«Prospects of establishing the production offiber glass pipes

in the Special economic zone “Alabuga”

The Special economic industrial zone “Alabuga”was created on December 21, 2006 in theRepublic of Tatarstan

In the center of the largest industrial region 800 km to the east of Moscow

�Territory – 67 800 km2

� Population – 3.8 mln.� GRP – USD 26,7 bln.� Industrial output – USD 26 bln.� S&P rate - BBB+� Moody’s rate - Baa2� Fitch - IBCA - BBB+

One of the most developed regions in the Russian Federation

Economic industrial structure of the Republic of Ta tarstan

“Free customs zone” regime

Foreign countries Russia

Machinery and partsNo VAT – 18%

No Import duty – 10%

SEZ “Alabuga”

Investment incentives and preferences

Title

1. Profit tax for the residents2. Property tax for the residents3. Land taxfor the residents4. Transport taxfor the residents

Taxation rate

20.0%15.5%2.2%0%1.5%0%

USD 0

from USD 0.3 to USD 3.8 (per a horse-power)

�Inner-site roads� Railway� Gas� Electricity� Heating� Water � Sewerage � Storm sewage � Drainage� IP Phone � High-speed Internet

Industrial infrastructure

Land plot rent and purchase

Rent:USD 0.05 for m2

per year Purchase:USD 0.12 for m2

10 ha area

Rent:USD 4.800 per year Purchase:USD 11.800

1. Checkpoint with 4х2 driving lanes (entrance and exit)2. Parking for 100 trucks3. Parking for 50 trucks4. Unit of cargo and vehicle profound audit5. Unit of container profound audit6. Railway7. Railway terminal8. Container terminal (1 500 containers 40 2 TEU)

Customs infrastructure

�Single Window System (One Stop Shop)�Banks�Conference halls�Exhibition hall�Offices�Post office�Meeting rooms�Public health office�Gym�Canteen

Administrative-business centre(total square – 11.000 m2) with all the necessary services needed for everyday work:

Business infrastructure

�Ministry of Ecology and Natural Resources�Ministry of Labor and Social Security�Service of Environmental, Technological and Nuclear Oversight�Federal Real Estate Cadastre Agency�Social Insurance Fund�Fund of Obligatory Medical Insurance�Inspection of State Architectural Building Supervision�Registration Service�Chamber of Commerce and Industry�Tax Service�Customs Service�Migration Service�Pension Fund�Certification Test Center�Technical Inventory Bureau

Single window system (One Stop Shop)

Polymers produced within 400 km from the SEZ “Alabuga”

Most major Russian carmakers are located within 500 km from the SEZ “Alabuga”

JV “P-D Tatneft-Alabuga Steklovolokno”

• OAO “Tatneft” – 50%

P-D Glasseiden GmbH Oschatz – 50%

• Investment volume – 63,6 million euro

•Production capacity – 21 000 tons

•Start of production – November 2009

•Full capacity production – by 2011

•300 jobs

•Payback period – 6,5 years

•Taxes to Federal and Local budget – 250 million rubles annualy

Products and application fields

Woven roving - used as reinforcing material for glass-fiber plastics pipes, plastics filling

Chopped fiber - used for non-woven material production

Glass-mat – used for glass-fiber plastics sheets, boats and transport hull, boxes etc.

Fiberglass mesh - used for building and construction, heat insulation, reconstruction and repairing of roads

Complex materials – consists of 2 or 3 types meshes and fabrics. Used in repairing of sewerage, production of pipes, shipbuilding

Roving for chopping – used for production of mesh, translucent glass-fiber plastics

Fiber glass production in Russia

Saint-Gobain Isover(Egoryevsk)

Saint-Gobain Vetroteks Fiber-glass (Gus-Khrustalny)Steklonit

Fiber-glass plastics plant (Stupinsk)

Tverstekloplastik

Novgorod fiber-glass plant

Fiber-glass plant in Astrakhan

Others

Total production in 2008 – 169 000 tonsMarket annual growth – 25%P-D Tatneft projected market share – 15%

Consumption of fiber glass by groups

14 % - automotive16 % - pipes, tanks

10 % - shipbuilding

Russian fiberglass pipes market to grow

Housing and utilities

Oil and gas

Chemical production

Energy sector

Advantages

• Corrosion-resistant

• High strength-to-weight ratio

• Low cost assembly and maintenance

• Wider temperature and pressure range

Fiberglass pipes in the overall polymer pipes consumption in Russia

11 % - PP pipes

76 % - PE pipes

Production of fiberglass pipes in Russia

Major producers

OOO “Zavod steklovoloknistih trub”, Kazan

OOO “Truboprovodspetsstroy”, Perm

OAO “DPO Plastic”, Dzerzhinsk

OOO “Armplast”, Nizhnevartovsk

FGUP “Avangard”, Safonovo

4 major producers

Oil and gas oriented (epoxy based, up to 300 mm)

Total annual production below 800 kilometers

Projected market annual growth – 30%

Cost of project realisation

Project realisation

Is in average 40 % lower

Cost of construction works is 30-40 % lower (USD)

Cost of construction materials is 35-40 % lower (USD)

Cost of labor force

55 % increase 41 % decrease

Source: Ministry of labour, employment and social security of the Republic of Tatarstan

Thank you for your kind attention!

Contacts:

Investor Relations Department:

Tel: +7 (85557) 5 90 23

Fax: +7 (85557) 5 90 01

E-mail: alabuga1@inbox.ru

www.alabuga.rosoez.ru