Caspian Energy (CE): Mr. Governor, which economic spheres are broadly developed in Astrakhan oblast of the Russian Federation and what do you think about their investment attractiveness? 

Alexander Zhilkin, Governor of Astrakhan oblast, Russian Federation: A few years ago we worked out a program of social-economic development which was supported by the government of Russia and consisted of 11 certain areas. In general, all 11 areas are being successfully developed and the fuel-energy complex is the driver. For instance, the work performed in the oil sector of the Caspian enabled to fully load a ship building sector, increases the amount of orders placed for the construction industry and promotes the growth of transshipment through the port. On the other hand, new production areas emerge, and large service companies which develop their positions by operating on the north Caspian fields enter our market. A new plant for production of concrete pipes was built last year. These pipes will be used for transportation of Caspian hydrocarbons of Russia to the shore. 

The program for expansion of gas industry capacities is developing in the same way. Over 10 geological survey companies engaged in exploration of Astrakhan subsoil resources are operating at present. All this involves parallel economic sectors including those of agriculture. One of the projects according to which we are closely cooperating with Azerbaijan’s scientists is production and use of such natural resource as iodine. Based on cooperation with Azerbaijan’s business-community this year we are to commence the construction of the first stage of iodine production plant. 

Agrarian complex is developing actively. We are proud that the volumes of harvest we managed to gain despite the peculiar climate of the Caspian region could be only a dream for our local officials during the soviet period. The agriculture keeps developing and now we are more interested in the projects on deep processing of vegetables but not in the amount of grown products. Considering high dynamics of our relationships, we cooperate with Azerbaijani specialists on this in order to adopt this positive experience in this sphere. 

CE: How would you assess bilateral relations of Astrakhan oblast with Azerbaijan and Kazakhstan? Which issues, in your opinion, have to be solved today for expansion of cooperation between these countries? 

Alexander Zhilkin: We enjoy friendship and cooperation with all Caspian states. Azerbaijan and Kazakhstan are still particular strategic partners for us. Astrakhan and Baku have common historical ties. I would like to thank President of Azerbaijan Ilham Aliyev for his personal concern and participation in development of relationships between Baku and Astrakhan. I met President of Azerbaijan during my regular visit to Baku. The dynamics of our relationships is very positive, the turnover of goods is growing, but it is early to say that we have reached the top. It is necessary to activate a number of directions of cooperation and a mutual understanding has been reached in this issue. The issue of establishment of direct ferry traffic between Baku is under active consideration. The air traffic which was temporally stopped due to the replacement of the air fleet will be resumed. All of this will enable to expand cooperation between businesses of Azerbaijan and Astrakhan oblast of the RF. A high amount of humanitarian projects is the most important component of our relations. Many humanitarian projects approved by President of Azerbaijan and concerning education, improvement of the city of Astrakhan and other issues, are realized in Astrakhan. All of it takes the relationship level between the peoples to a new qualitative level. Thus, business will activate very quickly. 

The commodity turnover with Azerbaijan grew by 2.5 times over the year. The sums are not big but the rates are rather high. I think this year the commodity turnover will grow in agriculture, navigation and construction industry as Azerbaijan is producing many construction materials that Astrakhan oblast needs. All of it needs transportation. Therefore, it is necessary to open mutual trade representations. I find the relationship with Azerbaijan to be the highest and I think it will keep expanding. 

We maintain the same active cooperation with Kazakhstan as well. Here, noteworthy is the leadership of the shipbuilding industry of Astrakhan oblast as it has long-standing relations with Kazakhstan and lends big support to Kazakh partners to develop the shelf in the Kazakh sector of the Caspian Sea. We are certainly cooperating for developing an agroindustrial production, especially stock-raising since Kazakhstan has traditionally been breeding sheep and cattle for meat. 

CE: What are the prospects of expansion of bilateral state and business relations? 

Alexander Zhilkin: An understanding has been reached between the states. We have signed an agreement which accumulates cooperation in all areas starting from humanitarian right up to all economic segments. We should certainly realize that Astrakhan is the subject of the Russian Federation and many issues concerning global cooperation are solved between the states. Our role in this regard is very important for activating relationships between Azerbaijan and Russia as well as for intensifying the present cooperation. President Ilham Aliyev has also mentioned repeatedly about the necessity for continuing close integration cooperation. As we have similar climate conditions, a twelve-month growth of fruit and vegetable products where Azerbaijan made a progress is of great interest to us. I assume we shall soon start implementing a joint project in this area. 

We are also going to start implementing a very important project on cotton growing this year. Here we also cooperate with business-structures and scientists of Azerbaijan. Cooperation in this direction will be interesting both for Azerbaijan and Russia. 

Commissioning of the ferry traffic from Baku to the port of Olya is the most important issue for now since it will promote the growth of economic mutual relations. 

Meanwhile, we also cooperate in the field of shipbuilding. Baku has a potential shipyard where serious technological re-equipment has been performed. Orders will abound in the Caspian Sea, so we will need each other. The negotiations on this issue are underway and I am confident that we will gain success. 

CE: What could you tell about the level of economic relations with Turkmenistan? 

Alexander Zhilkin: Mutual relationships with Turkmenistan are expanding and have reached a considerably high level in view of Astrakhan industry’s participation in certain economic projects of Turkmenistan. In particular, our companies perform dredging work in the port of Turkmenbashi and take part in installation of facilities on oil fields located in the Turkmen shelf of the Caspian Sea. There are also interests toward a qualitative product that Turkmenistan produces in the construction industry. It is a crushed stone which has always been the most qualitative. It is cement, textile products made of cotton that they grow. Apart from this, we implement very serious educational projects and train about 500 specialists for the Turkmen economy. 

CE: Do you consider oil-gas projects being implemented in the Russian sector of the Caspian successful? What is the contribution of Astrakhan oblast to this process? 

Alexander Zhilkin: This segment of the economy is capacious in view of finances. Investments made into it are estimated in billions of dollars. Considering the sensitiveness of the Caspian eco system, the Russian companies follow the principle of zero environmental impact. Therefore, these projects cost high enough. Development of the Russian sector of the Caspian Sea enabled to produce about 1 mln tons of hydrocarbons last year. According to our forecasts, the development expansion which is currently running will enable to produce 2.5 mln tons of hydrocarbon raw materials by 2015. We provide services to these projects. One of the projects on construction of surface facilities on the field has been realized by the shipbuilding plant of Baku. 

CE: What are the opportunities for cooperation with the Caspian states within the framework of Caspian oil-gas projects? 

Alexander Zhilkin: I think the projects that may raise the mutual relations to a higher level are important in this direction. Firstly, the Caspian Sea must be preserved. Secondly, it is necessary to preserve bio-resources so that not to ruin this historical region, which is interesting for all peoples residing in the Caspian, when developing, producing and transporting hydrocarbons. Noteworthy in this aspect is certainly cooperation in scientific surveys. Apart from this, we must take into account that we live in the place where big transport corridors intersect that they will develop. Noteworthy are also possibilities for humanitarian cooperation. I focus attention on this issue because human relationships play a very important role. If we want to realize economic projects actively, then we should strengthen and develop human relationships just like the way we do it today. I am very grateful to my friends from Azerbaijan since our friends there are very active, understand and give a high value to all undertaken measures because it will facilitate to solve any further issues in terms of ecological security and integration issues on development of Caspian fields. 

CE:  How will you solve the issue of ships sailing under foreign flags across the Volga?   

Alexander Zhilkin: It is the sphere of responsibility of the President and the Government of the Russian Federation. But these issues have been already preliminary discussed between the heads of our countries. I believe it will be one of the issues to be discussed at the summit of heads of the Caspian states. We under support of the Government of the Russian Federation have settled the issue of emergency ships calling under the flags of the Caspian littoral states for a fast repair on our shipyards.

CE: How would you evaluate the investment environment of Astrakhan in terms of attraction of foreign investors?

Alexander Zhilkin: I can estimate it in concrete figures.  According to the results of the last year, the growth rates of industrial outputs were much higher than those across the country, and totaled 126%. The share of investments in the gross regional product (GRP) now approaches 40%. The entire legislative framework for business has been created and coordinated.  We accompany and help the business to make it feel more comfortably. 

This year we set up already more ambitious goals on industrial production growth rate, which is 30%, and almost a 1.5 times increase of the volume of investments into all sectors of economy. It is the real program which we are introducing and implementing in Astrakhan now.

CE: What are the prospects of cooperation with the Caspian littoral states in the processing industry? 

Alexander Zhilkin: Prospects are very serious, for the processing industry now shows good growth rates and its volumes increased by one-fourth last year, including processing, light and food industries. We are quite seriously integrated. For example, we are implementing very interesting joint projects with Azerbaijan in the segment of fruit and vegetable production, with Turkmenistan in the segment of light industry with a due consideration of their cotton cultivation traditions. 

Besides, the market keeps on developing. Many companies will come and do come now, like in all Caspian states, to the field development segment, which entails a serious production program. Respectively, we should create integration-based new productions and each company shall be involved in that area it better deals with. I believe that prospects are great, especially in the food and light industry. At least, we offer cooperation to our partners in the Caspian countries.

Also, I would like to add that I am pleased very much to answer questions of Caspian Energy today, to see again our friends from Baku. I believe that all projects in Azerbaijan will keep on successfully developing. There are prospects to develop mutually advantageous cooperation. In general, I love Baku very much. It is the most beautiful city in the Caspian. We will prepare for the First Olympic European Games to be successfully hosted, I believe, in Azerbaijan.

Thank you for the interview