Frito-Lay announced Monday that it will plow $40 million into building a snack food plant outside Moscow, picking up where it left off when the financial crisis hit in August 1998.

The plant, which will make potato chips and other snacks, will be located in the Kashira district and will employ 350 people, Frito-Lay officials said.

"The decision to build our manufacturing facility in Kashira was prompted by Frito-Lay's long-term commitment to being a market leader in Russia," said John Stevenson, Frito-Lay's president for Central and Eastern Europe.

Stevenson was in Moscow for a three-day visit with the Business Development Mission to Russia, led by U.S. Commerce Secretary Donald Evans.

"The announcement today by Frito-Lay that they are going to open a plant in Kashira is another indication of the American business community sending a signal that this environment is friendly to American capital," Evans said.

In 1997, Frito-Lay spent $20 million in building a complex to house the plant, the construction of which was supposed to begin in 1998. After the crisis, however, those plans were put on hold, and the white, rectangular structure was instead used to store snacks shipped in from Poland.

The plant is to go online during the third or fourth quarter of 2002. It will be Frito-Lay's first potato-chip facility in Russia, and to ensure stable supplies, the company's agricultural experts are working with Russian farmers to increase crop yield.

"That's the template we use in all countries, including America," said Frito-Lay spokeswoman Louise Finnerty. "First, we reach critical mass, and then we move production closer to where our customers are."

Frito-Lay, the snacks subsidiary of U.S. food and drink giant PepsiCo, first entered the Russian market in 1993. The company said it saw a booming business until 1998, with its market share reaching 45 percent. Following the ruble slump, sales plummeted 85 percent, and the chips maker embarked on cost-cutting to survive.

Frito-Lay currently has a 52 percent share in the Russian salty-snack market, which includes four segments -- potato chips, corn chips, nuts and crackers, according to market analysts. It is the No. 1 potato-chip seller with a 47 percent market share, followed by Russky Produkt and Kraft Foods, which hold 17 percent and 9 percent, respectively.

The local snack market has a total value of some $200 million, about one-tenth the size of the confectionery market. But it is growing at a pace of 10 percent a year and is expected to grow 53 percent by 2005.

Frito-Lay expects to grow more than 20,000 tons of potatoes under its agriculture technology program next year. That figure is expected to double to 40,000 in 2003.

"We are very satisfied that Frito-Lay has decided on one of the region's most progressive districts," said Yevgeny Puzyakov, head of the Kashira administration. "It will provide a strong push for our agriculture and have a good influence on Kashira's socio-economic development."

With headquarters in Plano, Texas, Frito-Lay is the leader in half of the world's top 10 chips markets, with operations in 40 countries. The company had an annual revenue of $11 billion and posted an operating profit of $2.3 billion in 2000.

The Frito-Lay announcement came after Evans hailed the first commercial shipment of oil along a new Caspian pipeline built with the assistance of ChevronTexaco.

ChevronTexaco announced it had completed loading of the first tanker from the pipeline operated by the Caspian Pipeline Consortium, or CPC.

"U.S. companies are the largest investors in the CPC, over $1 billion," Evans said. "The CPC pipeline is the largest American investment in Russia and that sends a powerful signal back to America that the environment is right to invest in this country."

The 1,580-kilometer pipeline -- stretching from the Tengiz oil field in western Kazakhstan to Russia's Black Sea port of Novorossiisk -- has an initial capacity of 560,000 barrels per day, and capacity is set to reach 1.3 million bpd by 2015.

Evans also praised the Kremlin's efforts to liberalize the economy and attract foreign investment.

"Separately and apart from the [response to the Sept. 11] horrific attacks, it is obvious to the business community that this country is moving toward a market-based economy," Evans said.

"Their reforms, their actions demonstrate that they are serious about developing a market-based economy.

"We think this country's reaction, led by President [Vladimir] Putin's response ... has reinforced what we have witnessed for the last few years," he said.