Bashkortostan special report: Industry - Building on success

Bashkortostan’s traditional strengths in petrochemicals, agriculture and machine engineering are providing the springboard for the creation of a new generation of high-tech industries.

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The key to Bashkortostan’s consistent economic outperformance is to be found in its outstanding mineral resources and diverse industrial expertise.

Historically, the Republic’s prosperity has been based on petrochemicals. Oil extraction began in Bashkortostan in 1932 and today the region is the third-largest oil producer in the Russian Federation, producing around 15 million tonnes a year.

Bashkortostan also boasts world-class refineries, which process oil from both within and outside the region. At present, the Republic’s refining complex has a total capacity of around 30 million tonnes a year and production is running at close to 90% of that level.

Both industries are dominated by local oil giant Bashneft, part of the Sistema Group. The company has recently spread its wings beyond Bashkortostan, exploring production opportunities in the Arctic and Iraq, but still obtains the vast majority of its oil from the Republic. Indeed, preliminary results for 2013 showed a significant increase in oil production in Bashkortostan.

Bashneft’s refining subsidiaries also saw a step up in production last year. In total, its Ufa refining complex – comprising Ufa Oil Refinery, Novoil and Ufaneftekhim – processed 21.4 million tonnes of oil, a 3% increase on 2012, while the share of light products rose to 60.4%. The firm is also investing heavily in new downstream operations in Bashkortostan – work is due to start this year on a $3 billion plant for the production of ethylene by its recently created subsidiary United Petrochemical Company.

Bashkortostan’s other main petrochemicals firm, Gazprom Neftekhim Salavat, is also rapidly boosting its presence in the region. The company, part of the Gazprom Group, is undertaking extensive development and expansion of its refining and chemical production facilities at Salavat, to the south of Ufa.

Work began last July on a new catalytic cracking unit, part of the company’s extensive refinery modernization programme, while December saw the start of construction on a new complex producing a range of acrylic acids that is due to start operations in 2015. The company is also building a unique new power station using clean steam gas technology to provide a large part of the power at its Salavat facility.

Mineral wealth

In addition to oil, Bashkortostan also produces natural gas, coal, lignite and peat – and the region’s mineral wealth is not limited to fossil fuels. Sixty different types of minerals occur naturally in the Republic, providing the base for a wide range of industries including ferrous and non-ferrous metallurgy, the chemical industry and building materials.

Evgeniy Mavrin, deputy prime minister - minister of economic development
Evgeniy Mavrin, deputy prime minister - minister of economic development
Bashkortostan accounts for 10-12% of copper production in the Russian Federation and is also a leading producer of zinc, gold and silver. Major non-metallic deposits include rock salt, as well as essential raw materials for the chemical industry such as fluorspar, phosphorus rocks, carbonates, zeolites and glauconite.

Key companies in the non-metals sector include Soda, the largest producer of purified sodium bicarbonate in the Russian Federation, and caustic-soda producer Kaustik. Both firms are based in Sterlitamak, in the south-west of Bashkortostan.

The Republic’s natural resources provide the basis for several other major industries, including agriculture, timber processing and tourism. Bashkortostan has 7.1 million hectares of agricultural land and is one of the top five regions for agriculture in the Russian Federation, ranking first nationally for cattle livestock, second for horse livestock and milk production, and fifth in the production of poultry.

Bashkortostan also possesses extensive timber resources. Forests cover more than one-third of the Republic’s territory, amounting to 62,000 sq km, and the timber stock is estimated at 718 million cubic metres, with key varieties including birch, lime, oak, maple and conifers.

Engineering expertise

The fastest-growing industry in Bashkortostan, however, is outside the resources sector. Machine building and mechanical engineering has been a key sector for the Republic since the 1920s, when the first jet engines in the Soviet Union were produced by the Ufa Engine Industrial Association (UMPO), and is still today a major contributor to the region’s economy.

UMPO remains the largest aircraft engine producer in the Russian Federation, and has also expanded its range of products to include tractor and automobile parts, gas pumps and turbines. Other aviation leaders include the Kumertau Aviation Production Enterprise (KUMAPE), which makes helicopters and related equipment in the southern city of Kumertau.

In addition to aviation, Bashkortostan is a national leader in the production of passenger coaches and trolleybuses. The Bashkir Trolleybus Manufacturing Plant, based in Ufa, was established as early as 1979, while passenger coaches are produced in the north-west of the region by the Neftekamsk Automobile Plant (NefAz).

The Republic is also home to leading utility truck manufacturers such as the rapidly expanding Tuimazinsky Concrete Delivery Truck Works, as well as automobile parts manufacturer BelZAN, based near the western city of Oktyabrsky, and metal-cutting machine tools manufacturer Sterlitamak MTE.