RUSSIA – UPPER VOLGA NEWS REPORT

October 31, 2007

Author: Roman Vvedensky, BISNIS representative in Nizhny Novgorod, Russia

The report summarizes commercial, political and business development news in the Nizhny Novgorod region and Republic of Tatarstan in October 2007. The information is received from the Russian news agencies (INTERFAX, AK&M, NTA), TATAR-INFORM.RU, INTERTAT.RU, REGNUM.RU, VOLGA-INFORM, regional periodicals, PR departments, and web-cites of regional governments and local companies.

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The report highlights:

Nizhny Novgorod Region:

· RusOtel-N to invest US$ 53 million in 4-star hotel in the city center

· Ruspolymet announces Euro 150 million investment in rolled steel mill

· PAZ bus company to launch assembly of Brazilian buses

· Stolitsa Nizhny launches the second stage of US$ 150 million mall

Republic of Tatarstan:

· Tatneft and Shell agree on strategic partnership

· Tatneft and Preiss-Daimler Group to build a fiber glass plant in Alabuga

· Tatenergo meet IBM in London

NIZHNY NOVGOROD REGION

RusOtel-N to invest US$ 53 million in 4-star hotel in the city center

According to Nizhny Novgorod region’s government, the local investment committee, chaired by the region’s Governor, approved allocation of a land site to the Nizhny Novgorod-based company RusOtel-N for development of a 4-star hotel project.

The local company plans to invest over US$ 53 million in 100-150 room hotel, which may be further managed by Marriott. The new hotel will be built next to the Young Spectator Theater (TYuZ) in the city center of Nizhny Novgorod.

Ruspolymet announces Euro 150 million investment in rolled steel mill

The metal works Ruspolymet, located in the city of Kulebaki in the south-west of the Nizhny Novgorod region (http://www.ruspolymet.ru/index.php?idx=0&m=0&lang=en&tpl=0), registered a subsidiary company Kulebaki Electrometallurgical Works and announced Euro 150 million investment project to increase the output of rolled section steel from 70,000 to 750,000 tons per year.

Construction works will start in mid-2008, and the new facility should reach the design production capacity in late 2010. The investment project provides for removal of an old open-hearth furnace, and for construction of a new rolled section mill. The new plant will produce section iron for domestic construction companies, located at a 600-900 miles range from the city of Kulebaki, the Nizhny Novgorod region.

Earlier this year, Severstal announced a new steel mill investment project at the city of Dzerzhinsk, the Nizhny Novgorod region. The US$ 500 million project provides for construction of a steel mill with a production capacity of one million tons of section iron per year. The new mill should be launched in mid-2010.

PAZ bus company to launch assembly of Brazilian buses

According to the press-release of GAZ Group of companies, PAZ bus company completed preparation of a shop to assemble Real city buses under the joint project with Marcopolo, Brazil (http://www.marcopolo.com.br/novo/mpsa/default.asp?ldi=2). The shop will assemble 1,000 Real buses per year. Real is a 22-seat small city bus, mounted on Hyundai chassis.

Stolitsa Nizhny launches the second stage of US$ 150 million mall

Stolitsa Nizhny group of companies launched the second stage of Fantastika mall in Nizhny Novgorod in late October this year.

The project, designed in three stages and estimated at US$150 million, started last December with opening of a German DIY store OBI. The second stage of the project brought in the German supermarket Real, and a number of apparel, sports wear, electronics and home wear stores to the mall. Currently, the mall covers the area of 645,000 square feet, with the total investment of US$ 60 million into the project.

The third stage of the mall will dispose over 1,000,000 square feet for a 9-hall cinema, a World Class fitness center, a food court, and new brands of stores, which are currently not presented in the local market. The third stage of the mall should be launched in November 2008.

REPUBLIC OF TATARSTAN

Tatneft and Shell agree on strategic partnership

Tatneft and Shell Exploration Company B.V. signed an agreement on strategic partnership in the city Almetyevsk, which resides the headquarters of Tatneft oil company.

The parties agreed to work out a joint program, including a feasibility study, to develop high viscosity oil fields in Tatarstan, and in other regions of Russia. By now, Tatneft has introduced its own technology of lateral drilling to develop heavy crude oil in Tatarstan.

Tatneft and Preiss-Daimler Group to build a fiber glass plant in Alabuga

Tatneft oil company and Preiss-Daimler Group signed a MOU to set a joint venture, producing fiber glass at the free economic zone Alabuga, eastern Tatarstan.

The project is estimated at Euro 60 million. The German company would invest its know-how, some productive assets, including refractory materials for a glass-melting furnace, and it would provide training to the local staff.

Tatenergo meet IBM in London

Senior managers of Tatenergo electricity company ran negotiations with IBM in London to learn about Maximo software application to control major productive assets in the electrical power sector. Tatenergo representatives learnt about the IBM software resource and its application in the London metro system, and in the communal services sector.

For more information on Upper Volga region, Russia, visit BISNIS online at http://www.bisnis.doc.gov/bisnis/country/volga.cfm

BISNIS (www.bisnis.doc.gov) is part of the U.S. Commercial Service (www.export.gov).