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Singapore firm in 168billion rouble deal to invest in Far East infrastructure

By Anna Liesowska
03 March 2015

Memorandum of understanding will see construction of major projects including new refinery and upgrade to port.

Alexander Osipov, the First Deputy Minister of Development of the Russian Far East, and Dehong Zhou, the President of Baoli Bitumina Singapore (BBS). Picture: Bitumina Group

A Singaporean firm has signed an agreement to invest 168 billion roubles ($2.7billion) in road building and associated projects in the Russian Far East. Baoli Bitumina Singapore (BBS) will plough funds into major infrastructure across the region as well as create special high-quality road materials.

Part of the investment will go into the construction of a new refinery to produce bitumen, as well as the modernisation of port facilities in a major city to include a terminal for oil and gas exports.

The new facility will serve both domestic and overseas markets, with a particular focus on exports to China, Japan and other countries in South-East Asia.

Baoli Bitumina Singapore signed a memorandum of understanding on trade and investment with the Ministry of Development of the Russian Far East during the Krasnoyarsk Economic Forum on Sunday.

The ceremony was attended by Alexander Osipov, the First Deputy Minister of Development of the Russian Far East, and Dehong Zhou, the President of BBS. The deal comes just months after senior business leaders in Singapore said Russia could become one of the island state's main trading partners in the 21st century.

A statement on the BBS website says: 'A portion of this investment will go to the acquisition of an existing or construction of a new refinery that focuses on producing high quality straight-run bitumen from heavy crude oil, which other refineries don't like to utilise as they focus on the production of light products and therefore neglect the quality of bitumen, which is one of the main raw materials for road construction.

'Baoli Bitumina also intends to build three large hi-tech industrial units in the Moscow region, Khabarovsk and a third location yet to be disclosed, servicing the industry with the highest quality materials at affordable prices.'

Khabarovsk

BBS will plough $500million to establish a construction company in Khabarovsk through public-private partnerships and concession agreements. Picture: bibnout.ru

According to the Ministry of the Russian Far East, $50million will be invested in the construction of the refinery.

The company also intends to plough in $200million in the modernization of port facilities, most likely in Vladivostok, and a further $500million to establish a construction company in Khabarovsk for Russian infrastructure projects through public-private partnerships and concession agreements.

With the emergence of the Northern Sea Route – and the potential advantage of using the Arctic to reach Europe – the investment is likely to be the first of many.

The partnership with the Singaporean firm will be welcomed by Moscow, with President Putin keen to angle the economy towards Asia following sanctions from the West over the Ukraine crisis. 

Direct investment from Singapore is already on the rise, totalling some 3.5billion roubles (US$57million) in 2012, compared to 2billion roubles in 2011 and 1.8billion roubles in 2010.

International Enterprise Singapore put bilateral trade between the two countries last year at 240billion roubles – and it is set to reach record-breaking levels with figures showing it already stands at 251billion roubles this year. The majority of the trade has been in agriculture, consumer products and property development.

Not many Singapore firms currently operate in Russia but those that have ventured north have done well, with business leaders urging more companies to grasp the opportunity.

With its main offices in the UK and the United Arab Emirates, Bitumina has activities in more than 80 countries and employs about 55,000 people.

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