currently operating at a loss. Lack
of investment capital, shortage of working capital, and product
transportation difficulties are hampering the performance of the fish
industry in general, and especially the development of expanded trade
relations. Fish processing is
underdeveloped and represented by three plants. Unicheck
Ltd. During
the last decade, Unicheck Limited Liability Company was one of the most
successful fishing operations of the Khabarovsk Krai.
Since 2002, due to unfavorable quota situation, its volume of
production has decreased since the company does not have quotas enough for
its ten vessels. Still
Company’s management is fairly optimistic about its future since it’s
large trading subsidiary helps to compensate current losses in fishing
sector. Hogla
Trading Ltd. Hogla
is a holding encompassing several companies conducting long-line fishing
of halibut and cod (about 3,000 tons annually), which are processed in the
sea in accordance with the ISO standards, and sold predominantly to Korean
Republic. Its
shipping subsidiary runs five bunkering tankers and other bunkering
carriers servicing vessels both in the sea and seaports.
In the ports of Primorsky Krai Hogla operates oil terminals with
petroleum storage depots. In
the US, the Company tends to identify suppliers of pumps for oil products,
trestle bins, tanks for petroleum products, etc. Timber
Industry Traditionally
the district has been noted among the largest timber producers of the Krai.
Approximately 20 logging enterprises are operating currently in
district. Most felling areas
are located 60 –100 miles from Sovetskaya Gavan.
About 90 percent of the total volume of lumber produced in the
district is exported to the South-Asian countries.
For years China and the Korean Republic have been the largest
markets for the local fir, larch and spruce but during the last two years,
since the prices on the Japanese lumber market have been growing, the
portion of export from Sovgavan to Japan has considerably increased Hermes
Ltd. Hermes
established more than 10 years ago is one of the most reputable companies
in the area. Annually, it harvests over 70,000 cubic meters of timber, and
produces 20,000 cubic meters of sawn goods for export. The company
possesses a fleet of 6 carriers with a displacement from 4 to 6 thousand
tons. Hermes also runs a construction subsidiary and a chain of grocery
stores in Sovetskaya Gavan, Vanino and Khabarovsk.
The Company is interested in cooperation with the US businesses. Triton
Ltd. Triton
Limited Liability Company was established in 1998. It exports about
200,000 cubic meters of logs to Korea, Japan and China annually.
The Company is interested in cooperation with the US shipping
companies in transporting logs to Japan, China and Korea. Vanino-Tairiku One
of the most sophisticated manufacturing operations in the Krai today is
the Tairiku Sawmill plant near Sovetskaya Gavan. The plant is a
Russian-Japanese joint venture, which produces approximately 20,000 cub.
m. of kiln dried pine lumber annually and then, ships it to the Japanese
market from the port of Vanino. Raw
material for the mill is sourced out of the Lake of Baikal region, and
delivered to the mill by rail. Mill
residual waste is used for power generation for both the mill operation,
and nearby villages. Trade
During
2003, the District's retail turnover increased 15 percent and totaled 930
million rubles ($ 32 million). Food
products account for 60 percent of the retail trade, non-foods - 40
percent. Vostok Vostok
runs several businesses including a chain of stores marketing consumer
goods and home appliances, a furniture manufacturing facility. The Company
tends to establish a construction subsidiary and a firm providing design
and engineering services. Apart
from being Vostok’s Director, Mr. Popov is the Chairman of the Sovgavan
Union of Entrepreneurs and revealed strong interest in interaction of
Sovgavan businesses with the US companies and technical assistance
programs operating in the RFE. Transportation Sovgavan
Port US-Russia Joint Venture In
1996, the Global Forestry Management Group, a consortium of ten timber
enterprises from the U.S. northwest, and Exprales, a Khabarovsk joint
stock company, established two joint ventures in Vanino and Sovgavan.
Sovgavan Les harvested while Sovgavan Port processed and
transshipped the timber on the base of the Terminal joint stock Company.
At this time, GFMG has sold its share of Sovgavan Les to a Russian
company. GFMG currently owns
70 percent of the Sovgavan Port's shares, the Khabarovsk Krai Government -
25 percent, individual shareholder - 5 percent. The primary destinations
of timber, transshipped by Sovgavan Port are China, Japan and Korea.
In 2003, Sovgavan Port has transshipped nearly 300,000 cub. m., of
timber, which is a 20 percent decrease compared to 2002 results.
The decline is partially associated with the loss of a large
client, which could not be completely substituted by an inflow of new
minor customers. The other factors that contributed to the reduction
include unfavorable ice conditions at the Sovetskaya Gavan Seaport in
March; severe forest fires in July-August 2003, which affected the
performance of the local logging companies and SARS.
Currently the company is experiencing decline in the volume of
services since there is lack of timber carriers and the Imperial Bay of
Sovgavan is still covered with ice. BANK Sberbank
and the largest regional Dalcombank have branches in Sovetskaya Gavan.
The large private businesses have also opened bank accounts in the
Vneshtorgbank’s Representative office in Vanino as well as in the major
banks of Khabarovsk. BEST
SALES PROSPECTS Fish
processing equipment; Wood
processing equipment; CONTACT
INFORMATIO BISNIS
in Khabarovsk Sovgavan
District Administration; Sovgavan
District Administration; Sovgavan
District Administration, Firm
Hermes Ltd; Alexander Sosnovsky, Director General Triton
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