Prepared by Alexander Gordienko
BISNIS representative
Nizhny Novgorod, Russia

April 14, 1998

The Republic of Tatarstan is located in the central part of the Russian Federation at the confluence of the Volga and Kama rivers. The republic covers a total area is 67,836.2 square kilometers. Tatarstan is populated by 3.7 million people, of whom 1.1 million live in Kazan, the capital. According to the 1989 census, the most numerous ethnic groups are Tatars (48.5 percent of the population), Russians (43.3 percent), and Chuvashes (3.7 percent). The principal religions are Islam and Orthodox Christianity. Under the Tatar Constitution and a bilateral agreement with the Russian Government, Tatarstan is legally a sovereign state associated with the Russian Federation.

Natural Resources
Tatarstan has considerable deposits of oil. The republic's biggest oilfields are Romashkinskoye, Pervomaiskoye, and Bondyuzhskoye, which are located in the south and the northeast of Tatarstan. Since 1946, 2.6 billion tons of crude oil have been extracted from local oilfields. The present oil reserves are estimated at 800 million to 900 million tons. Tatarstan's oil reserves are largely concentrated in medium-sized and small oilfields that are among the least-developed in the republic.

Natural gas is produced in association with crude oil in Tatarstan. In the major oil fields, 40 cubic meters of natural gas are produced per ton of crude, on average. In addition, there are deposits of coal, bituminous shale, peat, gypsum, and other building materials.

Industry
Tatarstan's key industrial sectors are oil production, chemicals and petrochemicals, motor-vehicle manufacturing, machine-building and metal-working, and aerospace. In 1996, 25.6 millions tons of oil were produced in Tatarstan, 28 percent of which was processed locally. Tatneft is Tatarstan's leading oil company, in addition to be a major Russian producer of crude oil. The main petroleum products refined from Tatarstan crude are fuel oil and diesel fuel. In 1996 Tatarstan companies produced 30.1 million tons of fuel oil, 9 million tons of diesel fuel, and 10.7 million tons of gasoline. Over the first six months of 1997, 12.7 million tons of oil and 805.6 million cubic meters of natural gas were produced in the republic.

The energy sector generated 22.337 million KW/hr of electric energy and 33.548 million Gcal/hr of thermal energy in 1996, entirely meeting the energy needs of Tatarstan.

Petrochemicals account for 78 percent of the chemical/petrochemical sector. Such products as synthetic rubber, tires, plastic and synthetic resins are manufactured in significant volumes. Increasing the level of oil processing is one of the Tatarstan Government's top economic development priorities. Nizhnekamskneftekhim, Organicheskiy Sintez, Nikzhnekamskshina, and the Kazan Integrated Chemical Works (NAFIS) are among Tatarstan's leading chemical and petrochemical companies.

The leading companies in the automotive sector is the Kama River Motor Vehicle Works (KamAZ), in the city of Naberezhniye Chelny, and the Yelabuga Motor Vehicle Works (YelAZ) in the city of Yelabuga. KamAZ is the largest company in Tatarstan and employs approximately 20 percent of all industrial workers. KamAZ manufactures trucks, passenger cars, and truck and automobile engines. Originally a manufacturer of equipment and tools for the automotive industry, YelAZ now assembles Chevrolet Blazers under a contract with General Motors.

Aircraft-building includes the Kazan Helicopter Plant-MI and the Kazan Aviation Plant. The Kazan Helicopter Plant manufacturers the MI-8 and MI-17 series helicopters, which are used throughout the NIS and in a number of other countries. The Kazan Aviation Plant manufactures Tu-204-200 passenger aircraft and Tu-330 cargo aircraft. Tatarstan also has various manufacturers of optical, mechanical, electrical, medical, radiometric, compressor, refrigeration, petroleum- and chemical-industry, and building equipment.

Infrastructure
Tatarstan has a well-developed transportation network including roads and highways, railroads, 4 navigable rivers, gas and oil pipe lines, and domestic and international aviation. The republic is traversed by gas pipelines from Siberia to European Russia and Western Europe, as well as by oil pipelines supplying customers in European Russia and the Western NIS. The largest transportation nodes are the cities of Kazan, Agryz, Zelenodolsk, Bugulma, and Naberezhniye Chelny. Domestic and international air transportation is provided from Kazan International Airport.

An international satellite telecommunications station has been operating in Kazan since 1993. It provides telecommunications access to almost all parts of the globe. Cellular communication has rapidly been growing as well. Tatarstan companies have developed close contacts with Western telecommunications companies including Hughes Network Systems, Alcatel, Siemens and Nokia. The capacity of telephone lines in the republic rose by 55,200 telephone numbers in 1996. The telephone density is 37.7 per 100 families in urban areas and 13.6 per 100 families in rural areas. A "Unified Republican Data Transmission Network" is under construction which will allow its subscribers to have access to RELCOM/INTERNET, INFOTEL, ROSPAC, FAXNET, and paging systems.

Banking
The Tatarstan banking system is composed of 33 commercial banks and 1 government bank. Numerous Moscow, Samara, Nizhny Novgorod, and Ufa banks have branches in the republic, as well. Overall, there are 194 financial and credit institutions, 18 of which are licensed to perform foreign currency transactions. The largest local bank is the National Bank of the Republic of Tatarstan. Mezhkombank, Sberbank, Intekhbank, Zarechye, and Tatagroprombank are actively involved in foreign trade.

Wholesale & Retail Trade
There were 19,022 retail stores and food service companies in Tatarstan, as of July 1, 1997. Total retail in 1996 sales amounted to $2.8 billion (14.119 trillion rubles at an exchange rate of $1 = 5,000 rubles). When the Tatar Statistics Committee in June 1997 randomly polled retail outlet managers polled randomly by the Tatarstan Statistics Committee in June 1997 revealed that they stated that they preferred to stock imported goods because of more beneficial payment terms (45 percent of respondents), shorter turnover (21 percent), a longer shelf-life for imported food products ( 14 percent), and a more attractive appearance of the goods (20 percent). Higher quality is one more important reason why 62 percent of respondents trade in European, U.S. and Canadian merchandise. Lower prices and wider availability led 25 percent of respondents to stock Chinese and Korean-made products.

Small Business
Tatarstan ranks tenth in the Russian Federation in the number of small businesses. According to the Tatarstan Department of Small and Medium-Sized Business Support and Development, more than 90,000 small businesses were registered in Tatarstan in 1996. Of these, 2,458 were engaged in industrial activities, 5,707 in construction, 3510 in agribusiness, 3,249 in transportation and communications, 65,857 in trade and food service, and 9,658 in other types of business. The average small business in Tatarstan is staffed by 23 employees. The cities of Kazan, Naberezhniye Chelny, and Nizhnekamsk have the highest number of small businesses: 10,939 in Kazan, 4,602 in Naberezhniye Chelny and 1,411 in Nizhnekamsk.

Foreign Trade
According to the Tatarstan Customs Office and the Tatarstan Statistics Committee, in 1996 the foreign-trade turnover amounted to $2.4 billion with a positive balance of $1.2 billion. The republic's major foreign-trade partners are Ukraine, Lithuania, Germany, Poland, Finland, Kazakhstan, the United States, Hungary, Uzbekistan, and Turkey.

Exports. In 1996, Tatarstan's exports totaled $1.7 billion. Oil and oil products accounted for 57 percent of exports.

Product                       Value 
                         (thousands of dollars)        % of Total
Exports
Crude Oil                     908,278                  53.4
Synthetic Rubber              131,118                  7.7
Petroleum Products            105,853                  6.2
Aircraft                      85,874                   5.0
Ethylene Polymers             73,067                   4.3
Rubber Tires                  63,649                   3.7
Trucks                        51,079                   3.0
Cyclic Hydrocarbons           50,903                   3.0
Acyclic Spirits & 
Derivatives                   29,305                   1.7
Automotive components & 
equipment                     11,463                   0.7
Propylene Polymers            9,700                    0.6
Oil Gas and Hydrocarbons      6,105                    0.4
Non-ferrous Metals            537                      0.03
Lumber                        321                      0.02
Other                         172,748                  10.25
TOTAL                         1700000                  100

Tatarstan's top five export trading partners in 1996 were Germany (15.1 percent of exports), Ukraine (14.3), Lithuania (7.5), Poland (5.9) and Finland (4.7). Over the first 9 months of 1997, the republic's exports were worth $1.2 billion, a 15.2 percent increase of the same period the year before. Over this period of time over 58 percent of merchandise was exported to Germany, Ukraine, Poland, Finland and Lithuania. Crude oil and petroleum products accounted for 60 percent of exports.

Imports. Tatarstan's 1996 imports totaled $633 million. Machinery, equipment, automobiles, and related products accounted for 47.1 percent of total imports.

Products                      Value
               (in thousands of dollars)     % of Total Imports
                                             
Capital Goods*                281,868             47.1
Pipe (non-ferrous metals)     37,301              6.2
Non-ferrous Metals            22,675              3.8
Pharmaceuticals               10,257              1.7
Sugar                         8,890               1.5
Grains                        8,359               1.4
Meat & Meat Products          3,829               0.6
Beverages (alcoholic & 
non-alcoholic)                3,320               0.6
Sunflower Oil                 323                 0.1
Other                         256,178             37
TOTAL                         633,000             100

In 1996, imports of pharmaceuticals grew by 28.8 percent over 1995, non-ferrous metals imports rose 46.5 percent, and purchases of non-ferrous pipe rose 14.4 percent. The top five supplier to Tatarstan in 1996 were: Ukraine (30.9 percent of total imports), Germany (13.5 percent), Italy (6.6 percent), the United States (5.6 percent) and Turkey (4.4 percent). Over the first 9 months of 1997, imports amounted to $451.8 million, or 94.1 percent of the same period in 1996. Major importers during the first 9 months of 1997 were Ukraine, Italy, Germany, the United States and Brazil. They supplied roughly 57 percent of all imported merchandise.

Machinery, equipment, instruments and vehicles and components accounted for 56.7 percent of imports. Imports of passenger cars, food-processing equipment, barley, and sunflower oil rose sharply in 1996, while imports of aircraft, trucks, wheat, corn, and sugar decreased.

Foreign Investment
According to the Tatarstan Statistics Committee, $91.9 million worth of foreign investments were made in the Tatarstan economy in 1996. The majority of these investments came from European countries.

Over the first 9 months of 1997 foreign investments equaled $181.3 million, of which, $10.8 million (5.9 percent) were direct investments. Other investments were mainly in the form of loans and equaled $170.5 million. During the same period foreign investments were made largest in the industrial sector ($171.1 million or 94.4 percent), $168.3 million of which was invested in the fuel sector. The remainder of investments were distributed in the following way: machine-building and metal-working: $2.3 million; the medical sector: $0.5 million; trade and food service: $10 million; telecommunications: $0.2 million . Foreign investments in Tatarstan came from the United Kingdom ($101.93 million), the United States, Germany, Finland, the British Virgin Islands, France and Slovakia.

Joint-Ventures
As of September 30, 1997, 245 joint ventures were registered in Tatarstan, including those with charter capital in excess of 1 billion rubles. Foreign partners include companies from more than 40 countries, particularly the United States, Germany, Austria, the United Kingdom, Canada, and Turkey. Companies with investments in Tatarstan include Nalco/Exxon Chemical Energy Marketing Ltd. (U.K.), Global Natural Resources (U.S.), Mannesman AG (Germany), Alcatel (France) and ICL (Great Britain). The highest number of joint-ventures and foreign companies are based in Kazan, Naberezhniye Chelny, Almetievsk, and Nizhnekamsk. Imports by joint-ventures and foreign companies were worth $50.7 million, while exports were worth $ 50 million.

As of September 30, 1997, 43 ventures involving American companies were registered in Tatarstan. Joy Lad Distributors Int., Inc. and its partners Tatnefteprom and Tatnefteprodukt produce, process, transport, and store crude oil and natural gas and upgrade existing wells. Joyta is a joint venture set up by YelAZ and Granit-M of Tatarstan and Joy Lad Distributors Int., Inc. to produce assorted confectionery and bread products. Established by Tatneft and Signal Energy Corporation, the joint-venture Tatekh is involved in developing the Onbiy oil field.

Contacts:
Tatarstan Ministry of Economics
Damir Mansurovich Bikbov, Minister
420021 Kazan, ul. Kirova 55
Tel.: (8432) 644-623
Fax: (8432) 644-633

Tatarstan Department of Foreign Relations
Timur Yurievich Akulov, Director
420014 Kazan, Kremlin
Tel.: (8432) 327-552, 640-726
Fax: (8432) 367-088, 640-810

Department of Industry, Tatarstan State Property Management Committee
420043 Kazan, ul. Vishnevskogo 26
Tel.: (8432) 642-450
Fax: (8432) 643-200

Chamber of Commerce and Industry of the Republic of Tatarstan
Shamil Rakhimovich Ageev, General Director
420503, Kazan, ul. Pushkina 18
Tel.: (8432) 326-540, 320-522
Fax: (8432) 360-966

Agency for International Cooperation Development, Cabinet of Ministers, Republic of Tatarstan
Khafiz Mirgazyamovich Salikhov, General Director
420503 Kazan, ul. Kremlevskaya 17
Tel.: (8432) 324-902
Fax: (8432) 384-491

This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)