Representatives of the Far East Russian island of Sakhalin hope an exhibition this week in Moscow will boost the region’s visibility and help attract business and investment.
At "Sakhalin in the 21st Century," March 28-30 at the Federation Council in Moscow, business and government leaders will discuss economic developments, legal changes and improving Sakhalin’s relations with other regions.
Representatives from oil, coal mining, science, transport, fishing, light industry and financial structuring companies – 22 in all – some making the long trip from Sakhalin to Moscow, will promote their goods and services.
"Sakhalin is second only to Moscow for foreign investment in Russia and is number one in the Far East," said Michael Allen of the American Business Center in Yuzhno-Sakhalinsk, the island’s main city.
"It saw a jump from $140 million in 1998 to $1 billion last year. In 2000, we expect this figure to drop to around $500 million – a hiccup that is largely due to ExxonMobil’s drilling program having been held up by difficulties in obtaining a license."
Allen said that the "main oil and gas projects are currently Sakhalin 1 and Sakhalin 2, product-sharing agreements started in 1996 that began extracting oil from the Sakhalin shelf last year. In addition, there are two or three more product-sharing agreements waiting in the wings."
This year, foreign investors are expected to inject $350 million into the oil-shelf projects off Sakhalin, with each dollar of direct investment in shelf projects yielding two dollars for the local economy, officials said.
Sakhalin is the fourth largest in industrial manufacturing out of the nine Far East regions, a figure the exhibition hopes to improve this year.
The local mining industry has already undergone improvements – 20 worked-out mines have recently been replaced, a step which local authorities hope will lead to cheaper coal supplies and lower overheads for industry.
One problem facing the local economy is the dwindling deposits of onshore oil and gas fields. These are substantially depleted, and oil extraction has been declining continuously since 1984.
The good news for the area is that new fields have recently been discovered off the northeast shore of the island.
The island has substantial resources of oil, gas, coal and gold, with oil and gas the main areas of foreign investment – constituting 15 percent of Sakhalin’s total commodity output.
The island, with a population of 670,000, is seven hours ahead of Moscow time and situated in the Okhotsk Sea north of Japan. Russia and Japan have been in conflict since the early 19th century over the volcanic Kuril islands, which neighbor Sakhalin. Russia won back the islands along with southern Sakhalin after World War II, although the dispute continues as Japan still lays claim to the islands.
Earthquakes continuously threaten Sakhalin and the Kurils, the most destructive in recent times being the 1995 quake, which destroyed the Sakhalin town of Neftegorsk.
Next month, a new, major project involving supplying electricity from Sakhalin to Hokkaido, Japan, is set for approval. The $12 billion plan was first discussed between Anatoly Chubais and the governor of Sakhalin two years ago, and should become a reality after feasibility studies are completed in April, officials said.
(Information on the exhibition can be obtained by calling the Sakhalin representative in Moscow at 203-5141.)