IT IS -25C in a disused Red Army hangar in northern Russia. The director is wearing 18 layers of clothing. The cast can act for only a few minutes, before being taken inside to protect them from frostbite. Welcome to Stoliwood, Russia’s answer to Hollywood.

The director, the Emmy-award winning Brit Tom Roberts, recalls from the relative comfort of North London the tough experience of shooting the film In Transit last winter in St Petersburg. “They were extremely difficult conditions,” he says, “but it was worth it.”

Like an increasing number of Western stars and directors, Mr Roberts was persuaded to shoot in Russia by the lure of oligarchs’ billions. He was invited to Russia by Sistema Mass Media (SMM), the media company of LSE-listed Sistema holding group.

Michael Dounaev, SMM’s managing director, has a vision of turning St Petersburg into the Hollywood of the East, using Sistema’s ample financial resources. He says: “There’s been a trend in Hollywood over the last ten years to shoot films in Central Europe — Cold Mountain, for example, was shot in Romania — but with these countries joining the EU, production costs are going up. We think movie companies will simply move further east. You can make films in Russia for 30 per cent less than in the West.”

Sistema, owned by the oligarch Vladimir Yevtushenkov, is taking a Roman Abramovich-style approach to film-making. Roberts recalls: “We suggested a low-key cast, and SMM said: ‘Let’s get a better one. Let’s get John Malkovich as the star.’ They were very happy for us to spend more than we originally intended.” In Transit is due for release this year.

SMM is using its resources to finance films made in Britain. It was the principal financial backer of Woody Allen’s Match Point, shot in London. Mr Dounaev says: “We saved that film. Another backer pulled out and we came up with the cash.”

Now the company is building a four-hectare studio outside St Petersburg, in a converted military hangar. Mr Dounaev says that it will be the biggest film studio in Eastern Europe and the only one capable of shooting scenes underwater.

He says: “Western movie companies love shooting in St Petersburg because it has very special light in the summer and you can use the streets and canals to shoot scenes set in Venice, Amsterdam, Paris or other European cities.”

Another Russian film company is trying to turn Moscow’s giant MosFilm studios into Russia’s film capital. The Russian American Movie Company (Ramco) has shot two Englishlanguage movies in Moscow and is preparing a $50 million (£27 million) English-language version of War and Peace, which would be the most expensive Russian production to date.

Sergei Konov, general director of Ramco, says: “There is tons of money around in Russia . . . but a lack of places to put it.” Mr Konov, who managed to persuade Russian oligarchs to support Ramco’s English-language productions, says: “Russian businessmen love the idea of Hollywood glamour. They consider it a big honour to sit at the same table as some American movie star.”

Last year Ramco finished shooting Captivity, directed by Roland Joffre, and starring Elisha Cuthbert, one of the stars of the TV series 24. The film is due for release this year.

Michael Dounaev is the managing director of Sistema Mass Media, one of the biggest media companies in Russia. He helped to persuade Vladimir Yevtushenkov, who controls the Sistema holding group, to back his company and finance films. The company was the main financier of Woody Allen’s Match Point.

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