VZCZCXYZ0008
RR RUEHWEB

DE RUEHMO #1462 1550744
ZNR UUUUU ZZH
R 040744Z JUN 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 3626
INFO RUEHRL/AMEMBASSY BERLIN 2038
RUCPDOC/USDOC WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RHMFIUU/FBI WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHMFIUU/HQ BICE INTEL WASHINGTON DC

UNCLAS MOSCOW 001462 
 
SENSITIVE 
SIPDIS 
DEPARTMENT FOR PM/DDTC - BLUE LANTERN COORDINATOR 
 
E.O. 12958:  N/A 
TAGS: ETTC KOMC RS
SUBJECT: BLUE LANTERN LEVEL 3: POST-SHIPMENT END-USE CHECK ON 
LICENSE 050124935 
 
REF: STATE 46706 
 
¶1. (SBU) Summary:  Due to a lack of funding, we were not able to 
travel to Surgut, Russia to conduct a site visit of Surgutneftegas's 
business operations and on-site security.  A company representative, 
however, flew to Moscow to meet us and provided us with corporate 
reports.  He also described to us Surgutneftegas's security 
procedures for restricted items.  He said his company would retain 
positive control over the reftel items at all times.  The gyroscopes 
would be used to monitor the level and location of oil in the 
company's oil wells.  Surgutneftegas is a private company that 
accounts for a significant portion of Russia's oil and gas 
production.  Grytsiv claimed the company exports oil and gas largely 
to Europe, and cooperates with U.S. companies as well.  He also told 
us Surgutneftegas understood the restrictions on United States 
Munitions List (USML) items.  Although the company and its ownership 
structure are opaque, based on our conversation with Grytsiv, we 
have no reason to believe Surgutneftegas would be an unreliable 
recipient of USML items.  End Summary. 
 
¶2. (SBU) In a May 21 meeting, Head of the Oil-Field and Drilling 
Equipment Department of Surgutneftegas Aleksandr Grytsiv flew from 
Surgut to Moscow to meet us and provide us company reports and 
documents.  He told us his company has secure facilities and many 
procedures for handling sensitive USML items.  The security 
arrangements of the facility include monitoring equipment and the 
company's own security guard force.Qccording to Grytsiv, employees 
must sign out the items in order to use them, and all items are 
locked in safes when not in use.  No site visit was conducted to 
assess Surgutneftegas's business operations and on-site security, 
however. 
 
¶3. (SBU) According to Grytsiv, Surgutneftegas would retain positive 
control over all the reftel sensitive equipment at all times.  The 
items would not be transferred or re-exported to any other users. 
 
¶4. (SBU) Grytsiv told us the gyroscopes would be used to monitor the 
amount of oil and its location in Surgutneftegas oil wells. 
 
¶5. (SBU) Surgutneftegas is a private company that was founded in 
¶1977.  Vladimir Bogdanov is the Director General and has been on the 
board of directors since 1993.  Surgutneftegas is the fourth largest 
oil and gas company in Russia.  A letter signed by the Deputy 
Director General A.V. Pogorelov stated company accounts for 13 
percent of all oil and 25 percent of all gas extracted by oil 
companies (i.e. excluding Gazprom and Novatek) in Russia.  Grytsiv 
told us that he could not recall any other orders of USML defense 
items in the past, although the company frequently orders equipment. 
 He did, however, recall an instance in which Baker Hughes planned 
to sell Surgutneftegas remote control drilling equipment, including 
restricted heat isolation material.  According to Grytsiv, the USG 
did not allow the sale, although he could not recall why. 
 
¶6. (SBU) Grytsiv told us Surgutneftegas exports oil and gas, 
primarily to Europe.  It also owns a chain of gas stations in 
Russia.  Grytsiv said that Surgutneftegas would like to export oil 
and gas to China.  He added that Surgutneftegas also worked with 
U.S. companies such as National Oilwell Varco and Stewart and 
Stevenson. 
 
¶7. (SBU) Grytsiv told us Surgutneftegas understood the restrictions 
on USML items, including the prohibitions against unauthorized 
re-transfers and re-exports.  Surgutneftegas is known for being very 
closely held company that disseminates very little information 
publicly.  Its ownership structure is opaque and even professional 
investment analysts are often unable to obtain verifiable 
information about the company.  Our assessment is that 
Surgutneftegas is primarily a commercial venture, and we do not have 
reason to believe that Surgutneftegas would be an unreliable 
recipient of USML items. 
 
BEYRLE