Caucasus press review (August 3-9)

The Russian government approved a draft of the Law on Ratification of the Agreement between the Governments of Russia and Azerbaijan on Encouragement and Mutual Protection of Investments, which would be presented to the State Duma. The newspaper Azerbaijani News thinks that when the document is adopted it will eliminate one of the significant barriers to economic cooperation between the two countries. Under the current agenda between Moscow and Baku, it can be considered not only literally, but also as a way of deeper ‘involvement’ of Azerbaijan in the Russian trade and economic orbit, without imposing the formal and juridical limits of the CU and the EAEU on Baku.

According to the newspaper, the two countries have been striving for this for almost 15 years, feeling for problems. From the point of view of interests of foreign investors, i.e. Azerbaijani companies, the Russian legislation in the sphere of investments is not complete and stable at the moment. However, the current agreement enables to compensate certain drawbacks of Russian laws: the norms of the agreement have priority over the norms of national law. Another obstacle was that free access of Russian business to the Azerbaijani market in the early 2000s could have undermined the national security of some economic sectors. In recent years the Azerbaijani economy has strengthened and became a donor and a foreign investor. Now it is ready for more open competition. There were no such concerns from the Russian side. The scale of the Azerbaijani economy cannot threaten the capital of Russian business. On the contrary, as the North Caucasus within the NCFD limits has become an object for investments, its neighbors, including the Azerbaijanis, are involved in regional projects as a donor.

The newspaper stresses that today there are four significant Azerbaijani investors in Russia. These are the State Oil Fund of Azerbaijan (SOFAR) on the stock and real estate markets; SOCAR, which has recently registered its subsidiary enterprise SOCAR Rus for production, transit and trade of Azerbaijani and Russian oil; Azersun, which processes and exports agricultural products to Russia, and is an active investor in Krasnodar Territory and Stavropol. And the fourth investor is MBA-Moscow Bank, which gives loans to Russian companies which are working in the vector of bilateral relations.

Along with the traditional interest in the oil-and-gas industry, Russian business wants to enter the oil-chemical sphere of Azerbaijan. After the Western sanctions, many foreign oil-producing companies launched a technical moratorium on activities in Russia. Thus, this segment needs both technical and investment support from abroad. The Investing Committee of Gazprombank has already approved a loan for SOCAR Polymer – $489 million for 10 years for financing of building plants on production of HD polypropylene and polyethylene in Azerbaijan.

Therefore, the newspaper concludes, Azerbaijan is becoming a valuable partner for Russia: purchasing equipment and necessary raw-materials will be provided through joint enterprises for various spheres of Russian industry and infrastructure. Meanwhile, Azerbaijani investors are interested in Russian machine engineering, including the chemical and oil spheres, the electro-technical and radio-electronic industries, and shipbuilding technologies. As for politics, the agreement will open a wide road for direct economic integration without loud slogans and political obligations.

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The North Ossetia Newspaper reported that the acting head of the republic, Tamerlan Aguzarov, met industrial entrepreneurs of the region, discussing the problem of import substitution with them. At the governmental commission’s meeting headed by Premier Dmitry Medvedev RNO-A was poorly presented. At the moment, industrial production is growing in five regions of the NCFD; but in two of them – Karachay-Cherkessia and North Ossetia – the index is falling. The biggest percentage of the fall is registered in North Ossetia. According to Aguzarov, in all the regions of the North Caucasus plans on encouraging import substitution were adopted; and lists of key investment projects in industry were developed. Enterprises which are able to compete with foreign companies and produce high-quality products within the framework of import substitution will be supported. The head of the republic admitted that only three of 30 key projects which would be supported by the government were from North Ossetia. “This is the Vladikavkaz Technological Center 'Baspik', which produces microchannel plates and exports products to many countries. The second one is OOO Topaz-2 which plans to substitute imported injection syringes, medical utensils and vials. And the third one is SP Misung which organizes production of dyes for deep printing and printing on flexible wraps,” Aguzarov mentioned key projects of the North Ossetia.

Baspik is providing the Russian Army with night-vision devices. The company spent 85 million rubles for development of innovations. Last year the pace of growth reached 40%. This year it will be no less than 30%. It signed a contract on export of equipment to China for 150 million rubles. The enterprise has partnership relations with Germany, the US and the UK. At the moment it is searching for an investor for a new project of Volokno. It costs about 320 million rubles, which it is planned to be paid back over two years. 

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The Dagestanskaya Pravda newspaper  reported that the latest, 49th condensate well has been put into operation in the Dimitrov field near Makhachkala.

According to the Director General of the Dagneftegaz JSC, Valery Davydov, 150 thousand cubic meters of gas will be produced in the field every day, which accounts for nearly 20% of the volume produced by the company.

The investor of the project is the Rosneft oil company, the Dagneftegaz JSC is its subsidiary company. Experts estimate the deposit's reserves will last for 15-20 years. The Deputy Director General of ‘Dagneftegaz’, the deputy of the National Assembly of Dagestan, Dalgat Mahachev, has especially thanked the workers and the entire staff of the company, whose selfless work in conditions of cold and heat allowed this complex facility to be put into operation in time, which would be another object that will feed the national budget.

According to the publication, for Dagestani gas workers each well is not just a success, but a victory, since drilling is carried out in difficult geological conditions, and gas production at a depth of four kilometers is real aerobatics. Today in the Dimitrov field, which was discovered in 1960, ten wells have been mastered, and their number will increase. The gas workers are already planning the 50th anniversary, but it is not easy to do because of the high costs of the projects. For comparison: in the North, you can open oil wells with a capacity of 200 thousand cubic meters per day at a depth of 1000 meters, and it will cost less. Despite this, the mineral wealth of Dagestan remains competitive. Besides the Dimitrov field there are also exploration works, which are conducted on such promising license areas as Izberbash, Safarali, Karabudahkent, Agachaul, Karlanyurt and Karatube. The total investment program of the company ‘Rosneft’ in Dagestan is designed up to 2030

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The implementation of a multi-faceted cultural project create the first ethnographic complex in North Ossetia – the Dargavskaya Valley – which is aimed at developing cultural and ethnographic tourism, is entering its last stage. The alpine village of Dargavs was chosen as the platform for its implementation. The North Ossetia Newspaper reported that the central object to visit will be the branch of the National Museum of North Ossetia-Alania located here, the famous architectural and ethnographic complex ‘City of the Dead’, which includes 95 monuments of the history and architecture of the Ossetian folk of the late Middle Ages. The area is interesting, because not far from Dargavs there are the Midagrabinsky Waterfalls, which are the highest in Europe. This natural landmark has become one of the tourist ‘brands’ of the republic, but it is still not famous enough abroad.

Next to the unique open-air museum in the autumn of this year it is planned to instal a new turnkey exposition facility. This is the Ossetian traditional hut of XVII-XIX centuries with all its decorations and household outbuildings, sheds, places for cattle, male and female halves of living, a guest washroom, which is recreated by builders and museum staff. The serving traditional Ossetian furnace, in which it will be possible to bake cakes using wood according to old recipes, is also recreated there. Residents of local villages have given to the museum real-life objects of old Highland Ossetia, which were kept in homes. In a specially equipped room with modern interactive equipment and virtual technologies tourists can, if they wish, become even more acquainted with the history and culture of Ossetia.

The project will provide the necessary infrastructure for tourists: the catering trade and souvenirs, information boards and road signs, the development of ethnographic routes. In addition, it is planned to include the facility in the Accessible Environment program to make visits as comfortable as possible for disabled people, including those who are in wheelchairs.

The object was built with funds of the republican budget allocated by the Ministry of Culture of the Russian Federation.

According to the Acting Minister of Culture of the Republic of Ossetia, Fatima Khabalova, it is primarily needed for the residents of the republic, especially young people, most of whom have very little understanding of the nuances of history, ethnography and traditional culture of the native people. On the other hand, the Dargavsky Necropolis is a very popular tourist spot on the map of Ossetia, and guests of the republic should be able to get there to obtain visual and substantive information about its history and culture. The next step in the development of the infrastructure perspective of this object, according to the minister, would be the construction of a mini-hotel there, where residents and guests of the republic will spend their vacation with joy.