Category Archives: environmental threats

Mutant Avian flu: Expanding global vaccine production

 Allow me to add a personal note here .Right now I am writing I am recovering from the H5N1 flu,so is my family. It’s not a joy ride i can reassure you,i still feel my muscles stiff and my bones about to crack in pieces. BUT we took NO antibiotics,NO VACCINES- this is a is a must-not-do for my family-,nothing.  We had poor luck with all those “lethal” viruses so we got them all,Swine flu in 2009 and again the mutant swine flu last year[2011].WE didn’t die. Of course none of us belongs to the high risk groups. Yet we took a slight taste of pneumonia and other complications like otitis
I can not advise you if you belong to a high risk population group. But if you do not,just take some basic precautions and it will pass. We “survived” of five flu attacks with no harm done . You don’t need any killing Tamiflu or any vaccine that will make you more vulnerable to diseases
A friend of mine,a doctor,he said to me when i asked” you cannot predict a virus when it is bombed with antibiotics,the most possible to happen is to face new,mutant strains,resistant to known drugs”
And when i asked in return,why the Pharma industry doesn’t adapt their antibiotics to the new shown strains,he answered” if they did so,they would never claim a Pandemic“…
the rest is known..
21 June 2012

The H5N1 ‘bird flu’ virus could evolve to spread through the air between ferrets by picking up as few as five mutations, according to a long-awaited study from Ron Fouchier from the Erasmus Medical Centre in Rotterdam, the Netherlands1. The paper is published today in Science after months of debate about whether the benefits of publishing the research outweighed the risks.

H5N1 can cause lethal infections in humans but it cannot spread effectively from person to person. Fouchier’s paper is the second of two publications describing how the virus could evolve this ability. The first, from Yoshihiro Kawaoka at the University of Wisconsin–Madison, involved a hybrid virus with genes from both H5N1 and the H1N1 strain behind the 2009 pandemic2 (see ‘Mutant-flu paper published‘). Fouchier’s mutant contains only H5N1 genes.

“Coming after the Kawaoka manuscript, I thought it might be anti-climactic, but it does not fail to deliver,” says Vincent Racaniello, a virologist at Columbia University in New York.

There is only one common mutation in the combinations that Fouchier and Kawaoka identified. “It just means that there are multiple ways to skin a cat,” says Robert Webster, a virologist at St Jude Children’s Research Hospital in Memphis, Tennessee.

Despite their differences, both sets of mutations confer similar properties on H5N1. Some mutations allow the haemagglutinin (HA) protein on the virus’s surface to stick to the kind of receptors found in the human upper airway. Others stabilize the protein, an unexpected property that now seems to be important for transmission among mammals. “Two very different strategies led to common functional changes,” says Malik Peiris, a virologist at the University of Hong Kong, who notes that these changes are “not uncommon in field strains already”.

Fouchier now wants to know whether these traits could make any flu virus go airborne, and whether previous pandemics started in this way. “The virus could evolve in a thousand different ways,” he says. “But if we can show that any receptor-binding mutations, or any that change the stability of HA, can yield airborne viruses, the story becomes completely different. We can then do surveillance for mutations that cause the same phenotype.”

Fouchier’s team began by adding three mutations to an H5N1 strain isolated from Indonesia in 2005. Two of these — Q222L and G224S — changed the HA gene such that its protein preferentially sticks to human-type receptors over those found in bird cells. The third — E627K — changed the PB2 gene, which is involved in copying the virus’ genetic material, so that the virus was able to replicate more easily in the cooler environment of mammalian cells.

The team allowed this mutant virus to evolve naturally by passing it from one ferret to the next, injecting it into the animals’ noses and collecting samples daily for four days. After ten rounds, the virus could spread between ferrets housed in separate cages.

These airborne strains spread less effectively than the 2009 H1N1 virus, and are sensitive to current antiviral treatments and potential vaccines. They are lethal if delivered directly to the ferrets’ airways in high doses, but not if the animals catch the infections naturally through the air.

Fouchier’s airborne viruses carried a diverse array of mutations, with just five mutations shared by them all, including the original three that Fouchier had inserted and two more in the HA gene: T156A, which affects receptor binding, and H103Y, which stabilizes the protein. The five mutations might be enough for H5N1 to spread between ferrets, but it may take nine or even more. “Until the changes are introduced in combinations into H5N1 virus, we won’t know the answer,” says Racaniello.

In a related paper published in Science3, Derek Smith from the University of Cambridge, UK, and his colleagues has shown that wild H5N1 viruses already have many of the mutations that Fouchier and Kawaoka identified. Some of the viruses are two to four nucleotide substitutions away from the complete sets. However, whether those mutations would allow different strains of H5N1 to spread between ferrets, let alone humans, remains unclear.

Fouchier now wants to work out the number of other individuals who catch the airborne virus for everyone who is infected. This number “needs to be higher than 1 to cause a pandemic”, he says. “We need more quantitative transmission models to start addressing that.”

But Racaniello thinks a different approach would be more effective. “I suggest that we spend research money developing more flu antivirals, and a universal flu vaccine,” he says[Source]

Will Tamiflu save the world from the avian flu?

No one wants to catch the flu! At the very least, it will put you out of commission for a week, and it can also cause  life-threatening infections – pneumonia is the most common, although other bacterial diseases like bronchitis are common too. Most people don’t think about problems with secondary infections after catching the flu, but a deadly form of the flu could be just around the corner.

The H5N1 “avian” flu is highly deadly among birds, and it has occurred in humans. Most people who contract the avian flu have had direct contact with infected birds. Fortunately, H5N1 does not appear to spread from human to human, but what if mutations occur in the virus that allow this to happen?

The 2009 H1N1 “swine” flu reminded us of the potential for flu pandemics that cross over to humans from other animals.

Based on its severity in birds and in the humans who have been infected, an H5N1 pandemic could be far more deadly than the H1N1 pandemic; it could kill a significant percentage of the world’s population! For example, in the 1918 flu pandemic, about 5% of the world’s population died. Based on the virulence of H5N1 in birds, it’s predicted that a higher percentage of humans would die as a result of a H5N1 human pandemic, although this is, of course, conjecture. In support of this conjecture, however, is the fact that 63% of the humans who have been infected with H5N1 have died (Hurt et al.).

antiviral compounds

Antiviral compounds

Fortunately Tamiflu (Oseltamivir) and a related drug, Relenza (Zanamivir), reduce the severity of the flu if they are given when the flu symptoms initially appear. But will the drugs be effective forever?

Seventy years ago, antibiotics such as penicillin seemed like miracle drugs. But now bacteria are evolving to become resistant to antibiotics, in part because the antibiotics have been overprescribed. Could the same thing occur with antivirals as they become used more frequently? It is a possibility.

Mutations, changes in the genetic code of an organism, occur rapidly in the influenza virus. Most mutations are harmful to the virus, but a few are beneficial (and, therefore, potentially harmful to humans). A mutation could occur in an influenza virus that allows it to resist the effects of Tamiflu and Relenza. Such a virus would then grow much more rapidly than a nonresistant form in the presence of the drugs.

To understand how Tamilflu and Relenza function and how the virus might become resistant to them, we need a little background on the life cycle of the flu virus. When an unsuspecting victim inhales a flu virus, a protein on the surface of the virus called hemagglutinin (the ‘H’ in H1N1, for example) binds to a receptor called sialic acid on the surface of cells in the respiratory tract (see structure of sialic acid in picture above).

Influenza life cycle

Influenza life cycle

The cell takes in the virus, which then replicates inside the host cell. The newly formed viruses leave the cell by budding off the surface. The hemagglutinin on the new viruses can then bind to the sialic acid on the surface of other host cells, thus infecting new cells. For this to occur, however, the viruses need to escape the host cells. Another viral surface protein, neuraminidase (the ‘N’ in H1N1, for example), breaks down the sialic acid receptors so the viruses can escape.

Tamiflu and Relenza are structurally similar to sialic acid and will bind to the neuraminidase, but they cannot be broken down. Therefore, neuraminidase cannot bind to sialic acid on the cell surface when it has Tamiflu or Relenza bound to it. Because they prevent neuraminidase from functioning, the two drugs are collectively referred to as neuraminidase inhibitors (NAIs). When NAIs are present, some of the newly produced virus will get stuck to the original host cell and will not be able to infect other cells.  Some viruses will still escape, so NAIs don’t cure the flu but rather reduce its severity.

Are NAI-resistant viral mutants forming? Studies have identified a few flu viruses that are resistant to these drugs. A very dedicated (and patient) group of scientists (Monto et al.) grew up a whopping 2287 samples of flu virus that were collected from all over the world during the first three years (1999-2002) the drugs were prescribed. They grew these samples in the presence of each of the two NAIs. While the vast majority of the viruses were not resistant to the drugs, a few samples were. Resistance was determined by measuring the concentration of the drug needed to inactivate each virus. These results were concerning; however, another team of scientists (Yen et al.) studied two NAI-resistant flu mutants and found that they were not as contagious nor as fit as the non-resistant strains.

Ferrets

Ferrets used in nasal washes

Yen et al. (2005) also showed that the virus didn’t grow as well in vitro, and they measured how well the virus grew in an in vivo model. In those studies, three ferrets were infected with the virus: two with the mutant strains and one with a wild type (not mutated) virus.

After two days, each ferret was put into close contact with two other ferrets. Each day after exposure, the researchers took nasal washes of each ferret and quantified the amount of virus in the wash. (I wonder if there is a neti pot for ferrets.)

Neti Pot

Net pot for sinus infection

The washes showed that less virus was produced by the two resistant mutants. In fact, one of the ferrets exposed to a mutant virus was less contagious. Other studies have found this to be the case with the most resistant flu virus mutants. That is, the more resistant the flu virus is to an NAI, the less virulent is the virus.

However, exceptions were found in a further study by Yen et al. in 2006, where they found two mutants that were resistant to the drugs but still grew relatively well, which is more concerning. While these mutants did not appear naturally (they were designed by the lab) they could, in principle, occur in nature.

None of these studies looked at the H5N1 avian flu directly, but because the drug-resistant viruses were found over a wide variety of strains, there is potential for an H5N1 mutant that is resistant to Tamiflu and Relenza. Fortunately the drug-resistant mutants are usually less fit, so an H5N1 NAI-resistant mutant might not be as deadly. It appears that Tamiflu and Relenza would help reduce the impact of an H5N1 pandemic. However, we must monitor the virus for resistant mutants.

References:

Silver, G. (2003) The treatment of influenza with antiviral drugs. Canadian Medical Association Journal 168 (1), 49–57.

Monto, A., McKimm-Breschkin, J., Macken, C., Hampson, A., Hay, A., Klimov, A., Tashiro, M., Webster, R., Aymard, M., Hayden, F., & Zambon, M. (2006). Detection of Influenza Viruses Resistant to Neuraminidase Inhibitors in Global Surveillance during the First 3 Years of Their Use Antimicrobial Agents and Chemotherapy, 50 (7), 2395-2402 DOI: 10.1128/AAC.01339-05

Yen, H., Herlocher, L., Hoffmann, E., Matrosovich, M., Monto, A., Webster, R., & Govorkova, E. (2005). Neuraminidase Inhibitor-Resistant Influenza Viruses May Differ Substantially in Fitness and Transmissibility Antimicrobial Agents and Chemotherapy, 49 (10), 4075-4084 DOI: 10.1128/AAC.49.10.4075-4084.2005

Hurt, A., Holien, J., & Barr, I. (2009). In Vitro Generation of Neuraminidase Inhibitor Resistance in A(H5N1) Influenza Viruses Antimicrobial Agents and Chemotherapy, 53 (10), 4433-4440 DOI: 10.1128/AAC.00334-09

Yen, H., Hoffmann, E., Taylor, G., Scholtissek, C., Monto, A., Webster, R., & Govorkova, E. (2006). Importance of Neuraminidase Active-Site Residues to the Neuraminidase Inhibitor Resistance of Influenza Viruses Journal of Virology, 80 (17), 8787-8795 DOI: 10.1128/jvi.00477-06

Bioweapons, Dangerous Vaccines,
And Threats Of A Global Pandemic

By Stephen Lendman
7-7-9

Bioweapons, Dangerous Vaccines,
And Threats Of A Global Pandemic
By Stephen Lendman
7-7-9

Although international law prohibits the use of chemical and bacteriological weapons, America has had an active biological warfare program since at least the 1940s. In 1941, it began secret developmental efforts using controversial testing methods. During WW II, mustard gas was tested on about 4000 servicemen. Biological weapons research was also conducted. Human subjects were used as guinea pigs in various other experiments, and numerous illegal practices continued to the present, including secretly releasing toxic biological agents in US cities to test the effects of germ warfare.

The Hague Convention of 1907 banned chemical weapons usage, and the 1928 Geneval Protocol prohibited gas and bacteriological warfare. The 1972 Biological Weapons Convention (BWC) “Prohibit(ed) the Development, Production and Stockpiling of Bacteriological (Biological) and Toxin Weapons and Their Destruction.” The 1989 Biological Weapons Anti-Terrorism Act “implement(ed the) Prohibition of the Development, Production, and Stockpiling of Bacteriological (Biological) and Toxin Weapons and Their Destruction….”

In 2001, the Bush administration rejected the 1972 BWC, took advantage of a loophole allowing “prophylactic, protective or other peaceful uses,” continued a secret Clinton administration bioweapons initiative, and asserted its right to spend multi-billions illegally to develop, test and stockpile “first-strike” chemical and biological weapons that potentially can kill millions.

In his August 14, 2008 article titled, “The Pentagon’s alarming project: Avian Flu Biowar Vaccine,” F. William Engdahl cited:

“alarming evidence accumulated by serious scientific sources that the US Government is about to or already has ‘weaponized’ Avian Flu. If reports are accurate, this could unleash a new pandemic on the planet that could be more devastating than the 1918 Spanish Flu epidemic which killed an estimated 30 million people worldwide before it eventually died out. Pentagon and NIH experiments with remains in frozen state of the 1918 virus are the height of scientific folly” unless something more nefarious is afoot in collaboration with Big Pharma to produce weaponized viruses and/or dangerous mandatory vaccines that, at the least, can cause serious autoimmune diseases or, as some allege, a Swine Flu or other viral pandemic.

Alarming News about Baxter International

On February 27, 2009, various news agencies including Helen Branswell in the Canadian Press, reported:

Baxter International that “released contaminated flu virus material from a plant in Austria confirmed (today) that the experimental product contained live H5N1 avian flu viruses.” The WHO said the incident occurred at the company’s research facility in Orth-Donau, Austria, but claimed “that public health and occupational risk is minimal” thus far. What’s not known, however, “are the circumstances” behind the incident that, according to some, raise suspicions while others call it a willful criminal act. More on that below.

The contaminated product, “a mix of H3N2 seasonal flu viruses and unlabelled H5N1 (Avian Flu) viruses, was supplied to an Austrian research company….Avir Green Hills Biotechnology.” It then “sent portions of it to sub-contractors in the Czech Republic, Slovenia and Germany.”

The problem was discovered when The Czech Republic company discovered that ferrets innoculated with the product died. “Ferrets shouldn’t die from exposure to human H3N2 flu viruses.” Public health authorities called it a “serious error” that showed “the H5N1 virus in the product was live.” But Baxter “has been parsimonious about the amount of information it has released about the event.” Christopher Bona, the company’s global bioscience communications director, did confirm that the material was a “live….experimental virus” made at the Orth-Donau research laboratory.

Security experts expressed alarm that something this serious could happen, calling the co-mingling (or reassortment) of human H3N2 with H5N1 avian viruses a dangerous practice that should never occur because of the potentially devastating effects to human health. “If someone exposed to a mixture of the two had been simultaneously infected with both strains, he or she could have served as an incubator for a hybrid virus able to transmit easily to and among people,” who, in turn, could transmit it to enough others to potentially cause a pandemic. So far, nothing this extreme has happened, but a future threat remains.

As Medical Director of the Natural Solutions Foundation, Dr. Rima Laibow warns about dangerous, toxic drugs and vaccines. On March 6, 2009, she posted a “Pandemic Flu Emergency Action eAlert on her healthfreedomusa.org web site stating:

“World media (outside America) are reporting that Baxter Pharmaceuticals has admitted that it ‘accidently’ contaminated various vaccine batches with Avian Flu viruses. These batches were shipped to 18 countries. Clearly, either 1. stupidity and incompetence (are to blame) or 2. intentional contamination of flu vaccine lots was at work.”

Many Avian Flu vaccines compete with each other, yet they’re “profitable ONLY if used in huge numbers.” Although “Avian Flu has been slow to be become pandemic by ‘jumping the species barrier’ to humans in large numbers,” might Baxter’s “accident” be a way to do it? If so, Big Pharma will score “One of the biggest wins in history.”

In fact, it already has after the Center for Infectious Disease Research & Policy (CIDRAP) reported that Congress (in mid-June) “approved $7.65 billion for battling pandemic influenza, more than three times what the House and Senate had earlier proposed.” Unsurprisingly, it was part of “a $106 billion (Iraq and Afghanistan war) supplemental appropriation bill” to open a new front at home in the form of dangerous vaccines – perhaps to be mandated for everyone.

Laibow sees a “manipulated disaster of unprecedented magnitude precipitated by unprecedented avarice and greed,” and adds that “Baxter International Inc. is no stranger to recalls and lethal contaminations.” Its record includes producing faulty infusion and volumetric pumps, HIV-2 tainted Albumin Buminate 5 percent, faulty dialysis machine tubing and blood-cleaning filters, and various other products that should make everyone leery of its soon-to-be-released Swine Flu vaccine. Along with similar ones from other pharmaceutical companies, these drugs cause serious autoimmune diseases and absolutely should be avoided, even if mandated.

Laibow expresses great alarm in stating:

“Baxter mixed a virus which has a hard time infecting people (H5N1 Avian flu) with one that infects them easily (“Seasonal Flu”) in a medium which can promote mutations of the H5N1 virus into a type which can infect us easily. What will be in the vaccine you are forced/coerced/threatened into allowing into your body? Who knows?”

What is known are our constitutional and Nuremberg Code rights. The Fifth Amendment protects against abusive government authority in stating that “No person shall….be deprived of life, liberty, or property, without due process of law….” The Eight Amendment prohibits “cruel and unusual punishments.” Depriving someone of health is tantamount to the latter as well as life by harming and potentially shortening it.

The Nuremberg Code requires voluntary consent of human subjects without coercion, fraud, deceit, and with full disclosure of known risks. It also affirms that experiments should avoid “all unnecessary physical and mental suffering and injury,” and should never be conducted if there’s “an a priori reason to believe death or disabling injury will occur” or harm to human health.

The FDA as an Industry Front Group

As stated on its web site, the FDA is mandated to protect human health and well-being.

As an agency in the Department of Health and Human Services (HHS), “The FDA is responsible for protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs, biological products, medical devices, our nation’s food supply, cosmetics, and products that emit radiation.”

Run by officials of the industries it “regulates,” it fails on all counts. Byron J. Richards is a clinical nutritionist and founder of Wellness Resources. In his book “Fight for Your Health: Exposing the FDA’s Betrayal of America,” he discusses FDA complicity with Big Pharma, dangerous drugs worth billions of dollars to the industry, and the serious risks to people who use them. He states:

“The FDA has put into mothballs its federal mandate to protect the public. In order to foster drug sales, the FDA hides important medical data from the public and from doctors, including the risks of heart attacks, suicide, seizures, and serious mental-health debility. Even worse, the FDA has changed sides. They are actively undermining the rights of citizens to claim damages if injured by drugs. And they are seeking to remove safety barriers to drug testing. They are planning to expose many individuals to unproven drugs, a new form of human experiment” that may rise to a higher level if HHS mandates dangerous Swine Flu vaccines for all Americans despite no forensic evidence of an outbreak or even a single proved death attributable to H1N1.

Yet, in advance of what looks to be coming, on June 11, the WHO declared that “The world is now at the start of the 2009 influenza pandemic (in) decid(ing) to raise (its) influenza pandemic alert from phase 5 to (its highest) phase 6” level.

Dr. Laibow advises that everyone has a “right to say “NO!” to vaccinations and other treatments that (they) do not want. The Police Power of the State ENDS at my skin and yours!” If a pandemic erupts, as a longtime natural health practitioner, she advises what she’ll use herself – Nano Silver as well as vitamins, minerals, and herbs like echinacea that boost the immune system, unlike dangerous vaccines that destroy it. For more information, she directs individuals to the web site: <http://www.nutronix.com/naturalsolutions>www.nutronix.com/naturalsolutions.

WHO, CDC, and Canada’s Public Health Agency (PHAC) Fearmongering Misinformation

Besides declaring its highest Level 6 influenza pandemic alert on June 11, the BBC reported on July 3 that WHO’s Director-General, Dr. Margaret Chan, warned that the spread of swine flu is “unstoppable” while admitting that most cases are mild and many people recover unaided.

On June 25, Daniel DeNoon in WebMD Health News reported that CDC’s influenza surveillance chief, Dr. Lyn Finelli, said: “Right now, we are estimating over 1 million (Swine Flu) cases in the US” in 2009 affecting about 6% of households in major cities. She, too, admitted that the vast majority of cases have been mild but avoided the fundamental issue – that no forensic evidence attributes a single death globally to Swine Flu and all or most known instances may be ordinary viral influenza or common colds, bad enough to cause fever (at times high) and discomfort, last several days and then pass for most people.

With no proof, Finelli cited 3065 Swine Flu hospitalizations and 127 deaths. In a June 26 telebriefing, Dr. Anne Schachat, CDC’s National Center for Immunization and Respiratory Diseases director, cited no verifiable forensic documentation in saying:

“The novel H1N1 (Swine Flu) influenza is continuing to spread here in the United States and around the globe. The key point is that this new infectious disease is not going away. In the US, we’re still experiencing a steady increase in the number of reported cases (and they’re just) the tip of the iceberg.” She added that vaccines are being hurriedly produced. No decisions have been made about “which populations” will need them, but “it’s very important for states and communities to begin intensifying their efforts on planning to administer a vaccine should such be necessary in the fall,” especially for “young people including school children, pregnant women, babies, and adults, particularly younger adults with those underlying conditions….” That said, it “doesn’t mean we’ve finalized any vaccine recommendations.”

On June 21, Canada’s National Post published Sharon Kirkey’s Canwest News Service report headlined, “Vaccinate Canadians under 40 and (aboriginal) natives first: experts.” She added that “Under Canada’s official pandemic plan, the entire population would ultimately be immunized against H1N1 swine flu,” but not at once as vaccines will only be available in batches.

Canada’s Public Health Agency (PHAC) “is working on a priority list,” effective for all provinces and territories. Gymnasiums will be used for mass vaccinations of school children, but no final decisions have been made.

In a June 26 news release, PHAC reported that “The Government of Canada today launched a three-year public education campaign to encourage parents to have their children immunized against certain diseases before the age of two. The Honorable Leona Aglukkaq, Minister of Health, made the announcement at the annual meeting of the Canadian Paediatric Society” saying that “Immunization is one of the best tools we have to protect the health of our children.”

In fact, all vaccines are dangerous and should be avoided. They contain squalene-based adjuvants that cause a menu of autoimmune diseases in test subjects. In humans they include chronic fatigue, various type rashes, chronic headaches, anemia, aphthous ulcers, seizures, weakness, neuropsychiatric problems, ALS, Raynaud’s phenomenon, and multiple sclerosis, among other illnesses and diseases, some causing death.

It’s why Dr. Laibow says “No insurance company in the world will insure against” their risks. In America, a special fund “has paid out over 2 billion dollars to parents of children killed or maimed by vaccinations.” However, the vast majority of those harmed are never compensated, and US law ‘immunizes’ drug companies from lawsuits.

Laibow adds:

“In fact, vaccines are explicitly acknowledged NOT to protect against diseases they supposedly are designed to prevent (read the Package Inserts for vaccines, available on line and in your doctors’ offices if you doubt that) and often” cause them.

Yet they continue in use because they’re so “immensely, enormously and hideously profitable,” and Big Pharma has enough clout to proliferate products that “in a rational society (should) be banned forever.”

Bioterrorism Criminal Charges Filed

On June 10, Austrian journalist Jane Burgermeister filed sweeping criminal charges with the FBI in addition to earlier ones on April 8 with the Vienna State Prosecutor’s Office against Baxter AG, Baxter International and Avir Green Hill Biotechnology AG, “for manufacturing, disseminating, and releasing a biological weapon of mass destruction on Austrian soil between December 2008 and February 2009 with the intention of causing a global bird flu pandemic virus and of intending to profit from that same pandemic in an act that violates laws on international organised crime and genocide.”

Baxter operates Biosafety Level 3 (BLS-3) labs that take strict precautions to assure no possibility of accidental H3N2 and H5N1 co-mingling contamination unless something more nefarious is afoot.

BLS-3 personnel are trained in handling pathogenic and potentially lethal agents and are supervised by competent scientists with extensive experience with them. In addition, these labs have specially engineered design features for added safety.

On its web site, CDC lists four biosafety levels:

— BLS-1 labs are “suitable for work involving well-characterized agents not known to consistently cause disease in healthy adult humans, and (pose) minimal potential hazard to laboratory personnel and the environment.”

— BLS-2 labs are “similar to Biosafety Level 1 and (are) suitable for work involving agents of moderate potential hazard to personnel and the environment. It differs from BLS-1 in that (lab personnel) have specific training in handling pathogenic agents,” and are “directed by competent scientists.” In addition, access to the labs are limited, and “extreme precautions are taken with contaminated sharp items….”

— BLS-3 labs work with “indigenous or exotic agents which may cause serious or potentially lethal disease as a result of exposure by the inhalation route. Laboratory personnel have specific training in handling pathogenic and potentially lethal agents, and are supervised by competent scientists who are experienced in working with these agents.” Labs also have “special engineering and design features,” and follow strict procedures. In addition, protective clothing, equipment, and other extreme precautions are taken.

— BLS-4 labs are for the most highly toxic and dangerous agents – ones “that pose a high individual risk of aerosol-transmitted laboratory infections and life-threatening disease.” As a result, the strictest possible procedures and precautions are always taken.

By combining human influenza H3N2 with bird flu H5N1 virus in its BLS-3 lab, “Baxter produced a highly dangerous biological weapon with a 63 per cent mortality rate. The H5N1 virus is restricted in its human-to-human transmissibility, especially because it is less airborne.”

“However when….combined with seasonal flu viruses (easily transmitted by air), a new flu virus is created which is unknown to the human immune system and which will have a severe impact on an unprotected population. A deadly virus of this kind could spread around the world in a short time and (potentially) infect millions and even billions of people.”

Baxter (via Avir) “distributed (72 kilos of) contaminated (live bird flu) vaccines using false concealment and a false labels to 16 laboratories in Austria and….other countries at the end of January/beginning of February, potentially infecting at least 36-37 laboratory staff, who (were) treated preventively for bird flu and ordinary flu.” On the same day, 18 Avir employees were as well at Vienna’s Otto Wagner Hospital.

Burgermeister cited a Baxter-Avir 2006 contract with Austria’s Health Ministry for 16 million vaccine doses in case a bird flu pandemic was declared. She maintains that this “laboratory incident shows that national and international authorities are not able to fulfill their obligations to ensure the safety of the Austrian people” and claims that authorities were engaged in a cover-up.

“If a pharmaceutical company can breach laws – and almost trigger a bird flu pandemic, which (potentially could spread worldwide) – without being made accountable for it….then there is, de facto, no rule of law on Austrian territory.”

She also contends that Baxter’s production system, “namely, the use of 1200 liter bioreactors and vero cell technology,” meets “the technical criteria to be classified as a secret dual purpose large-scale bioweapon production facility (able to produce) a huge amount of contaminated vaccine material….rapidly.”

“If (this) material were added to the 1200 liter bioreactors, it would replicate and infect the entire batch of vaccine material in (it). Contaminated material could (then) be distributed among sections of the population using false labels and secretly marked batches (able to) infect millions of people.”

Burgermeister accused high-level Austrian Health and other Ministry officials of knowledge and support of this practice. Otherwise, controls would have been in place to prevent it. In June, she named drug producers Baxter, Novartis and Sanofi Aventis, world agencies, including the WHO, UN, and CDC, and high-level officials in Austria, other European countries, and America.

Whether or not there’s enough evidence to substantiate her charges, her case is vital to alert people globally to the potential health threat they face because inadequate controls are in place if the worst occurs.

It highlights the importance of being alert to this and other potential health hazards given lax government regulations and public complicity with powerful corporate interests, that in alliance show a disturbing indifference to public safety and well-being – worse still because dominant print and broadcast media stoke fear by reporting misinformation to convince people to use dangerous drugs and vaccines they should avoid.

As they say, forewarned is forearmed. Better be safe than sorry. Something nefarious may or may not be afoot, but it’s vital to learn the truth, know the risks, and assert your legal right to refuse all dangerous vaccines and other medications, even if mandated.

Stephen Lendman is a Research Associate of the Centre of Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Monday – Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listing.

http://rense.com/general86/bio.htm


Iran,Iraq,Syria,Russia :Mission NOT accomplished for Big Oil

23 August 2012

 

Published (with an intro by Tom Engelhardt) on TomDispatch

In 2011, after nearly nine years of war and occupation, U.S. troops finally left Iraq. In their place, Big Oil is now present in force and the country’s oil output, crippled for decades, is growing again. Iraq recently reclaimed the number two position in the Organization of the Petroleum Exporting Countries (OPEC), overtaking oil-sanctioned Iran. Now, there’s talk of a new world petroleum glut. So is this finally mission accomplished?

Well, not exactly. In fact, any oil company victory in Iraq is likely to prove as temporary as George W. Bush’s triumph in 2003. The main reason is yet another of those stories the mainstream media didn’t quite find room for: the role of Iraqi civil society. But before telling that story, let’s look at what’s happening to Iraqi oil today, and how we got from the “no blood for oil” global protests of 2003 to the present moment.

Here, as a start, is a little scorecard of what’s gone on in Iraq since Big Oil arrived two and a half years ago: corruption’s skyrocketed; two Western oil companies are being investigated for either giving or receiving bribes; the Iraqi government is paying oil companies a per-barrel fee according to wildly unrealistic production targets they’ve set, whether or not they deliver that number of barrels; contractors are heavily over-charging for drilling wells, which the companies don’t mind since the Iraqi government picks up the tab.

Meanwhile, to protect the oil giants from dissent and protest, trade union offices have been raided, computers seized and equipment smashed, leaders arrested and prosecuted. And that’s just in the oil-rich southern part of the country.

In Kurdistan in the north, the regional government awards contracts on land outside its jurisdiction, contracts which permit the government to transfer its stake in the oil projects — up to 25% — to private companies of its choice. Fuel is smuggled across the border to the tune of hundreds of tankers a day.

In Kurdistan, at least the approach is deliberate: the two ruling families of the region, the Barzanis and Talabanis, know that they can do whatever they like, since their Peshmerga militia control the territory. In contrast, the Iraqi federal government of Prime Minister Nouri al-Maliki has little control over anything. As a result, in the rest of the country the oil industry operates, gold-rush-style, in an almost complete absence of oversight or regulation.

Oil companies differ as to which of these two Iraqs they prefer to operate in. BP and Shell have opted to rush for black gold in the super-giant oilfields of southern Iraq. Exxon has hedged its bets by investing in both options. This summer, Chevron and the French oil company Total voted for the Kurdish approach, trading smaller oil fields for better terms and a bit more stability.

Keep in mind that the incapacity of the Iraqi government is hardly limited to the oil business: stagnation hangs over its every institution. Iraqis still have an average of just five hours of electricity a day, which in 130-degree heat causes tempers to boil over regularly. The country’s two great rivers, the Tigris and Euphrates, which watered the cradle of civilization 5,000 years ago, are drying up.  This is largely due to the inability of the government to engage in effective regional diplomacy that would control upstream dam-building by Turkey.

After elections in 2010, the country’s leading politicians couldn’t even agree on how to form a government until the Iraqi Supreme Court forced them to. This record of haplessness, along with rampant corruption, significant repression, and a revival of sectarianism can all be traced back to American decisions in the occupation years. Tragically, these persistent ills have manifested themselves in a recent spate of car-bombings and other bloody attacks.

Washington’s Yen for Oil

In the period before and around the invasion, the Bush administration barely mentioned Iraqi oil, describing it reverently only as that country’s “patrimony.” As for the reasons for war, the administration insisted that it had barely noticed Iraq had one-tenth of the world’s oil reserves. But my new book reveals documents I received, marked SECRET/NOFORN, that laid out for the first time pre-war oil plans hatched in the Pentagon by arch-neoconservative Douglas Feith’s Energy Infrastructure Planning Group (EIPG).

In November 2002, four months before the invasion, that planning group came up with a novel idea: it proposed that any American occupation authority not repair war damage to the country’s oil infrastructure, as doing so “could discourage private sector involvement.” In other words, it suggested that the landscape should be cleared of Iraq’s homegrown oil industry to make room for Big Oil.

When the administration worried that this might disrupt oil markets, EIPG came up with a new strategy under which initial repairs would be carried out by KBR, a subsidiary of Halliburton. Long-term contracts with multinational companies, awarded by the U.S. occupation authority, would follow. International law notwithstanding, the EIPG documents noted cheerily that such an approach would put “long-term downward pressure on [the oil] price” and force “questions about Iraq’s future relations with OPEC.”

At the same time, the Pentagon planning group recommended that Washington state that its policy was “not to prejudice Iraq’s future decisions regarding its oil development policies.” Here, in writing, was the approach adopted in the years to come by the Bush administration and the occupation authorities: lie to the public while secretly planning to hand Iraq over to Big Oil.

There turned out, however, to be a small kink in the plan: the oil companies declined the American-awarded contracts, fearing that they would not stand up in international courts and so prove illegitimate. They wanted Iraq first to have an elected permanent government that would arrive at the same results. The question then became how to get the required results with the Iraqis nominally in charge. The answer: install a friendly government and destroy the Iraqi oil industry.

In July 2003, the U.S. occupation established the Iraqi Governing Council, a quasi-governmental body led by friendly Iraqi exiles who had been out of the country for the previous few decades. They would be housed in an area of Baghdad isolated from the Iraqi population by concrete blast walls and machine gun towers, and dubbed the Green Zone.  There, the politicians would feast, oblivious to and unconcerned with the suffering of the rest of the population.

The first post-invasion Oil Minister was Ibrahim Bahr al-Uloum, a man who held the country’s homegrown oil expertise in open contempt. He quickly set about sacking the technicians and managers who had built the industry following nationalization in the 1970s and had kept it running through wars and sanctions. He replaced them with friends and fellow party members. One typical replacement was a former pizza chef.

The resulting damage to the oil industry exceeded anything caused by missiles and tanks. As a result the country found itself — as Washington had hoped — dependent on the expertise of foreign companies. Meanwhile, not only did the Coalition Provisional authority (CPA) that oversaw the occupation lose $6.6 billion of Iraqi money, it effectively suggested corruption wasn’t something to worry about.  A December 2003 CPA policy document recommended that Iraq follow the lead of Azerbaijan, where the government had attracted oil multinationals despite an atmosphere of staggering corruption (“less attractive governance”) simply by offering highly profitable deals.

Now, so many years later, the corruption is all-pervasive and the multinationals continue to operate without oversight, since the country’s ministry is run by the equivalent of pizza chefs.

The first permanent government was formed under Prime Minister Maliki in May 2006. In the preceding months, the American and British governments made sure the candidates for prime minister knew what their first priority had to be: to pass a law legalizing the return of the foreign multinationals — tossed out of the country in the 1970s — to run the oil sector.

The law was drafted within weeks, dutifully shown to U.S. officials within days, and to oil multinationals not long after. Members of the Iraqi parliament, however, had to wait seven months to see the text.

How Temporary the Victory of Big Oil?

The trouble was: getting it through that parliament proved far more difficult than Washington or its officials in Iraq had anticipated. In January 2007, an impatient President Bush announced a “surge” of 30,000 U.S. troops into the country, by then wracked by a bloody civil war. Compliant journalists accepted the story of a gamble by General David Petraeus to bring peace to warring Iraqis.

In fact, those troops spearheaded a strategy with rather less altruistic objectives: first, broker a new political deal among U.S. allies, who were the most sectarian and corrupt of Iraq’s politicians (hence, with the irony characteristic of American foreign policy, regularly described as “moderates”); second, pressure them to deliver on political objectives set in Washington and known as “benchmarks” — of which passing the oil law was the only one ever really talked about: in President Bush’s biweekly video conferences with Maliki, in almost daily meetings of the U.S. ambassador in Baghdad, and in frequent visits by senior administration officials.

On this issue, the Democrats, by then increasingly against the Iraq War but still pro-Big Oil, lent a helping hand to a Republican administration. Having failed to end the war, the newly Democrat-controlled Congress passed an appropriations bill that would cut off reconstruction funds to Iraq if the oil law weren’t passed. Generals warned that without an oil law Prime Minister Maliki would lose their support, which he knew well would mean losing his job. And to ramp up the pressure further, the U.S. set a deadline of September 2007 to pass the law or face the consequences.

It was then that things started going really wrong for Bush and company. In December 2006, I was at a meeting where leaders of Iraq’s trade unions decided to fight the oil law. One of them summed up the general sentiment this way: “We do not need thieves to take us back to the middle ages.” So they began organizing. They printed pamphlets, held public meetings and conferences, staged protests, and watched support for their movement grow.

Most Iraqis feel strongly that the country’s oil reserves belong in the public sector, to be developed to benefit them, not foreign energy companies. And so word spread fast — and with it, popular anger. Iraq’s oil professionals and various civil society groups denounced the law. Preachers railed against it in Friday sermons. Demonstrations were held in Baghdad and elsewhere, and as Washington ratcheted up the pressure, members of the Iraqi parliament started to see political opportunity in aligning themselves with this ever more popular cause. Even some U.S. allies in Parliament confided in diplomats at the American embassy that it would be political suicide to vote for the law.

By the September deadline, a majority of the parliament was against the law and — a remarkable victory for the trade unions — it was not passed. It’s still not passed today.

Given the political capital the Bush administration had invested in the passage of the oil law, its failure offered Iraqis a glimpse of the limits of U.S. power, and from that moment on, Washington’s influence began to wane.

Things changed again in 2009 when the Maliki government, eager for oil revenues, began awarding contracts to them even without an oil law in place. As a result, however, the victory of Big Oil is likely to be a temporary one: the present contracts are illegal, and so they will last only as long as there’s a government in Baghdad that supports them.

This helps explain why the government’s repression of trade unions increased once the contracts were signed.  Now, Iraq is showing signs of a more general return to authoritarianism (as well as internecine violence and possibly renewed sectarian conflict).

But there is another possibility for Iraq. Years before the Arab Spring, I saw what Iraqi civil society can achieve by organizing: it stopped the world’s superpower from reaching its main objective and steered Iraq onto a more positive course.

Many times since 2003 Iraqis have moved their country in a more democratic direction: establishing trade unions in that year, building Shi’a-Sunni connections in 2004, promoting anti-sectarian politicians in 2007 and 2008, and voting for them in 2009.  Sadly, each of these times Washington has pushed it back toward sectarianism, the atmosphere in which its allies thrive.  While mainstream commentators now regularly blame the recent escalation of violence on the departure of U.S. troops, it would be more accurate to say that the real reason is they didn’t leave far sooner.

Now, without its troops and bases, much of Washington’s political heft has vanished. Whether Iraq heads in the direction of dictatorship, sectarianism, or democracy remains to be seen, but if Iraqis again start to build a more democratic future, the U.S. will no longer be there to obstruct it.  Meanwhile, if a new politics does emerge, Big Oil may discover that, in the end, it was mission unaccomplished. [source]

Putin backs Russian push for Iraqi oil

 

President Vladimir Putin lobbied Iraq’s prime minister on Wednesday to support Russian energy investment, as the oil arm of gas export monopoly Gazprom (GAZP.MM) pushes for a foothold in the semi-autonomous region of Kurdistan.

Gazprom Neft (SIBN.MM) is still interested in Kurdistan’s oil, company sources and the province’s spokesman said, rebutting reports it had frozen projects in the Iraqi province.

Putin, a vocal opponent of the U.S.-led invasion of Iraq in 2003, called for Russia to strengthen its presence in the OPEC oil producer state at talks with Prime Minister Nuri al-Maliki at his residence near Moscow.

“Our companies are boosting their activities in Iraq – the whole list of our large energy companies,” Putin said. “I hope their work will develop step by step and we are very much hoping for your support, Mr Prime Minister.”

Russia’s second-largest crude producer LUKOIL (LKOH.MM) is developing the vast West Qurna-2 oil, while mid-sized Bashneft (BANE.MM) is teaming up with Britain’s Premier Oil PLC (PMO.L) after they won the right to tap oil in the Middle East country.

LUKOIL bought Norway’s Statoil (STL.OL) out of their partnership in West Qurna-2 in March, and CEO Vagit Alekperov said he would be open to taking on board a new partner.

“We bought it, 100 pct, if there is a good offer we can sell part of it, so far we feel comfortable with it,” Alekperov told Reuters. Asked if there was an offer in the works, he said “at the moment no, only outline ideas.”

Russia signed $4.2 billion worth of arms deals with Iraq on Tuesday.

DEAL NOT FROZEN

Late on Tuesday, the International Oil Daily cited Iraqi Oil Minister Abdul-Kareem Luaibi as saying Baghdad had received a letter from Gazprom, in which the company said it had frozen its contract with Kurdistan.

Baghdad has been angered by the plans of some international majors, including ExxonMobil (XOM.N), to tap oil and gas in the northern region. The central government says the deals are illegal.

A spokesman for the Kurdistan Regional Government (KRG) said Gazprom Neft had informed the KRG on Wednesday that it remains committed to its contract in the Kurdistan region.

Sources at Gazprom Neft also knocked down the report.

In August, Gazprom Neft acquired interests in two blocks in Kurdistan.

“Gazprom Neft is still working on these projects. The company keeps its interest in Kurdistan,” a Gazprom Neft source told Reuters.

Another source at the company said Gazprom Neft would be able to go ahead with the projects once the Iraqi central government and KRG resolve their differences.

He also said Gazprom Neft management will travel to Kurdistan before year-end to discuss oil development in the province. A company spokeswoman declined to comment.

Gazprom Neft already has a project in Iraq, near the Iranian border, where it expects to produce about 15,000 barrels per day from 2013. [source ]

 

And the other side “de la moneda” Judge for yourselves

 

October 11, 2012 

Iraq today stands on the brink of total control by Iran and the establishment of a new dictatorship. 

The dream for which so many American soldiers believed they were fighting is slipping away as Iraq moves in the opposite direction – toward Iran. 

Iran’s presence is already visible in Iraq, from the droves of pilgrims at Shi’ite holy sites to the brands of yogurt and jam on grocery shelves, and Iraqis see clear Iranian influence since the US troops left at the end of last year. 

It could be considered a natural step for the only two Shi’ite Muslim-led governments in the Sunnidominated Middle East to expand their relationship. However, many Iraqi Shi’ites are cautious of intrusion of their country’s sovereignty and afraid of being overrun by the Iranian theocracy. 



Iraqis are accusing Iran of meddling in Iraqi affairs to destabilize the new democracy and strengthen Iran’s influence over it and its neighbors. Top Iranian officials maintain they are only strengthening diplomatic and economic ties with Iraq, as they have sought to do since the 2003 ouster of Saddam Hussein. On the other hand, head of Iranian al-Quds Brigades General Qasim Sulaimani announced recently that Iraq and South Lebanon are submissive to Tehran’s will, stating that his country could regulate any movement with the aim to form Islamic governments in both countries. 

Not to mention the close relationship between Iran and Syria. This is the goal of the Iranians: to form the Shi’ite crescent – Iran, Iraq, Syria and Southern Lebanon – controlled by Hezbollah. The aim is to encircle Israel. Israel should worry about Iraq acquiring F-16 aircraft from the United States, especially since their pilots will be selected from among the Shi’ites most loyal to the regime in Tehran. “Iran wants to make Iraq a weak state,” said Maj.- Gen. Jeffrey S. Buchanan, a US military spokesman in Iraq, a few years ago. 

This issue has also worried many American officials who have long feared what they described as Iranian meddling in Iraq and its potential to sow unrest across the Middle East. Those worries were a chief driver of failed efforts to leave at least several thousand American troops in Iraq beyond the end of last year’s withdrawal deadline. 

“The more you think about it, the more examples there are of Iranian influence,” says Buchanan. “They’re circumstantial, but that’s how behind-thescenes influence works.” Since Iraq’s 2010 election, Iraqis have witnessed the subordination of the state to Prime Minister Nouri al- Maliki’s Iranian-backed Da’awa party, the erosion of judicial independence and intimidation of opponents. All of this happened during the Arab Spring while other countries were ousting dictators in favor of democracy. Iraq has become a sectarian battleground in which identity politics have crippled democratic development. 

Maliki has laid siege to his political opponents’ homes and offices, surrounded them with his security forces, all with the blessing of politicized judiciary and law enforcement systems that have become virtual extensions of his personal office. 

This is a typical textbook definition of “lawfare.” His national security adviser has complete control over the Iraqi intelligence and national security agencies, which are supposed to be independent institutions but have become a virtual extension of Maliki’s Da’awa Party; and his Da’awa loyalists are in control of the security units that oversee the Green Zone. The Iraqi prime minister uses secret prisons under the supervision of his elite security apparatus, and the Red Cross has conclusive evidence about these prisons. 

It was stated in its recent report that there is evidence detainees being tortured to extract confessions and information. The report mentioned that some of the torture sessions were attended by Iraqi judges. The Red Cross reported that there are three secret prisons in the Green Zone alone that are linked to Maliki’s office. The political process in Iraq is going in a very wrong direction; it’s going toward a dictatorship, while Iran views Maliki as its man in Baghdad and has dictated the shape of the current government. 

This Shi’ite Islamist government bodes ill for the country’s future. Today in Iraq, we see Maliki silencing and eliminating his opponents, using the law as a silent weapon for a quiet war. MALIKI IS using the judicial system to attack his political opponents, and the security services in Iraq have become part of the problem as they have been proven to be managing secret detention centers where torture is practiced under the personal supervision of the Office of the Prime Minister. It was revealed recently that 36 out of 38 inspectors-general at Iraqi ministries are from Maliki’s Da’awa Party. 

What we also see in Iraq now is that Iraq supports Syria, weapons from Iran being transported to Syria through Iraq, violations of UN security council resolutions against Iran and money laundering through Iraqi banks in favor of Iran with the full knowledge and support of the Office of the Prime Minister. The Iranian government played an important role in the revitalization of money laundering in Iraq by private banks in coordination with the Office of the Prime Minister. Armed groups backed by Tehran receive millions of dollars monthly in salaries and benefits from Iraqi banks under the guise of bank transfers or investment projects or grants to civil society organizations. It has been confirmed that Tehran-backed armed groups present in southern, central and northern Iraq are dealing with specific banks in these areas and receive their funds facilitated by the Da’awa Party. By consistently thinking of Maliki as a Shi’ite rather than an Iraqi Arab, American officials overlooked opportunities that once existed in Iraq but are now gone. Thanks to their own flawed policies, the Iraq they left behind is more similar to the desperate and divided country of 2006 than to the optimistic Iraq of early 2009. When American forces withdrew from Iraq at the end of last year, it was thought that they would be leaving behind a country that was politically unstable, increasingly volatile, and at risk of descending into the sort of sectarian fighting that killed thousands in 2006 and 2007. Nothing like this actually happened or will happen; instead we see Iraq falling under the full control of Iran. It is controlled by Iran’s embassy in Baghdad and its many consulates in other Iraqi cities. From a strategic standpoint, one can say that Iraq, with all its territory and capabilities, has become Iran’s strategic depth, supplementing its regional expansion. 

Iran controls the political decision-making and economy of Iraq. For all of its potential, Iraq has become merely an advanced strategic base for Iran. Iran may want to strike Israel via Hezbollah, and Iraq, due to its geographical location and the nature of the ruling powers, will be a key player in this regard. 

This is especially true when we observe in Iraq today that there is education, promoted by the Shi’ite parties linked to Iran, saying that the expulsion of Jews from the land of Palestine will be only at the hands of the Islamic Republic of Iran. It should also be noted that Iran is not crazy enough to attack the Gulf States and risk losing its legitimacy, as happened with Iraq when it invaded Kuwait. Iran must not be seen attacking Muslim states, which will antagonize the Muslim world. Iran will certainly target Israel first; this is the issue, aided by warmongering media campaigns, that would garner sympathy for Iran among the ignorant people of the Islamic world.[source]


BP Entry contract for Rumaila field

Fourth release, 31 July 2011

During the second half of 2009, Iraq held two auctions of its largest oilfields, awarding them to multinational companies such as BP, Shell and ExxonMobil to operate under 20-year contracts. Between them the oilfields account for over 60% of Iraq’s reserves. The contracts were service contracts rather than the companies’ preferred production sharing agreements, which had been proposed for Iraq but rejected as giving too much away.

Media reports of the auction focused on the headline remuneration fees. These sounded so low – between $1.15 and $5.50 per barrel – that many commentators questioned the profitability of the deals. But as always in oil contracts, the devil is in the detail. And whereas the auctions were billed by the Iraqi government as among the world’s most transparent contracting processes, the first contract, for the super-giant Rumaila field near Basra, was privately renegotiated between the Iraqi government and the winning BP/CNPC consortium for more than three months after the auction.The result was that the terms changed significantly from the published model contract on which the auction was based, to  make it much more attractive to BP and CNPC, at the expense of the Iraqi people.

  • We have obtained the renegotiated Rumaila contract, and can reveal its contents for the first time. The major changes are explained in the report “From Glass Box to Smoke Filled Room – How BP secretly renegotiated its Iraqi oil contract, and how Iraqis will pay the price”, written by Fuel on the Fire author Greg Muttitt and published by PLATFORM.

NEW REPORT: From Glass Box to Smoke Filled Room.

DOCUMENT 12: the original model contract, on which the auction was based.
DOCUMENT 13: the leaked, renegotiated contract, which was actually signed.

Also in today’s release:

  • Another document released today reveals the possible reason BP was so successful in changing the terms in its favour, by focusing on the detailed terms of the contract. In April 2009, Ministry of Oil officials travelled to the UK to explore how to meet their training needs. Just two months before the auction, foremost among the areas where they sought training were commercial and negotiating skills. And the training provider they went to? BP!

DOCUMENT 14: Letter from BP to Iraq Ministry of Oil, 28 April 2009.

  • The contracts were opposed by many in Iraq, including oil experts, the management of the South Oil Company (which would have to work with BP on the Rumaila field), the oil trade union and the parliamentary oil and gas committee. When parliamentarians called in the Iraqi Oil Minister for questioning about the contract, Prime Minister Nouri al-Maliki wrote to the speaker of parliament to warn against the move. In the private and confidential letter, released today, he told the speaker that he would consider such questioning to be “in harmony” with recent major terrorist bombings in Baghdad.

DOCUMENT 15: Letter from Nouri al-Maliki to parliament, October 2009 (Arabic original)

DOCUMENT 16: Letter from Nouri al-Maliki to parliament, October 2009 (English translation)

Fifth release, July 17, 2012

(See also today’s press release)

Two documents are published today, revealing for the first time the role of the Energy Infrastructure Planning Group, whose purpose was to plan for the running of Iraq’s oil industry during the period of direct U.S. occupation and administration of Iraq (under the CPA of Paul Bremer, as it became).

EIPG was established in summer 2002 by Undersecretary of Defense for Policy Douglas Feith. It was led by Michael Mobbs, a political appointee in the Department of Defense. The other members were Michael Makovsy of the Department of Defense, Seneca Johnson of the Department of State, Clark Turner of the Department of Energy (Strategic Petroleum Reserve) and a CIA analyst.

The EIPG did the thinking behind the subject, and made recommendations to the Deputies and Principals Committees of the National Security Council (comprising the heads and second-in-commands of the government agencies relevant to national security).

They were obtained from the Department of Defense under the Freedom of Information Act. This is the first clear evidence, more than nine years on, that Bush administration officials were planning before the war to open the way to multinational oil companies, an assertion consistently denied by the government.

DOCUMENT 17: a briefing to the Deputies Committee on November 6, 2002.  The main topic of the meeting is how to spend the proceeds from Iraqi oil.

See especially page 10, where weighing up whether to repair war-damaged Iraqi oil infrastructure, one of the cons is that it “could deter private sector involvement”. Although this route was rejected (see DOCUMENT 18), it could later be seen in the U.S. forces’ failure to stop looting of the infrastructure in April 2003 (they only protected the Oil Ministry building, which held the irreplaceable geological data – they did nothing to protect drill rigs, pump stations etc). The attitude was seen again when the Oil Ministry’s considerable human resources were cleared out in fall 2003, in favor of friends and family of the new oil minister.

Note also on the contents page (2) the EIPG planned to consider later that month “whether to use control of Iraqi oil to advance important U.S. foreign policy objectives”. DOD reports that it holds no record of such discussions. They are likely to involve not direct U.S. energy interests, but whether to tear up eg Russian and Chinese contracts in order to harm those countries.

(The briefing was stored by the DOD as landscape printed on portrait paper – hence the edges are cut off in the official archive too!).
DOCUMENT 18: a briefing to the Secretary of Defense Donald Rumsfeld on January 11, 2003, incorporating comments and decisions from earlier Deputies meetings.

Here the option of leaving war damage unrepaired so as to make room for Big Oil has been rejected, in favor of appointing Halliburton subsidiary KBR to carry out repairs (page 5).

Priorities are set of restoring crude oil production (which the USA needed) over electricity and fuel (which Iraqis needed – page 6).

Increasing Iraqi production to 5 million barrels per day (from 2.5m bpd)  is favored as it “helps consumers” and “puts long-term downward pressure on the oil price”

Strikingly, “pubic diplomacy” (page 4) means the message that would be given to the public, including saying that “we will act… so as not to prejudice Iraq’s future decisions” – even though the opposite is proposed as substantive policy. In other words, the briefing recommends that the Bush administration mislead the public on how it would approach Iraqi oil.


Oil Wars : The BP entry in Iraq [rare documentation]

First Release, 27 April 2011

These five documents are minutes of meetings about Iraq between the UK government and oil companies BP and Shell, ion the six months before the war. They were reported in the Independent on 19 April 2011.

The documents do not demonstrate that oil was the reason for the war. But they do show that during the preparations for war, oil was a central concern for the UK government, disproving its claims that it was not interested in Iraq’s oil.

The documents also provide a remarkable insight into the interaction between oil companies and government, at the highest levels. We see that the government needed no persuasion that it should help the companies – the civil servants clearly saw themselves as on the same side as the oilmen. The companies could barely contain their excitement about Iraq – “the big oil prospect”, as BP put it in one meeting (DOCUMENT 3) – and the tone is quite unlike that usually seen in minutes of government meetings. The companies and government officials alike had no doubt that a war would take place, months before the parliamentary vote and while the government struggling (unsuccessfully) to persuade the UN Security Council to pass resolution authorising the war.

From the company perspective, the main purpose of the meetings was to ensure that they got their share (as they saw it) of Iraqi oilfields after the war. They were especially worried that the US government would naturally favour US companies, and might offer other fields to French, Russian or Chinese companies in exchange for their governments’ support in the UN Security Council. Tony Blair had already pledged British participation in the war, and so the British companies feared that with no bargaining power they’d be left out.

Trade Minister Baroness Symons – a staunch Blairite and active member of the British American Project, which had aimed since the 1980s to align the Labour Party’s foreign policy with that of the USA – was present in two of the meetings. She said [DOCUMENT 2] that “It would be difficult to justify British companies losing out in Iraq in that way if the UK had itself been a conspicuous supporter of the US government throughout the crisis”. In other words, if British forces fight in a war then British companies should get a share of the spoils. This view is clearly unethical, but is also arguably illegal, under the Fourth Hague Convention.

BP and Shell both claimed that no such meetings took place. These minutes show such claims to be untrue. When invited to explain the discrepancy, both companies declined to comment. For her part, Symons said to Parliament in April 2003 that Iraq’s oil was “the patrimony of the people of Iraq, which should be used for their benefit, and for their benefit alone” – this was not what she said in private to the oil companies.

For more commentary on these documents, including the companies’ objectives and their history of deals with the Saddam regime, please see Chapter Four of Fuel on the Fire. For more on the UK and US governments’ strategic oil objectives, please see Chapter Three.

  • DOCUMENT  1 – Meeting of Edward Chaplin (Middle East Director, Foreign & Commonwealth Office (FCO)) with Tony Wildig (Senior Vice President for New Business in Middle East, Shell), 2 October 2002.


Chaplin: “Shell and BP could not afford not to have a stake in it for the sake of their long-term future… We were determined to get a fair slice of the action for UK companies in a post-Saddam Iraq.”

DOCUMENT 2 – Meeting of Baroness Liz Symons (Trade Minister) with representatives of BP (Richard Paniguian, Tony Renton), Shell (John Withrington, Gavin Graham) and BG (Bethell), 31 October 2002.

BP: Iraq “would provide an immense strategic advantage to any company which emerged in a commanding position”

Symons: “Anything of this nature would be highly sensitive and kept very close”.

DOCUMENT 3 – Meeting of Michael Arthur (Head of Economic Policy, FCO) with Richard Paniguian (Group Vice President for Russia, the Caspian, Middle East and Africa), 6 November 2002.

“Iraq is the big oil prospect. BP are desperate to get in there.”

BP: “Vitally important – more important than anything we’ve seen for a long time.”

DOCUMENT 4 – Meeting of Baroness Symons with Richard Paniguian and Tony Renton (Commercial Director Middle East, BP), 4 December 2002

Discussion of US planning efforts for Iraqi oil. “It was clear that Ahmad Chalabi, the leader of the INC [Iraq National Congress] had a key role in selecting who was involved in these groups”.
“BP believed that the US authorities need to start giving some serious consideration to a number of issues on the future of Iraq’s oil industry including Iraq’s role in OPEC, the role of both existing and future Oil Ministry and State Owned Oil Company.”
Note that BP wanted more involvement of Iraqi expertise – presumably for greater stability for any investment.

DOCUMENT 5 – Meeting of John Browne (Chief Executive, BP) with Michael Jay (Permanent Undersecretary, FCO), 18 March 2003

This meeting took place less than 48 hours before bombs started falling on Baghdad, at the highest level: the head of BP with the most senior civil servant in the FCO. Of Jay’s five predecessors in that role, four had become directors of oil and gas companies on retirement from government service (two at Shell and one each at BP and BG).
BP had a team ready. But in the longer-term development of Iraq’s oilfields “They would not wish to be involved unless they were clear that administrative and other structures were in place to ensure that their involvement would be acceptable to whatever government followed military action”. This political conservatism by the major oil companies would shape the evolution of Iraqi oil policy during the early years of the occupation. Note however that Browne did not apparently make the more common point that such deals would have to be legal.

Second Release – 27 April 2011

These three documents set out the British government’s objectives for Iraqi oil, and its strategies for how to achieve them. They were reported in the Independent on 20 April 2011.

The documents stand in stark contrast to public claims by the government that it had no interest in Iraq’s oil. For example, Tony Blair said in February 2003 that “The oil conspiracy theory is honestly one of the most absurd when you analyse it.” Three months later, a Foreign & Commonwealth Office (FCO) strategy paper (DOCUMENT 6) would declare, “The future shape of the Iraqi oil industry will affect oil markets, and the functioning of OPEC, in both of which we have a vital interest.” That paper was written less than two weeks after President Bush declared “mission accomplished” on the deck of the USS Abraham Lincoln.
The nature of British and American interests in Iraqi and Middle Eastern oil is explored in Chapter 3 of Fuel on the Fire. It is not as simple as to ‘take the oil’ (as Donald Trump has been saying over the last few weeks as a launchpad for his presidential campaign). And nor is it just about getting contracts for their own companies, although that was a secondary aim, as discussed in the pre-war Whitehall meetings. The most important strategic interest lay in expanding global energy supplies, through foreign investment, in some of the world’s largest oil reserves – in particular Iraq. This meshed neatly with the secondary aim of securing contracts for their companies. Note that the strategy documents released here tend to refer to “British and global energy supplies”. British energy security is to be obtained by there being ample global supplies – it is not about the specific flow, as if physical Iraqi oil goes to China rather than Europe, another source (say, in Africa) can be re-rerouted from China to Europe in its place.
Chapters 9 and 11 of Fuel on the Fire look at how Britain and the USA sought to achieve their oil objectives during the early years of the occupation (before the formation of a permanent government in 2006). Those chapters contextualise and interpret these three British strategy documents; they also reflect on the favoured euphemism of “advice” (which implies that Iraqi leaders were independently able to take or leave the advice).
DOCUMENT 6 – Iraqi oil and British interests, FCO paper, 12 May 2003

As its title suggests, this document is quite blunt about British interests, not bothering to dress up its proposals as being in Iraqi interests. And it notes the interplay between British energy security and commercial interests.

DOCUMENT 7 – Management change in the Iraqi oil sector, 27 May 2003

Two weeks later, this document was prepared for an interdepartment meeting of the government’s Oil Sector Liaison Group, comprising officials from the FCO, the Treasury, the Department of Trade & Industry and the Department for International Development.
Unlike the previous document, this expresses its aims as being in the interests of Iraqis – yet of the seven items in the objectives list on page 4, five are quite plainly British rather than Iraqi concerns. Even the other two (the 4th and 5th) are only what outsiders imagine Iraqi concerns to be, rather inaccurately.
Note especially the aim for Iraq to be a role model for the other major oil countries in the region, and the call for it to remain within OPEC but as an advocate of lower oil prices.

DOCUMENT 8 – UK Energy Strategy for Iraq, September 2004

This too was an interdepartmental paper, and is quite clear about how Britain would influence the evolving Iraqi oil policy. Note especially the recognition that Iraqis won’t like the plans.


Zion Oil Wars: U.S. secret mission sent to Jordan to control Syrian chemical weapons ( BP-Shell drilling in Jordan)

-Tony Hayward’s anglo-turkish oil firm Genel Energy today confirmed that drilling has now begun on its first well on the Chia Surkh exploration block in Iraqi Kurdistan.

The block spans 984 square kilometres in the southern part of the Kurdish region. It has an estimated 300 million barrels of prospective oil resources.

The Chia Surkh 10 well will be drilled to a total depth of 2,500 metres to test Lower Miocene to Palaeocene targets.

The well results are expected in the first quarter of next year.

Genel has a 60% interest in Chia Surkh. City broker Oriel Securities estimate that Chia Surkh is worth a ‘risked’ 38p per share at this stage.

The broker highlighted, in a note today, that Genel is hosting a capital markets day this week and it beleives the company is likely to update on the plans for the Miran gas development as well as its exploration programme – which now includes new licences in Malta, Morocco, Cote d’Ivoire and Somaliland.

Gazprom Neft, the oil arm of Russia’s top natural gas producer Gazprom, is still interested in Kurdistan’s oil, a Gazprom Neft source said, rebutting reports it had frozen projects in the Iraqi province.

In August, Gazprom Neft acquired interests in two blocks in Iraq’s Kurdistan region, after similar moves by international rivals angered the central Iraqi government in Baghdad.

The International Oil Daily cited Iraqi Oil Minister Abdul-Kareem Luaibi as saying Baghdad received a letter from Gazprom, in which the company said it had frozen the contract with Kurdistan.

“Gazprom Neft is still working on these projects. The company keeps its interest in Kurdistan,” a Gazprom Neft source told Reuters.

A company spokeswoman declined to comment.

Gazprom Neft already has a project in Iraq, near the Iranian border, where it expects to produce about 15,000 barrels per day from 2013.

Baghdad was angered by the plans of some international majors, including ExxonMobil, to tap oil and gas in the semi-autonomous region. The central government says the deals are illegal.

Later on Wednesday Iraqi Prime Minister Nuri al-Maliki is due to meet Russian President Vladimir Putin in Moscow where they may discuss energy issues.

Russia said on Tuesday it had signed $4.2 billion worth of arms deals with Iraq.

The Kurdistan Regional Government (KRG) is planning to build an oil pipeline to Turkey with a capacity of 1 million barrels a day, according to a report from Platts.

KRG natural resources minister Ashti Hawrami told an energy conference in Turkey on Thursday that plans were already in place for the construction of short spur lines from producing fields and that funding had been arranged for a main export line to carry crude from these fields to the border.

Plans are underway to launch a construction tender for the project, he added.

He said that initially the new line would connect with the existing Turkish section of the Kirkuk-Ceyhan oil line but that talks were underway with investors interested in building a new pipeline inside Turkey running from the border with northern Iraq to the Mediterranean port of Ceyhan.

“Any such pipeline will be an Iraqi pipeline…it will be for the benefit of all nations, all the Iraqi people and all the Turkish people,” Hawrami said.

“It is not designed to be anything else except supplying secure oil to the market,” he added in an apparent reference to recent talk that the KRG was planning its own oil export routes independent of the federal government in Baghdad.

Talk of building new pipelines through Turkey, which currently serves as an outlet for Iraqi crude oil produced in the north through the Mediterranean port of Ceyhan, has given rise to speculation that this might be a first step toward greater independence by the Kurdish province.

Hawrami stressed that the new pipeline would be Iraqi property on the Iraqi side of the border and Turkish on the Turkish and that the oil the line carried would remain the property of the Iraqi state.

“We believe that by 2015 we will safely reach 1 million bpd and by 2019, 2 million bpd,” Hawrami said.

Gulf Keystone, one of the biggest companies listed on London’s junior AIM stock market, is due to start the defence of its ownership of a huge oil field in Iraqi Kurdistan in a London court this week.

The company has long been touted as a potential acquisition target for an oil major looking for a foothold in Kurdistan, but the looming legal battle has been cited as a potential obstacle to any takeover deal.

Kurdistan is emerging as an attractive oil province for big western oil companies. Exxon Mobil, Total and Gazprom have all taken acreage there over the last year, lured by the lucrative terms on offer in Iraq’s semi-autonomous northern region.

Gulf Keystone will contest claims made by Excalibur Ventures LLC at the English Commercial Court. The claimant, which commenced legal action in 2010, asserts it is entitled to an interest of up to 30 percent in all of Gulf Keystone’s blocks in Kurdistan.

Gulf Keystone’s prize asset in Kurdistan is the Shaikan field, which could hold up to 15 billion barrels of oil – a volume which would make it one of the biggest discoveries made anywhere in recent years.

Under legal orders, Excalibur has paid 6 million pounds ($9.6 million) to the court as security for Gulf Keystone’s legal costs, and 3.5 million as security for the costs of Texas Keystone, a U.S.-based company against which it has also made the claims.

Texas Keystone, a company founded by Gulf Keystone Chief Executive Todd Kozel and of which he is still a director, holds a small interest in the Shaikan field in trust for Gulf Keystone.

Kozel, whose expensive divorce attracted media coverage nine months ago, is one of Britain’s highest-paid executives, having earned around $20 million in 2011.

The court case, which is expected to take between 10 and 12 weeks, was scheduled to start on Wednesday but was delayed by the judge.

Shares in Gulf Keystone closed at 205.75 pence on Tuesday, down over 50 percent from an all-time high reached in February, and valuing the company at about 1.75 billion pounds.

U.S. secret mission sent to Jordan to control Syrian chemical weapons: report

The United States military has secretly sent a task force of more than 150 planners and other specialists to Jordan to help the armed forces there to prepare for the possibility that Syria could lose control of its chemical weapons and be positioned should the turmoil in Syria expand into a wider conflict, a report published by the New York Times on Wednesday said.

The secret mission, led by a senior American officer, will also help in handling the estimated 180,000 Syrian refugees who have crossed the border and are severely straining the country’s resources, the report said.
The task force is based at a Jordanian military training center built into an old rock quarry north of Amman.

According to the report, U.S. officials familiar with the operation said the mission includes drawing up plans to try to insulate Jordan, a strong U.S., from the upheaval in Syria and to avoid the kind of clashes now occurring along the border of Syria and Turkey.

“We have been working closely with our Jordanian partners on a variety of issues related to Syria for some time now,” George Little, the Pentagon press secretary, was quoted as saying by the New York Times. He added that a specific concern was the security of Syria’s stockpiles of chemical and biological weapons. “As we’ve said before, we have been planning for various contingencies, both unilaterally and with our regional partners.”

The Obama administration has declined to intervene in the Syrian conflict beyond providing communications equipment and other non-lethal assistance to the rebels. However, the outpost near Amman could play a broader role should U.S. policy change.

The New York Times mentioned that there were no comments on the U.S. military operation from neither the Pentagon nor the Jordanian Embassy in Washington.

Analysts have always said that the Syrian regime of President Bashar al-Assad might deliberately force the Syrian conflict to spill over beyond the Syrian borders in order to keep the world’s attention away from the violence committed against civilians inside Syrian.

Over the past week, Syria and Turkey have exchanged artillery and mortar fire across Syria’s northern border. In western Syria, intense fighting recently broke out in villages near the border crossing that leads to the Bekaa Valley in Lebanon. To the east, the Syrian government has lost control of some border crossings, including the one near al-Qaim in Iraq.

Recent scuffles have also broken out between the Syrian military and Jordanians guarding the country’s northern border, where many families have ties to Syria.

Jordan, which was one of the first Arab countries to call for Assad’s resignation, has become increasingly concerned that Islamic armed groups, coming to join the fight in Syria, could cross the porous border between the two countries.

Al Arabiya has recently revealed that Assad gave instructions for his agents to try to ignite unrest in Jordan. According to “classified intelligence documents” leaked to Al Arabiya, Assad gave orders to provide peaceful protesters, who call for reform in Jordan, with weapons.

According to the New York Times report, the U.S. mission in Jordan quietly began this summer. In May, the U.S. organized a major training exercise, which was dubbed Eager Lion. About 12,000 troops from 19 countries, including Special Forces troops, participated in the exercise.

After it ended, the small American contingent stayed on and the task force was established at a Jordanian training center north of Amman. It includes communications specialists, logistics experts, planners, trainers and headquarters staff members, the report mentioned citing American officials.

Defense Secretary Leon E. Panetta met in Amman in August with King Abdullah II of Jordan. Panetta was then followed in September by Gen. James N. Mattis, the head of Central Command, who met with senior Jordanian officials in Amman.

Members of the American task force are spending the bulk of their time working with the Jordanian military on logistics — figuring out how to deploy tons of food, water and latrines to the border, for example, and training the Jordanian military to handle the refugees, the report said.

Jordan is currently hosting around 100,000 Syrians who have either registered or are awaiting registration, the United Nations said.

Royal Dutch Shell PLC (RDSA) has drilled more than 100 wells in Jordan in the two years since it a concession agreement to explore for oil from the country’s vast oil shale reserves, a person familiar with the project said.

Shell signed a production-sharing agreement with Jordan in May 2009 and pledged to spend some $500 million for exploration, assessment and designs on the project. The project aims at exploring for and, if successful, developing and producing oil from Jordan’s vast oil shale resources that are estimated at 40 billion metric tons. Many analysts now see oil shale–an unconventional form of oil contained in difficult-to-extract reservoirs–as a serious rival to crude.

Shell is mobilizing two rigs in the project that covers an area of 22,000 square kilometers from northern Jordan and west Safawi to Azraq in the middle and Sirhan and al-Jafer in the south. A third rig will be mobilized next year, the person told Dow Jones Newswires.

If the exploration proves successful Shell would invest billions of dollars and produce thousands of barrels of oil a day, the person said. Jordan signed similar agreements with companies such as U.K.-registered Jordan Energy & Mining Ltd., or JEML, and Estonian EESTi Energy.

Jordan, home to around 6 million people, imports some 100,000 barrels of oil a day, which constitutes around 98% of its energy needs.

BP last week began drilling the first well in its concession in the Risha natural gas field in eastern Jordan, near the border with Iraq, the British oil major said on Monday.

The drilling follows two years of preparation and a “very successful 5,000 square km seismic acquisition program in 2011”, BP said.

The well is expected to take three to four months to complete, and a number of international oil and gas service contractors as well as local firms are involved, it said.

Jordanian officials hope intensive exploration and drilling at Risha will lead to the discovery of extensive recoverable gas reserves, which will help cut dependence on oil imports to fuel Jordan’s power sector and industries.

Risha, which was discovered in 1987, has not delivered encouraging exploration results in the past.

In 2009, BP was given up to four years to spend at least $237 million to explore and evaluate the Risha block, which covers an area of 7,000 square km, Jordanian officials said.

If the exploration leads to the discovery of large commercially viable reserves of natural gas, officials said BP would enter a second phase to invest billions of dollars in developing the field.

BP said the seismic survey “was one of the largest ever acquired in the Middle East and one of the safest and highest-productivity surveys acquired in BP history.”

The government strategy calls for Risha to produce 330 million cubic feet of gas per day by 2015. The field has a current modest daily output of about 18 million cubic feet.

The kingdom, which imports most of its energy, is struggling to meet electricity demand, which is growing by more than 7 percent per year, due to fast growing population and rising industrial needs.

Zion Oil Executes Memorandum of Understanding Regarding Drilling Partnership

Dallas, Texas and Caesarea Israel – June 4, 2012 – Zion Oil & Gas, Inc. (“Zion Oil”) (NASDAQ GM: ZN) announced today that the Company recently signed a Memorandum of Understanding (MoU) with Lapidoth Israel Oil Prospectors Corp. Ltd. (“Lapidoth”), a forerunner of onshore oil prospecting in Israel. Lapidoth was incorporated in 1959 and its securities are traded on the Tel Aviv Stock Exchange.

The MoU, effective June 4, 2012, outlines plans to establish a company, tentatively named “Zion-Lapidoth Drilling”, which is to locate and purchase a drilling rig suitable for drilling wells to a depth of up to 25,000 feet. The MoU contemplates that Zion-Lapidoth Drilling will be 50% owned by Zion Oil and 50% by Lapidoth. The anticipated cost of the drilling rig is up to US$ 15 million and each party will share equally in the financing of Zion-Lapidoth Drilling.

The MoU provides that Zion Oil will retain Zion-Lapidoth Drilling for its drilling program and when not required by Zion Oil, Zion-Lapidoth Drilling may lease the drilling rig to third party oil and gas drilling entities.

The MoU is subject to certain standard conditions, including the execution of definitive purchase agreements, obtaining required approvals and the completion of acceptable due diligence by the parties. Additionally, the implementation of the MoU is subject to Zion raising at least US$ 10 million within the next 12 months.

The MoU provides that for the next 12 months Lapidoth will have a right of first refusal to drill wells, as needed, in accordance with Zion Oil’s work program.

Zion’s Founder and Chairman, John Brown, said today, “The signing of this MoU marks a significant milestone in the life of Zion Oil & Gas. We are looking forward to the future expectantly and the partnership with Lapidoth Israel Oil Prospectors Corp. Ltd helps solidify our commitment to drill our prospective exploratory wells.”

Zion’s Chief Executive Officer, Richard Rinberg, noted, “The partnership with Lapidoth helps to alleviate a longstanding concern about our ability to continue to drill exploratory wells in Israel without dependence on an outside third party. Zion will also benefit from Lapidoth’s significant experience in operating drilling projects in Israel. We believe that the ultimate establishment of Zion-Lapidoth Drilling will take Zion Oil, as a business, to a completely new level.

We remain excited about the possibility of recovering hydrocarbons on our license areas, onshore Israel, especially due to the U.S. Geological Survey report, published in April 2010, containing their assessment that there may be 1.7 billion barrels of recoverable undiscovered oil and 122 trillion cubic feet of recoverable gas in the Levant Basin, as all of Zion’s exploration rights fall within the area of the Levant Basin.”

Zion’s common stock trades on the NASDAQ Global Market under the symbol “ZN” and Zion’s warrants trade under the symbol “ZNWAW, ZNWAZ and ZNWAL”.

Zion Oil & Gas, a Delaware corporation, explores for oil and gas in Israel in areas located onshore between Haifa and Tel Aviv. It currently holds three petroleum exploration licenses, the Joseph License (on approximately 83,272 acres) and the Asher-Menashe License (on approximately 78,824 acres) between Netanya, in the south, and Haifa, in the north and the Jordan Valley License (on approximately 55,845 acres), just south of the Sea of Galilee. The total license area amounts to approximately 217,941 acres.

FORWARD LOOKING STATEMENTS: Statements in this communication that are not historical fact, including statements regarding Zion’s planned operations, geophysical and geological data and interpretation, the successful establishment of the drilling subsidiary and the negotiation and execution of definitive agreements with Lapidoth with respect thereto, the presence or recoverability of hydrocarbons, sufficiency of cash reserves, ability to raise additional capital and timing and potential results thereof and plans contingent thereon are forward-looking statements as defined in the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements are based on assumptions that are subject to significant known and unknown risks, uncertainties and other unpredictable factors, many of which are described in Zion’s periodic reports filed with the SEC and are beyond Zion’s control. These risks could cause Zion’s actual performance to differ materially from the results predicted by these forward-looking statements. Zion can give no assurance that the expectations reflected in these statements will prove to be correct and assumes no responsibility to update these statements.


Case Name:Gazprom & the Russian Mafia

Surname: Alisher

Name: Usmanov

Fathername:

Position: General Director of “Gazprominvestholding”

Biography:

Born September 9, 1953 in the city Chust of the Namangan region, Uzbekistan SSR. In 1976, he graduated from the Moscow State Institute of International Relations (”MGIMO”), International Law department. After graduation, Usmanov worked as a junior researcher at the Center of Scientific Information in the presidium of the Academy of Sciences of the Uzbek SSR; he was a senior consultant for the Central Committee of Komsomol of Uzbekistan, Director General of Foreign Trade Association of the Soviet Committee for Defense of Peace (“SKZM”).

In the late 1980’s, he engaged in intense business activities. According to several media sources, in those years Usmanov was vice-president of Uzbek-Belgian joint venture “Vita” (Tashkent).

In 1990-1994 he worked as first deputy general director of JSC “Intercross” (according to other sources, he was president of JSC “Intercross”). In December 1992, he acted as the founder of the Moscow OOO “Company ‘Bars’ (Moscow)”, in June 1993 he became head of the finance and investment company AOZT “PRNB-Invest” (a subsidiary of the First Russian National Bank).

In August 1994, he became the founder of the AOZT “Goldkross”.

In 1994-1995 he was adviser to the director of the Moscow Aircraft Production Association (“MAPO”). In 1995 he became first deputy chairman of the MAPO-Bank. In 1994-1998, he led the Interbank Investment -financial company “Interfin” (ZAO “MIFK Interfin”), one of its founders was MAPO-Bank.

In 1997 he graduated from Finance Academy under the Government of Russia with a degree in Banking.

In 1997-2001, served in the Board of Directors of OAO “Arkhangelskgeoldobycha” (“AGD”) (according to other sources, in 1997 he became a member of the Board of Directors of “AGD-Invest”, and in 1998 – joined the Board of Directors in AGD.

In 1998 he became first deputy general director of OOO “Gazprominvestholding”, and in February 2000 he was appointed CEO of the holding.

In 1999 he became a member of the Board of Directors of ZAO “Arkhangelsk Almazy” (“Arkhangelsk diamonds”).

Starting from November 2000 to July 2001 was an adviser to chairman of Gazprom, Rem Vyakhirev.

In January 2005, he became co-owner of ZAO “Metalloinvest” – the former management company of Mikhailovsky GOK (“Mining and Processing Combine”) (MGOK), which had need acquired by Usmanov shortly before.

In August 2006, Usmanov became the owner of the publishing house “Kommersant” (he acquired both the media and the property owned by “Kommersant” with total area of 7.5 thousand square meters in Moscow and St. Petersburg). “Media holding” is listed as the owner of Kommersant – it is a registered overseas personal company of Usmanov. In December 2006, PB “Kommersant” and the company Metalloinvest also purchased some assets of PB “Sekret firmy” (“The secret of the company”) with its magazines: “The secret of the company,” “You have got the right”, “All is clear”, and the online newspaper Gazeta.ru.

On June 22, 2007 it became known that Usmanov had bought 75 % stake of the music channel “Muz-TV”. On August 30, 2007 he became co-owner of the London soccer club “Arsenal”. On September, 6 the businessman bought the American company Films by Jove and gave VGTRK the right to run 550 Soviet cartoons in the world (including “Cheburashka”, “Snow Queen”, “Mowgli”, “Hedgehog in the Fog”). According to some reports, the amount of the transaction amounted to 5.10 million dollars.

On September 17, 2007 the press reports appeared that the businessman bought a collection of paintings belonging to the singer Galina Vishnevskaya and her late husband, musician Mstislav Rostropovich. The singer was going to sell this collection at London auction Sotheby’s on September, 18-19. The deal amounted to 72 million dollars. On October 1, 2007 Usmanov officially announced the transfer of the collection of Rostropovich-Vishnevskaya to the Konstantin Palace in Strelna near St. Petersburg.

On May 7, 2008 the firm by Usmanov “AF Telecom Holding” and the IPOC Fund agreed to purchase through the Usmanov firm an 8 % stake in MegaFon and 58.9 per cent stake in Telecominvest, which, in turn, owned 31.3 % stake in Megafon . After the elimination of IPOC Usmanov has become the full owner of that share.

In June 2008, Usmanov and the owners of the company “SUP” (“Soup”), including the financier Alexander Mamut agreed to expand the partnership and exchanged their web assets. As a result, Kommersant received up to 50 % of “SUP” (which owned an Internet service LiveJournal), as well as an opportunity to appoint two members of the board of the company, and “Soup” became the owner of 100 % Internet-edition “Gazeta.ru”.

Usmanov is the executive vice-president of the British company Middlesex Holdings.

Usmanov’s company New Media Technologies was called the largest shareholder of the co-owner of one of Russia’s most popular social network “Odnoklassniki.ru” by the Company Digital Sky Technologies (DST). As of December 2009, the share of New Media Technologies in the company was 35 %.

In December 2008 he was elected president of the International Fencing Federation (FIE).

Usmanov is married. His wife Irina Viner is a head coach of Russia in rhythmic gymnastics. In December 2008, he was elected president of the All-Russian federation of the sport.
Source: lenta.ru (Updated on 22.12.2009)

In the world ranking of Forbes-2010 Usmanov has held the 100th place. His fortune by this year has been estimated at $ 7200 million; while in the last year it was $ 1600 million

Usmanov has two kids.
Source: forbesrussia.ru

Dossier:

According to press reports, in 1980, Alisher Usmanov- the son of the prosecutor of Tashkent – was sentenced by a military tribunal of the Turkestan Military District for extortion. It was reported that his accomplice had been an operative of the special department of the KGB Nasymov, son of Vice-Chairman of the KGB in Uzbekistan. Usmanov was sentenced to 8 years of imprisonment in a penal colony with confiscation of property. After the scandalous trial fathers of both convicts lost their jobs. In 1986, Usmanov was released on parole “due to sincere repentance” and “for good conduct.” Subsequently, Usmanov said that he was a victim of political repression. There is no information on the circumstances of the crime committed by Nasymov and Usmanov because the criminal case files had been destroyed, according to the media: in July 2000, the Uzbek Supreme Court fully rehabilitated Usmanov and called the criminal case against him as fabricated.
Sources: “Sobesednik” on 23.10.2007, “The Company” from 14.08.2000

Since the late 90-s the press began to report on a close acquaintance of Alisher Usmanov with a lieutenant colonel of foreign intelligence in the KGB Yevgeny Ananyev, as well as with Sergei Yastrzhemsky, in 2000 he became assistant to Russian President Vladimir Putin. It was reported on the ambiguous relationship of Usmanov: his name was mentioned in one context with Sergei Mikhailov, known under the nickname “Mikhas” and was considered the leader of the Solntsevo OPG. It was also reported on Usmanov’s dealings with State Duma deputy Andrei Skotch and businessman Lev Kvetny (both appeared in the media as members of the Solntsevo OPG, first – under the nickname “Scotch”, the second – “Kvetnoy”), as well – with the North Caucasian mafia clan.

According to the press, Usmanov met Ananyev in the late 80’s. After graduating MGIMO Usmanov headed the firm “Association of the 8th day”, which as written in the media, arranged hunting rare animals in the Pamirs for wealthy foreigners. It was reported that one of the customers allegedly tried to recruit Usmanov. But he tipped about the queer client to deputy chairman of the KGB Uzbekistan, after which he met the officer of the 6th Directorate of the KGB, USSR – Yevgeny Ananyev. When Usmanov opened shop for production of plastic bags in the Moscow area based on Ramensky plastics plant Ananiev allegedly helped him avoid the second arrest, according to press reports. The local police became interested in the shop : according to some sources, the waste of which the packages had been made in fact was a first-class raw material from the factory.

According to the press, in April 1993 MAPO-Bank was established with the participation of the first Russian Independent Bank, Usmanov was in the board of directors there. The bank reportedly was needed to serve the financial contracts of the state enterprise generating aircraft MAPO “MiG”. It was also reported that by the request of Usmanov shortly before the establishment of MAPO-Bank Evgeny Ananievwas introduced to the surrounding of Vladimir Kuzmin, then head of MAPO “MiG” , and was appointed an adviser.

As written in the press, according to some data, the bank enjoyed the patronage of the then Vice-Premier Oleg Soskovets and the Chief of Security Service of President Alexander Korzhakov. In August 1997, Ananiev was appointed director general of Rosvooruzhenie by decree of Boris Yeltsin. As a result, according to the press, MAPO-Bank received a serious clientele in the face of the FSB, SVR(Foreign Intelligence Service) and Rosvooruzheniye.

As written in the media with reference to operational data, before the establishment of MAPO-Bank Ananiev had met with one of the most influential in Central Asia boss nicknamed Gafur (Gafur Rakhimov) in the country house of Usmanov . Reportedly, then Usmanov allegedly had met with a criminal leader Sergei Mikhailov several times.

According to the press, accounts of the FSB, SVR and Rosvooruzheniye were transferred to other banks because of strengthening the position of organized crime in the MAPO-bank. As reported, starting from August 1996 MAPO-Bank focused on serving the project on creation a financial-industrial group “AtomRudMet” developed with the participation of Usmanov.

According to the press, MAPO-Bank became the main bank of “AtomRudMet”, its authorized capital consisted of the collective funds. Citing the security sources, the press reported it was through the export flows of “AtomRudMeta” the foreign currency funds of the North clan had been transferred abroad. And then there was information that the “collective funds” of the North Caucasian clan having been located in MAPO-Bank for almost four years, was removed and transferred to one of the offshore zones. Then on February 16, 2000 the Bank of Russia decided to revoke the license for banking operations of the MAPO-Bank, according to official information, it was due to its “inability to satisfy the claims of creditors on monetary obligations”.
Source: “Version” from 20.06.2000

According to the press, Usmanov co-founded the Inter-bank investment-financial company Interfin, which became a shareholder in MAPO-Bank; he did so at the same time with the creation of MAPO-Bank

As reported, this time the partner of Usmanov appeared to be Andrei Scotch, a former head of the firm “Oka-Oil” – an oil products trader. Since 1999, Andrew Scotch was member of the State Duma. In the press there is evidence of Scotch’s involvement in the Solntsevo OPG. In early 2003, Usmanov said in an interview that the group “Interfin” was owned by three partners. As reported, he said those were him and Kvetnoy. The third one, as suggested by journalists, was Scotch. The media suggested that the latter was not named because of his parliamentary mandate.
Sources: “The Company” from 15.09.2006, “Kommersant” dated 22.07.97, Kompromat.ru

In 2003, as it was written in the press, Alisher Usmanov became the owner of an asset with a bad reputation. As reported that the fall of 2002, he sided with General Director of “Russian Aluminum”, Oleg Deripaska, in a struggle for possession of “NOSTA” – Orsk-Khalilovsk steel plant. On a par with Deripaska Usmanov created LLC “Ural Steel”, which in October 2003 purchased the assets of “NOSTA”. Media reported that since the beginning of the 90’s the owner of “NOSTA” (as well as Avtobank Ingosstrakh, etc.) was Andrei Andreev – former senior officer of OBKhSS. According to press reports, the participation of Andreev in the bank’s capital and the insurance company was camouflaged by offshores and cross-ownership. But attempts by Andreev to work in a highly competitive industries had not been supported by sufficient financial and administrative resources. As a result, in 2001 Andreev lost his business empire. The owner of its assets became the consortium, consisting of Basic Element, Millhouse Capital and Nafta-Moscow (Abramovich and Deripaska). As the press wrote, later the entrepreneur insisted he had not sold Avtobank, Ingosstrakh, Nosta and others, but that they had actually stolen them from him. Ingosstrakh stayed with Oleg Deripaska, “Nosta” came under the control of Alisher Usmanov. Avtobank became an integral part of Uralsib (Nikolai Tsvetkov).
Source: lenta.ru with reference to the Center for Economic and Policy Research and Development of 24.06.2004, “The Secret Companies» # 39 (174) on 23.10.2006, # 6 (141) on 13.02.2006

In 2004, former British ambassador to Uzbekistan, Craig Murray publicly accused Usmanov of a number of serious crimes. It was reported that Murray had been British Ambassador to Uzbekistan in 2002-2004, then he accused the Uzbek government of violating human rights. Later he wrote the book “Murder in Samarkand”. In that book Murray wrote about the beginning of negotiations between Gazprom and Uzbekistan over the expansion of the gas trade. Citing its own sources, the author claimed that a key figure in this business had been an oligarch Alisher Usmanov. He had allegedly given bribes over 80 million dollars to President Karimov’s daughter, Gulnara Karimova (the company, in which she had interests, was listed in the media as a link between the management of Uzbekistan and Gazprom).
Source: newsru.com of 9.04. 2008

Murray wrote in an article posted in the British press that:

“Large sums for bribing ‘necessary” people had been sent through ‘Gazprominvestholding’ of Usmanov. Thus, in November 2004 they paid 44 million pounds to the president’s daughter Gulnara Karimova who allowed Gazprom to snatch a contract with Uzbekistan from the Americans. In exchange for the money Putin gave instructed Karimov to kick out the Americans from the military base that was controlling the Central Asian region, and Gazprom received a strategic bridgehead for hegemony over the gas reserves of Central Asia and Caucasus.
Source: “The Mail on Sunday” (Translation: InoSMI.Ru from 28.05.2007), “Sobesednik” on 23.10.2007

Press wrote that once the site of Craig Murray (at that time – the famous British blogger) came with the publication of allegations against Alisher Usmanov, web hosting company shut off several well-known political sites. As they explained in the hosting company, the work of the site of Craig Murray had been suspended due to the fact that “potentially dangerous defamatory material.” had been placed on it. And it was done after the London law firm Schillings had submitted the provider a demand to remove the contents of the site Murray, representing the interests of Usmanov in the UK.
Source: RB.Ru from 24.09.2007

In May 2005, as the press wrote, Usmanov made a “capture attack” on “Magnitka” – Magnitogorsk Iron & Steel Works (“MMK”). It was reported that the businessman had intended to subordinate the factory itself. But its leader Viktor Rashnikov proved intractable. The MMK historically lacked the proper raw materials, and Usmanov, “put” it on the “raw diet”. In May 2005, the supply of iron ore from the mining and concentration complexes (Mikhailovsky and Lebedinsk) controlled by Usmanov were stopped. Usmanov also persuaded the Kazakh colleagues, Sokolov-Sarbaiskoye mining production enterprise (“SSGPO” previously provided 70% of MMK) to join the “raw blockade” of Magnitka. As the press wrote, in a few days the largest company of the steel industry in the country, which share of Russian production was 20%, appeared to be without a supplier. MMK was on the verge of stopping. But, as reported, Rashnikov’s relations in the Kremlin helped him avoid a takeover by Metalloinvest.
Sources: “The Company” from 15.09.2006, http://www.met1.ru, http://www.metalloprokat.ru from 30.05.2005

In May 2005 the press reported that two months beforehand Usmanov had bought a luxurious mansion secretly in London, formerly belonging to the Emir of Qatar. It was reported that the house had been built in the style of the English Empire and was located in an area of 11 acres in North London. According to media reports, it was put up for sale in January 2004 for 65 million pounds. Usmanov paid much lower price – 48 million pounds, but he bought the estate which is still proved to be one of the most expensive real estate in the history of London. Journalists noted that, based on cadastral documents, Usmanov bought real estate through a company registered on the Isle of Man.
Source: The Sunday Times (Translation: Inopressa.ru from 19.05.2008)

In August 2006, Alisher Usmanov bought PH “Kommersant” from Badri Patarkatsishvili,which had been previously owned by Berezovsky. The press went burst with the publications of the cardinal change of the situation in the Russian media market. Media broadcast the views of analysts who suggested that Usmanov had been acting on behalf of Gazprom which since 2001 had been buying up the media in the interests of the Kremlin.
Source: Press Attashe.Ru of 31.08.2006

It was reported that Usmanov himself claimed that he had bought Kommersant at his own expense, for $ 200 million. Usmanov called the new purchase a “long-term investment in business which was new for him.
Source: Regnum from 31.08.2006

A number of analysts expressed the view in the press that the purchase of Kommersant confirmed the story of the task posed by the Kremlin to create media holding on the threshold of the forthcoming parliamentary (2007) and presidential (2008) election, which was to have credibility in the eyes of potential voters. National News Agency, for example, wrote that the purchase of Kommersant virtually ensured the victory of the current government in the upcoming elections, as the leading publications of the country had already been under the control commercial and governmental structures close to the Kremlin(Promsvyazbank, Gazprom-Media) Source: National News Agency of 25.12.2006

In October 2007 the press reported that the multinational diamond company De Beers accused Alisher Usmanov of fraud. It was reported that a subsidiary of De Beers – Archangel Diamond Corporation (ADC) – filed a lawsuit in the U.S. court to recover the losses incurred due to the ill-fated collaboration with a former business of Usmanov – Arkhangelskgeoldobycha (“AGD”). Press wrote that, according to plaintiffs, De Beers lost control over the diamond fields due to the fact that Usmanov deliberately had been buying its shares. According to media reports, the subject of the claim was a long-standing deal between the ADC (which owns a controlling stake in De Beers) and AGD (former company of Usmanov). Referring to the materials of the case, the press wrote that in the late 90’s De Beers became the majority owner of the diamond pipes named after Gribov in the Arkhangelsk region. According to the position of the plaintiffs, the shares of the pipes named after Gribov had been bought by Alisher Usmanov, and after some time the company was privatized. De Beers lost its access to the diamond fields. According to press reports, the plaintiffs pointed out that the deposit was explored in 1996, and Usmanov, served in the Board of Directors of AGD from 1997 to 2001.

It was reported that De Beers estimated its damage from the alleged fraud at 30 million dollars of investments. According to the press, the plaintiffs also argued that they had lost at least $ 400 million of guaranteed profits. According to the documents of the state of Colorado court, as journalists wrote, the position of ADCwas reduced due to the fact that Usmanov and other interested persons from Russia “had entered into a criminal conspiracy in order to mislead” the company “about the agreement on the right for 40% of the company which was having the right for exploitation.

According to press reports, hearings on the suit of ADC in the court of Colorado had to begin in November 2007.
Source: newsru.com of 8.10. 2007, The Sunday Times 08.10.2007, “version” of 20.06.2000

Media reported that on the day of the news appearance about the lawsuit in the court of Colorado, the press office of the businessman denied the message. As they explained to reporters, the information in the press did not correspond to reality, and Usmanov was not a defendant on the claims of the company ADC.

The representatives of the press-service said that ADC lost all claims against AGD filed in 1998-2003. AGD won the courts on the territory of Russia, as well as in the Stockholm court (Sweden) and in the district court of Denver (USA). According to the press service, the only case lasted in Colorado was against JSC “LUKoil (AGD was called subsudiary of the oil company). Meanwhile, as the press service told, during the trials the facts of fraud had been established committed by the persons representing the interests of ADC. For example, there were indications that the basic document ADC based its claim turned out to be false.
Source: “Times” of 08.10.2007

In late 2007, the press mentioned the wife of Alisher Usmanov – the legendary coach Irina Viner in connection with an ugly story. It was reported that she had appropriated to heself the roof of the luxury house at the street Krylatsky hills, taking 100 sq meters of the property. According to press reports, Irina Viner bought an apartment in 200 sq.m. in that house. The scandal burst because of the superstructure on the roof made by the coach without the consent of the other tenants. The heads of the housing cooperative “AlStar” filed a lawsuit to court.

As reported in the press, during the proceedings Viner allegedly said “I am not aware of what is happening there. I do not live at that address, but do repairs!”. The Kuntsevsky court granted the plaintiffs, ordering Viner to dismantle the substructure.
Source: “Express-Gazeta” on 02.10.2007

In early 2009, Usmanov’s name was mentioned in the press in connection with the development of Udokan copper deposit scandal. According to media reports, in September 2008 a subsidiary of Metalloinvest – Mikhailovsky GOK in a concession to Rostechnology received the right to develop this deposit. In early 2009, there were indications that ” Metalloinvest did not pay the remaining 10.5 billion rubles for the license to develop Udokan. In this regard, the press wrote that Metalloinvest seemed to find a powerful patron in the person of Deputy Head of Federal Agency for Subsoil Use, Vladimir Bavlov because the company offered a six-month delay in paying the rest of the amount. The press reported that because of the economic crisis Metalloinvest was going to reconsider the license conditions by changing the terms of the construction (from 7 years to 9-10 years) and payback period of mining-processing enterprise.

The press wrote that Usmanov has decided to seek assistance from the State Bank like several other oligarchs suffering a difficult situation. It was reported that the head of state corporation “Rostehnology” Sergey Chemezov was negotiating with Vnesheconombank for a loan of 10 billion rubles for the start of Udokan development. By the words of Chemezov, the funds were scheduled to be received by the spring of 2010.
Source: “Moskovsky Komsomolets” from 23.04.2009

According to media reports, in early 2010 the management of Metalloinvest argued that the company was showing signs of recovery. But it was reported that strup of the development of Udokan, which had been scheduled to begin in spring 2010, was postponed.
Sources: moscow-post.ru from 13.01.2010, expert.ru from 23.11. 2009

The press wrote that the business of Alisher Umanov suffered greatly from the economic crisis. The businessman does not deny this also. According to media reports, in 2009 Usmanov admitted that Metallinvest had huge debts. As of April 2009, the oligarch estimated them at $ 5 billion. In an interview with Vedomosti and Kommersant, he acknowledged that he was doing not very well. The press reflects the opinions of experts who believe that debts of Usmanov exceed 5 billion dollars. Journalists wrote that Usmanov was selling non-core assets. He has already sold 75% in the operator of the South Tambeyskoye gas condensate field. According to the staff of Center political conjuncture of the entrepreneur’s business structure have owed about $ 10 billion altogether.
Source: “Case of the Week” from 23.04.2009

Surname: Korzhakov

Name: Alexander

Fathername: Vasilyevich

Position: Advisor to Governor of Tula region

Bio:
Korzhakov was born on 31 January, 1950 in Moscow. He comes from the family of workers.
In 1967-1968 he worked as a second-class assembly mechanic at Moscow Electromechanical Plant.
In 1969-1970 served in the Kremlin regiment.
In 1970-1989 he worked for the Ninth Chief Directorate of the KGB. He was engaged in protection of superior government officials. In 1971 Korzhakov joined the Communist Party and became a member of the party bureau and a member of the Komsomol committee of the Ninth Directorate.
In 1981-1982 he served in Afghanistan.
In 1985 – 1987 he was a bodyguard of Boris Yeltsin, the first secretary of Moscow city party committee.

In 1989 he was dismissed from the KGB “on age and health grounds”, but the actual reason was his support to Yeltsin who had quarrelled with the government by that time. Korzhakov remained Yeltsin’s bodyguard and worked under his direction at the reception of chairman of the Supreme Soviet construction and architecture committee.
In 1990 – 1991 he was the head of security department under chairman of the RSFSR Supreme Soviet Boris Yeltsin.
In 1991 – 1996 he was the chief of the Presidential Security Service
In 1991 – 1995 he was the first deputy chief of the Protective Service of Russia.
In 1996 he was a member of Yeltsin’s election staff. In June 1996 was removed from all the positions he had taken. A few months later he allied with general Alexander Lebed.
In 1997 Korzhakov was elected State Duma deputy from the Tula region. At that time he also published a book titled Boris Yeltsin: From Dawn to Dusk.
Since January 2000 he has been deputy chairman of the State Duma Defense Committee.
Awards:
Order For Personal Courage
Korzhakov has two daughters, Galina and Natalia, by his first wife Irina Semyonovna Korzhakova. In 2008 he married to his assistant Galina.
In 2010 Korzhakov earned 2.4 million rubles. He had an apartment provided for free use that had an area of 68 square meters. Korzhakov owned a land plot measuring 3,400 square meters and a house. He owned Chrysler 300 car, Chevrolet Avalanche truck, Chevrolet-Express j3500 bus and ATV.
Source: Wikipedia

Dossier:
While being the chief of the Presidential Security Service, Korzhakov had profound influence on Yeltsin. The service was established by special Yeltsin’s decree and was not regulated by law. To control it Yeltsin issued Presidential Security Service Regulations that became classified information. Security Service was engaged in operational-search activity and surveillance of potentially dangerous citizens. The service used hidden camera techniques, phone tapping and so on, although the Presidential Security Service was not mentioned in the law On operative-search activity that granted a licence for that kind of activity. Security Service call-forward was included in confidential part of the budget message avaliable only for specially authorized officials, including members of the Duma Security Committee. No one, but the Kremlin officials, was supposed to know about fund amounts and expenditure pattern of Korzhakov’s departments.
Source: Dossier on Korzhakov by Most group.

The Communists reported that on 3-4 October 1993, during the armed conflict in Moscow, Korzhakov had been involved in shooting defenders of the government quarters. He was said to demand their execution after they had been captured and brought to the stairs of the quarters: “I am ordered to liquidate all the uniformed people!”

But in fact, Korzhakov’s role was insignificant. He confined himself to arresting security officers Rutskoi , Khasbulatov and Makashov. Rumours about “bloody butcher Korzhakov” are still not confirmed. There is no evidence of the very fact that militants who had surrendered were shot.
Source: old.flb.ru, 21 November 2007

The first overt conflict between Korzhakov and Gusinsky-Chubais alliance was provoked by Korzhakov’s attack on Gusinsky’s Most holding corporation. On 2 December1994 officers of the Presidential Guard were ordered by Korzhakov to raid Moscow office of Most-bank, located at the City Hall quarters in Novy Arbat street. Officers blocked the office for several hours. A criminal case on the raid was dismissed “for lack of corpus delicti”. Moreover, chief of Moscow FSB office Evgeni Savostyanov, who then had come to the aid of Gusinsky along with his officers, was immediately discharged. Soon after that Gusinsky left for London and spent there five months

Source: Vremya novostey, 16 June 2000

On 19 June 1996, in the evening, Arkadi Yevstafyev and Sergey Lisovsky, members of Yeltsin’s campaign staff, headed by Chubais, were detained while carrying a photocopier box out of the Government House. Cash amount totalling 538 thousand U.S. dollars was found in the box. After questioning Yevstafyev and Lisovsky were released. Chief of the Presidential Security Service Korzhakov, the FSB director Mikhail Barsukov and first deputy Prime Minister Oleg Soskovets, who had initiated their detention, were forced to resign because of vigorous campaign launched by certain media.

In fact, half a million dollars turned to be costs of eliminating the group undesirable for Chubais. Korzhakov, Soskovets and Barsukov were no longer close to Yeltsin. As Korzhakov claimed in his memoirs, Security Service received reports on “plundering” of the campaign funds. On 19 June1996 Security Service secretly broke open a safe of Deputy Finance Minister German Kuznetsov and allegedly found 1.5 million U.S. dollars there. Korzhakov stated that the amount had been kept there without any documents indicating its source, while payment warrants of the foreign banks were found.

According to Korzhakov, after his resignation Chubais asked Korzhakov’s deputy to “return his 500 thousand”. In 1999 prosecutors dismissed the case.

Source: Riw.ru, 2001

In February 2004, while being a State Duma deputy, Alexander Korzhakov filed a request with the President, the Prime Minister, the Prosecutor General’s Office, the FSB, the Chamber of Accounts and Gazprom company. He reported on the activities of Gazprominvestholding director-general Alisher Usmanov and former department head of Gazprom public company Alexander Krasnenkov.

As Korzhakov stated, he was informed about their arbitrary and lawless usurpation of Gazprom by retired FSB officer and shareholder of Zapsibgazprom Tyumen company Alexey Rudakov. In September 2002 Rudakov sent him a letter.

As Rudakov learned, Usmanov and Krasenkov employed any means to ”prevent Zapsibgazprom from getting improved under external control. To avoid external interference, while having 8 billion rubles payables they reached out-of-court settlement, according to which the company property was to be distrained and sold by auction” .

Krasnenkov Usmanov rejected all the accusations and filed a counter-claim on protection of honor and dignity. Korzhakov was forced to drop the investigation.
Source: Gazeta, 2 February 2004

On 11 January 2010 Yeltsin’s daughter Tatyana Yumasheva posted to Live Journal her own version of the incident “with photocopier boxes “. According Yumasheva, the money found on Lisovski and Yevstafyev was intended for payments to actors who had taken part in the show held in Yeltsin’s support. Businessmen were to convey the money to the recipients.

As Yumasheva claimed, Korzhakov, who controlled Yeltsin’s campaign funds, knew about it and grabbed the opportunity to regain its former influence on the president, having fabricated an embezzlement case. Yumasheva called Korzhakov’s actions “stupidity, baseness and betrayal.”

Alexander Korzhakov replied that he had not controlled the Yeltsin’s campaign funds. “Chernomyrdin, Chubais and deputy Finance Minister Kuznetsov were responsible for that,” he said. Korzhakov added that the operation on the arrest of Lisovski and Yevstafyev had been conducted at Yeltsin’s request, as Yeltsin had suspected stealing money from his funds.
Source: Utro.ru, 19 January 2010

In November 2010 Andrey Bagdasarov, an assistant to State Duma deputy Alexander Korzhakov, was found shot dead at his Moscow apartment. Bagdasarov formerly served as a senior officer in the Federal Protective Service of Russia.

Investigators considered various motives for his murder, including his business activity. However, the most intriguing thing was the fact that Bagdasarov had been a witness of a search of the apartment , where Alexander Tikhonov, the father of lawyer Stanislav Markelov’s and journalist Anastasia Baburova’s murderer Nikita Tikhonov, lived.

Source: Versiya, 11 November 2010

Surname: Kvetnoy

Name: Lev

Fathername: Matveyevich

Position: Director General of JSC “Oskol Electrometallurgical Combine

Biography:

Date of Birth on August 27, 1965

Rogachevo, Moscow region.

Education: Graduated from the Leningrad Institute of Physical Culture in 1989. He graduated from Finance Academy under the RF Government in 1997.

1990-1992 Managing Director of JSC “Pragma-trading”;

1992-1995 Vice-President of JSCB “Montazhspetsbank”;

1995-1996 Deputy Director General of Interfin (the CEO is Alisher Usmanov). Founder of JSC “Financial Consulting and Management”. The representative of the Board of Directors of JSC “Oskol Electrometallurgical Combine “;

1997 Director General of the company “Lukoil-Garant”. Member of the Board of Directors of “AGD Invest”;

1998 Member of the Board of Directors in OAO “Arkhangelskgeoldobycha” and OAO “Lebedinsky GOK”;

1999 General Director of Oskol Electrometallurgical Combine. Member of the Board of Directors of JSC “Arkhangelsk Diamonds”;

2000 Head of holding “Gazmetal”;

2005 Member of the Board of Directors of OAO “Vnukovo Airport”;

2006 Owner of the banks “National Standard” and “Novoroscement”.

Hobbies: History.

Marital status: Married; Has two children.

Source: dirbiz.ru

Since 2006 – the owner of OAO “Novoroscement”

In September 2009, he was re-elected to the Board of Directors of OAO “Vnukovo Airport” (owns the terminal internal lines)

Source: http://www.vedomosti.ru

Dossier:

In 2000 Kvetnoy was involved in the conflict between the structures of Gazprom (Gazprominvestholding and Interfin), controlling the Lebedinsky GOK, and the Novolipetsk Metallurgical Complex (NLMC). Shareholders of LGOK did not introduce the representative of the NLMC supervisory council. At the same time shareholders reduced the number of members of the Supervisory Board, so that Chairman of the Board of Directors of NLMK, Vladimir Lisin could not carry his member into the supervisory board of GOK. Lev Kvetnoy entered it among others, while representative of NLMK, Andrey Leschikov did not.

This combination was performed in order to make NLMK waive the requirements to reduce tariffs on raw materials supplied to it. However, the Chairman of the Board of Directors of NLMK Vladimir Lisin did not to make concessions.

Source: “Kommersant» № 86 (1971) on 17.05.2000

In 2005 Kvetnoy was elected to the Board of Directors of OAO “Airport Vnukovo”. His candidature was proposed by a private shareholder of the company Vnukovo Vnukovo-Invest” to be an independent director. At the time Kvetnoy entered the board of directors, it largely consisted of government officials from Moscow.

Source: “Kommersant» № 125 (3209) on 09.07.2005

In 2006, Lebedinsky GOK (LGOK) purchased shares of “Oskol Electrometallurgical Combine” (OEMC) – so the consolidation of assets began on the basis of mining and metallurgical holding that Alisher Usmanov created. At the time Alisher Usmanov owned a controlling stake of the company Gazmetall controlling LGOK and OEMC, other securities belonged to Kvetnoy and Andrey Scoch.

Source: “Kommersant» № 51 (3382) on 24.03.2006

In the same year it became known that Alisher Usmanov, and Andrey Skoch had bought Kvetnoy’s shares in the LGOK and OEMC to merge the company with assets of Metalloinvest owned by Usmanov and Vladimir Anisimov into the largest iron-holding country.

The idea of its creation came from Usmanov after he had bought Mikhailovsky GOK. But Kvetnoy did not want to become his partner in the creation of the holding. He decided to sell his stake in the GOK and OEMC to the companies by Usmanov and Skoch .

Partnership of Kvetnoy with Usmanov and Skoch started in the 90’s when they began buying up shares of LGOK and OEMC. For a while all three had been partners in Gazprom.

In 2000 they, created Gazmetall along with Gazprominvestholding, GOK and OEMC gave their shares to it. Kvetnoy headed Gazmetall.

In 2005, Kvetnoy were at odds with Usmanov because of the Magnitogorsk Steel Plant. In May 2005, Michael and Lebedinsky GOKs stopped deliveries of ore to the MSP.

Source: Vedomosti from 20.04.2006

This was due to the fact that there was no agreement on the price of supplies. Kvetnoy insisted on the resumption of supplies by LGOK, disagreeing with Usmanov.

Source: Kommersant (Voronezh) № 71 (3402) on 21.04.2006

After Kvetnoy had had his shares bought a subsidiary of OEMC – JSC “OEMC-Invest” he owned gained control over the bank “National Standard”, it served accounts of the companies of the metallurgical holding Gazmetall. Kvetnoy received the bank in exchange for his shares Gazmetall.

Source: “Kommersant» № 171 (3502) on 14.09.2006

Bank “National Standard” was captive and served enterprises of metallurgical industry. Kvetnoy announced plans to turn it into a universal bank, with a broad range of clients.

Source: http://www.vz.ru ot13 September 2006, 15:04

In 2007, due to growth in demand for cement Kvetnoy became interested in the cement business and acquired a controlling stake in OAO Novoroscement “- the second largest industrial enterprise in Russia. Earlier, Oleg Deripaska was interested in this plant, but did not agree on the price. The plant is close to Sochi, which almost guaranteed orders in the Olympics in 2014. However, Kvetnoy will have to compete with Inteko by Elena Baturina, whose cement assets are located nearby.

Source: Journal “Sekret Firmy” № 7 (190) from 26.02.2007

In 2007 the bank of Kvetnoy, National Standard began buying up regional banks. The first purchase was the Volgograd “Russian Southern Bank”.

Source: rbkdaily.ru from 15.08.2007

Soon Kvetnoy announced his intention to buy the company “Gornozavodsktsement”, in which the Basic Element of Oleg Deripaska had been interested also.

Source: Kommersant (Perm) № 150 (3726) on 22.08.2007

In 2009 Kvetnoy after two years became a member of the Board of Directors in Vnukovo again.

Source: AviaPort.Ru from 07.09.2009, 17:42

Previousely, upon having left the council, he retained an indirect connection with the airport: some accounts of OAO Vnukovo Airport and all accounts of “Vnukovo-Invest” had been served by owned by served the Bank “National Standard” of Lev Kvetnoy.

His return had to be at a difficult time for the shareholders. His arrival was associated with a desire to protect shareholders from the Moscow authorities’’ attempts to strengthen influence in the airport.

Kvetnoy replaced the former board member, deputy director general of the airport – Gennady Goncharov.

The Moscow government believed that Kvetnoy and Usmanov are the beneficiaries of offshore structures behind the private shareholders of Vnukovo. But they had been appealed for help only after Vasily Kichedzhi, a new member of the board of directors from the Government, wrote to Mayor Yuri Luzhkov on the need to make a check, assuming that they had been deriving assets from the airport.

Source: “Kommersant» № 165 (4220) on 08.09.2009

According to some reports, Dmitry Baranovsky, one of the leaders of the Solntsevskaya OPG, nicknamed Dima Bely (“White”) had worked for Kvetnoy and Skoch .

There is information that Kvetnoy has intimate relations with the daughter of ex-chairman of the MAPO-Bank, Ananyev.

Source: Kompromat.ru from 30.06.2000

Surname: Skoch

Name: Andrey

Fathername: Vladimirovich

Position: Deputy of the State Duma of the Russian Federation

Biography:

 

 

Born on January 30, 1966 in settlement Nikolsky, Moscow Region; In 1988 graduated Moscow state pedagogical university (MSPU), faculty of Psychology, PH.D; Graduated from Russian Academy of Public Administration under the President of the Russian Federation.

In 1984 he served in army in reconnaissance and landing troop; was wrestling in David Rudman’s Moscow club “Sambo-70”, gat certificate of mastery, then was training. Subsequently he worked in commercial structures, was the assistant to the general director of OOO Open «Kuznetsov and partners», the assistant to the general director of investment company “Interfin”.

Since 1996 Andrey Skoch is the citizen of Israel.

In 1997 Skoch was the chairman of the Moscow regional lottery fund «Youth Planet», in December, 1997 he unsuccessfully stood in deputies of the Moscow regional Duma from the district including territory of Zheleznodorozhny, Balashihinsky and Lyuberetsky areas. Besides, Skoch proposed the nominee on elections for the State Duma in Mari El Republic. He participated in elections as the president of international fund “Generation”.

In 1999 Andrey Skoch became the deputy director of investments and development of AO «Lebedinsky MPC».

In 1999-2003 – deputy of the 3rd State Duma of the Federal Assembly of the Russian Federation, the member of Committee on the industry, construction and high technologies. In 2000 became the chairman of Advisory council on metallurgy and mountain-ore industry of this committee.

In 2003-2007 – Deputy of the 4th State Duma of FA of the Russian Federation.

In December, 2007 was elected as the deputy of the 5th State Duma of FA of the Russian Federation. A member of fraction “United Russia”, the president of the international fund “Generation”, honored trainer on sambo-wrestling and judo.

According to “Finance” magazine, his fortune for 2009 was 1.50 billion dollars, and the 33rd place in a rating of Russian billionaires.

Andrey Skoch is married, has seven children, four of them – twins of 1994 year of birth.

Sources: duma.gov.ru, lobbying.ru, viperson.ru, c-society.ru, magazine «Company Secret»

 

 

File:

 

 

In the early nineties Andrey Skoch was one of the leaders of «Solntsevskaya» organized criminal community and had a nickname Scotch Tape. Among criminal communications of Skoch there were named such as the head of Solntsevskaya Sergey Mikhailov (AKA Mihas), Averin brothers, Alexander and Victor – active members of Solntsevskaya criminal community. Together with others Solntsevskaya’s authorities – Kvetnoy brothers, Lev and Vladimir, and Dmitry Baranovsky (nickname White) – Skoch headed the criminal group which was engaged in illicit weapon business. Arms supplies were carried out to Russia from Poland, the Baltic States and Belarus. Legalization of the received incomes occurred by an investment of money resources in processing and a mining industry, through various commercial structures. Skoch’s group with more than 20 former sportsmen and persons with previous convictions supervised commercial banks “Montazhspecstroy”, “Dialogbank”, and also a capital casino “Karusel”. Andrey Skoch was registered as on one of owners of Moscow casino «Arbat court yard».

Source: «New newspaper» № 3 from 1/17/2000

 

In the late nineties press wrote about Andrey Skoch’s participation in showdowns concerning Serpukhov oil base – the enterprise became a dispute subject between «Solntsevskaya» and “Podolskaya” criminal structures. Podolskaya group – the second biggest and influent group after «Solntsevskaya» in Moscow region – went on rupture, despite earlier strong communications between two criminal communities. The conflict occurred because of long dispute on control over Serpukhov oil base. In February, 1998 members of “Podolskaya” group attached a tank farm from grenade discharges, then company “Oka-oil” located there and headed by chairman of the board Andrey Skoch, had to leave the territory of the base and to locate in another place.

Source: «New newspaper» № 3 from 1/17/2000

 

In 2000 in the biographic data of Andrey Skoch published in mass-media, there was an information that he served in research division of KGB which ostensibly was engaged in experimental researches of mass suggestion. There is no any more concrete data on this stage of his activity in open sources.

Source: «Moskovsky Komsomolets» from 3/15/2000

 

In State Duma Andrey Skoch is named as the active lobbyist of metallurgical branch. His desire to be the chairman of Advisory council on metallurgy and the mining industry (the lobbyist organization) became a main objective of Skoch’s coming to politics. Skoch was said to be informally delegated to the Duma by a metallurgical complex of Belgorod – Lebedinsky and Stoilensky MPC, Oskolsky electrometallurgical industrial complex. Then the former minister of an antimonopoly policy Gennady Khodyrev and the representative of the Ural region Zelimhan Mutsoev became his assistants to the Head of council. Council included: Deputy Peter Shelishch, the ex-minister of metallurgy of the USSR, the president of the International union of metallurgists Serafim Kolpakov, the owner of “Severstal” Alexey Mordashov, the head of “Mechel” – Alexey Ivanushkin, “Nornickel” – Alexander Khloponin, SUAL – Victor Vekselberg, Novolipetsk metallurgical industrial complex – Vladimir Lisin, a member of Academy of mountain sciences Evgeny Panfilov, the deputy director of institute in the system of State Science Center Chermet Leonid Makarov.

Source: www. svh-home.zeonweb.ru

 

In 2000 Andrey Skoch came into the view of police in connection with criminal case on charge of the head of “Montazhspecbank” Arcady Angelevich, in the past – the basic treasurer of «Solntsevskaya» criminal group who was accused of plunder over 7 million dollars belonging to commercial bank “Unity”. Andrey Skoch who was registered as the councilor in “Montazhspecbank”, together with Lev Kvetnoy, assistant to Angelevich, was targeted in the investigation as the witnesses. Actually, according to journalists, both of them were “authorities”. During the investigation Angelevich colluded department of economic counterespionage of FSB, and the employee of FSB Vladimir Vanesyan who forced Skoch and Kvetnoy to leave from “Montazhspecbank” was directed to the bank. Lev Kvetnoy was written to declare during investigation that Vanesyan threatened him to put a grenade in trousers. Solntsevsky then left the interest to bank.

Source: “Version” from 4/11/2000

 

Mass-media wrote about a certain conflict in relations of Andrey Skoch and his colleague in «Solntsevskaya» Lev Kvetnoy. In 2006 Skoch, having united with businessman Alisher Usmanov, redeemed shares of Lev Kvetnoy in Lebedinsky MPC and Oskolsky electrometallurgical industrial complex. After this transaction Usmanov and Skoch began to unite the enterprises with actives of “Metalloinvest” in mining-ore holding. For some time all three businessmen were “Gazprom” partners. In 2000 they together with “Gazprominvestholding” created “Gazmetall” where they transferred the share holdings of MPC and ОEMC. Kvetnoy headed “Gazmetall”. In 2005 Kvetnoy had disagreements with Usmanov because of the conflict concerning Magnitogorsk metallurgical industrial complex. Sckoch took Usmanov’s part in this conflict.

Source: “Vedomosti” from 4/20/2006

 

In the State Duma Andrey Skoch lobbied interests of the large alcoholic companies. It was one of initiators of the bill «About modification of the Federal law « About state regulation of manufacture and a turn of ethyl spirit, alcoholic and alcohol-containing products» (regarding introduction of an obligatory denaturizing of nondrinking spirits), brought in the State Duma in October, 2006. The bill obliged manufacturers of methyl and isopropyl spirit which are the basis for substitute production, to denature the production, adding, for example, gasoline. It should bring additional 5 billion roubles to manufacturers of strong alcohol. Apart from Skoch, the deputies Valery Draganov, Alexander Kogan, Yury Medvedev, and Alexey Rozuvan were authors of the bill.

Source: “Kommersant” № 191 (3522) from 10/12/2006

 

In 2006 minorities of OAO «Oskolsky electrometallurgical industrial complex», supervised by Andrey Skoch, businessmen Alisher Usmanov and Vasily Anisimov, submitted the claim to arbitration court of Belgorod about recognition of founders of industrial complex, instead of simple shareholders. Minorities tried to challenge industrial complex privatization. The claim was that in 1993 during the act of acquiring shares and formation of joint-stock company of open type, and then creation on its base of open joint-stock company workers of industrial complex received the status of the shareholder, having lost the status of the founder, though the circle of powers of founders is wider, than shareholders. The court decided that process of privatization ОEMC which took place in 1993, was according to norms of the legislation of that time. Subsequently the group of minorities made the complaint to Voronezh arbitration court, but there the first judgment was upheld.

Source: “Commersant” № 151 (3482) from 8/17/2006

 

In 2010 in a rating of Russian billionaires magazine Forbes named six deputies of the State Duma including also Andrey Skoch. According to Forbes, Skoch is the richest Russian deputy with the fortune of 1.4 billion dollars. At the same time, according to his declaration, Skoch is one of the poorest deputies: in 2009 he submitted data to tax department that he earned 1.7 million roubles, that in his property he has only one apartment with the area of 65,31 sq. m and no any car.

Source: “Newspaper” from 14.05.10

Surname: Berezovsky

Name: Boris

Fathername: Abramovich

Position: Entrepreneur

Biography:

 

 

Born in 1946 in Moscow. In 1967 he graduated from the Moscow Institute of Forestry Engineering, in 1973 — the mechanic-mathematical department of MSU, later defended PhD and doctoral thesis; became a member of the Academy of Sciences of the USSR. In 1989 he became CEO of the Soviet-Swiss joint venture LogoVAZ engaging in supplies of software to AvtoVAZ and sales of domestic cars and servicing cars. In 1994, he resigned as general director of LogoVAZ, becoming a chairman of its board of directors.

In 1991 he co-founded the Moscow Independent Broadcasting Corporation (MIBC). In 1993 – the general director and member of the Board of Directors of JSC “Automobile All-Russia Alliance” (AVVA), which was planning to build a new automobile plant on the money of private investors. The project failed later .

In winter 1993-1994, Berezovsky entered the inner circle of President Boris Yeltsin by getting acquainted with Valentin Yumashev, who introduced him to Yeltsin’s daughter Tatyana Dyachenko.

In December 1994, Berezovsky became the first deputy chairman of the board of directors ORTV. In the second half of 1995, Berezovsky and businessman Roman Abramovich created Sibneft. In 1995, Berezovsky became one of the shareholders of MIBC channel “TV-6 Moscow”.

In October 1996 he was appointed deputy secretary of Russia’s Security Council, in November 1997 was removed from his post. In the same month Berezovsky became an adviser to the head of presidential administration of Russia Yumashev, and in April 1998 he was appointed executive secretary of the CIS. In May 1998, he was dismissed from his post as adviser to the head of the presidential administration, and in March 1999 — was removed from his post as chairman of the CIS Executive Secretariat.

In March 1997, he became a member of the Federal Commission on the problems of Chechnya, in May – participated in the signing of a peace treaty between Russia and the Chechen Republic of Ichkeria.

In spring 1999, he obtained 75% of shares in MIBC “TV-6 Moscow”; in July 1999 he acquired the publishing house “Kommersant”.

In December 1999, he was elected to the Duma, but in July 2000 – resigned his office as deputy, and began to criticize the actions of President Putin. In late 2000 he went to London in fear of further prosecution on the «case of Aeroflot».

In December 2000, Berezovsky created Civil Liberties Foundation in the U.S. – a charitable human rights organization. In November 2001, he was admitted to the motion of the «Liberal Russia» and elected to its political council.

In September 2003, he was granted political asylum in Britain. Later in the UK Berezovsky had been issued new documents in the name of Platon Elenin.

In summer 2005, Berezovsky changed the direction in PH “Kommersant”, and then sold the shares of PH Patarkatsishvili. In August 2006, Patarkatsishvili sold his PH to Alisher Usmanov, general director of Gazprominvestholding, a wholly-owned by OAO Gazprom.

Berezovsky was married several times and has six children, and many grandchildren. In April 2006 the British newspaper Sunday Times put him on the 68th seat in the 1000 list of richest people in the country with the fortune of 800 million pounds sterling.
http://www.lenta.ru on 11/01/2010

 

Dossier:

 

 

For the first time the press wrote negatively about Berezovsky in connection with his appearance in August 1994 in the board of directors of AvtoVAZ. As reported by the media, Berezovsky and CEO Vladimir Kadannikov in order to establish full control over Avtovaz used the scheme of cross-shareholding. As reported, the essence of the scheme was that the majority of shares in the company was bought by VAZ-controlled firms, including LogoVAZ and AVVA. It turned out that the top managers of the plant became heads of the structures that had kept its shares.

It was also reported that another “invention” by Kadannikov and Berezovsky was schemes of sham cars re-export. Their essence was that the exported vehicles cost less than those that went to the domestic market. But the cars crossed the border only on paper. In fact, they were sold in Russia on domestic prices.
“Profile» № 43 (115) on 23.11.1998

 

Press wrote about the scandals associated with secret service owned by Boris Berezovsky – a private security company “Atoll”. It was reported that this structure provided not only security services, but also engaged in spying, espionage and collecting dirt for enemies and friends of Berezovsky. According to the media, the people of Yeltsin’s inner circle, known as the “Family” appeared in its field of view .

They wrote that in the summer of 1998 “Atoll” of Berezovsky got in the field of view of law enforcement agencies. Employees of DOCU in the Eastern District of Moscow withdrew specialized equipment and materials collected on the leading politicians of the country from the base of the security company . But soon the “Atoll” got its property back.

According to press reports, in January 1999 the General Prosecutor’s Office of Russia opened a criminal case, and repeatedly searched «Atoll».
Source “Moskovsky Komsomolets” on 20.01.99, on 21.06.2006, from 21.06.2006

 

According to the head of «Atoll», the case against his company was terminated. But, according to the media, Berezovsky chose to get rid of it. First, funding for security services was reduced and then stopped altogether.
“Moskovsky Komsomolets” on 21/06/2006

 

Berezovsky’s name ended up in the media in connection with reports about his collaboration with Chechen field commanders about the abduction and release of the hostages in 1996. It was reported that the militants earned money through such a cooperation, while Berezovsky gained political capital. First, as the press was writing, with the help of Berezovsky there were 22 OMON riot policemen released from the Chechen captivity, captured on December 14, 1996 in Dagestan. Shortly thereafter, 11 Chechens were released from the Russian prisons, and then pardoned retroactively. Berezovsky helped to return from the Chechen captivity the NTV correspondent Helen Masyuk, and Plenipotentiary Representative of President of RF, Valentin Vlasov. The entrenched image of a peacemaker was spoiled with the release of a Ministry of Interior of Russia, General Gennady Shpigun. The Chechens were to release him on June 12, 1999. But after the Berezovsky’s intervention in the negotiations Shpigun was killed.
“Moskovsky Komsomolets” of 22.06.2006

 

In late 1996, Berezovsky appeared in the scandalous story related to the assignment of his Israeli citizenship. Media reported that on October 29, 1996 that Berezovsky was appointed Deputy Security Council Secretary, Ivan Rybkin on presidential decree. But then the information appeared he had had citizenship of Israel at the time. Moreover, he received Israeli citizenship in November 1993. Those two circumstances – the new appointment and Israeli citizenship – conflicted with Russia’s law on civil service.
“Izvestia” on 22/11/1996

 

According to press reports, on November 13, 1996 Berezovsky confirmed he did have Israeli citizenship. He said that even before the new appointment, he applied the Israeli Foreign Ministry for annulling it. Press wrote that, according to some reports, there was a falsification of documents. Berezovsky reportedly sent a statement of revocation of citizenship for a couple of months before the appointment. But the documents were lost by the Israeli authorities.
“Moskovsky Komsomolets” on 21/06/2006

 

According to media reports, on November 20, 1996 the Israeli embassy in Russia officially stated that Berezovsky was no longer a citizen of Israel.
“Izvestia” on 22/11/1996

 

The press described the protracted conflict between Boris Berezovsky and Russia’s law enforcement and supervisory authorities.

On November 13, 1998 Berezovsky published an open letter to the FSB director Vladimir Putin, saying the preparation of attempt on his life. Berezovsky argued that in late 1997 the former management of the Office for development and suppress the activities of criminal organizations FSB allegedly instructed its subordinates to kill him.
“Kommersant» № 212 (1615) on 13.11.1998, “Moskovsky Komsomolets” on 23/01/2006

 

On November 17, 1998 Berezovsky organized the ORT press conference in which representatives of the FSB took part, including Lt. Col. Alexander Litvinenko, who later defected from Russia in the UK. FSB officials reportedly confirmed that they had received an instruction from the superiors to eliminate Berezovsky. The same was to occur with the brother of famous Chechen businessman Umar Dzhabrailov – Hussein. Litvinenko also said that they had prepared an attempt on a senior tax official also. As written in the press, the FSB officers asked the public to protect them from the criminal leadership. Media wrote that experts linked that action to the campaign discrediting the government of Yevgeny Primakov.
Source “Profile» № 43 (115) on 23.11.1998 and # 12 (134) on 05.04.1999

 

In 2001, as the press stated, Berezovsky asked the Ministry of Internal Affairs of Great Britain and announced that Russia’s security services had been preparing an attempt on his life. After that Berezovsky obtained political refugee status in the UK.
gzt.ru № 51 dated 21.03.2008

 

According to media reports, on January 24, 2002 the confrontation between Berezovsky and Russian intelligence services continued. Berezovsky was accused by FSB director Nikolai Patrushev of the financing the illegal armed formations in Chechnya. As reported, in response to those charges Berezovsky declared about the involvement of special services of Russia to the bombings of apartment blocks in Moscow and Volgodonsk in 1999.
lenta.ru citing IUE “Panorama” on 23/01/2006

 

On March 5, 2002 the media reported that Berezovsky was involved in the preparation of a campaign of Chechen bandit formations to Dagestan in the summer of 1999; and also took part in the kidnapping and murder of General Shpigun in Chechnya. Prosecutor’s Office released the statement of an unnamed witness. Reportedly he claimed that Berezovsky had had relation to Chechen separatists, and also maintained close relations in business as well with the Chechen criminal group in Moscow and its leaders – Khozh-Akhmed Nukhayev and Movladi Atlangeriev. The media wrote that, according to some sources, Nukhaev and Atlangeriev owned a large stake in the St. Petersburg branch of JSC «LogoVAZ».
lenta.ru citing Demfront.narod.ru from 01.09.2005

 

The press wrote about Boris Berezovsky in connection with the notorious “case of Aeroflot», its investigation began in April 1999. According to press reports, in late 1995 Berezovsky played a key role in the change of leadership in “Aeroflot”; as a result, Marshal Yevgeny Shaposhnikov headed the company. The first deputy general director on commerce in «Aeroflot» became the former director of LogoVAZ, Samat Zhaboev. However, Berezovsky made no secret of that he wanted to take part in the company privatization.
“Kommersant» № 212 (930) on 16.11.1995, “Kommersant-Vlast» # 48 (159) on 26.12.1995

 

In 1999, according to press reports, Berezovsky was accused of illegal business activities associated with Aeroflot. It was reported that on April 6, 1999 Prosecutor General of Russia ordered the imprisonment of Berezovsky and the Deputy Director General of Aeroflot, Nikolay Glushkov. On April 14, 1999 the decision was reversed. According to investigators, Glushkov along with another deputy general director of Aeroflot, Alexander Krasneker, and chief accountant Lidia Kryzhevskaya misled the head of “Aeroflot” Shaposhnikov by persuading him to concentrate 80 % of the free foreign exchange earnings of the company on account of the Swiss company “Andava». According to press reports, one of the founders and major shareholders of “Andava” was Glushkov, and the other major shareholder – Boris Berezovsky.

As the press was writing, in the Prosecutor’s Office opinion 252 million dollars passed through “Andava” in 1996-97. According to investigators, nearly 40 million had been illegally transferred in the Swiss bank Credit Suisse to personal accounts of Glushkov, Krasneker, and Kryzhevskaya.
Source gzt.ru from 15.03.2004, “Kommersant” dated 09/07/2002

 

According to investigators, Berezovsky participated in the embezzlement of funds through his Swiss company Forus Holding. As the press reported, the main part of “case of Aeroflot” had lasted five years and ended with a verdict by the Savyolovsky court of Moscow. Glushkov, Krasneker, Kryzhevskaya, and another helper were found guilty, but on the whole the version of the Prosecutor General’s Office of serious crimes committed by them had been rejected. In March 2004, as reported, all of the four received minimum terms and were released in the courtroom immediately after sentencing. The case against Mr Berezovsky was separated in a special case.
gzt.ru from 15.03.2004

 

According to press reports, in November 1999, Berezovsky was acquitted of charges, and he became involved in the case as a witness.
RIA Novosti on 07/12/1999

 

The media wrote that on October 2, 2001 Prosecutor General of Russia ordered the compulsory process of Berezovsky’s interrogation on the case of “Aeroflot” as a witness . On October 22, 2001 Prosecutor General Vladimir Ustinov said that Berezovsky would be arrested if one appears in Russia
lenta.ru citing IUE Panorama of the 23.01.2006

 

On July 12, 2007 the Savelovsky court of Moscow began an absent trial of Berezovsky. He was charged of fraud – embezzlement of Aeroflot at 214 million rubles (Part 3 of Article 159 of the Criminal Code of Russia), as well as the legalization of stolen money in excess of 16 million rubles (Part 3 of Article 174 of the Penal Code).

Berezovsky refused to participate in the process, even through his lawyers, calling it a “farce”.
RIA Novosti on 12/07/2007

 

As reported, on November 29, 2007 the Savyolovsky court of Moscow sentenced Berezovsky in absentia to six years imprisonment. He was found guilty of fraud, but not of the legalization of stolen funds of Aeroflot.
RIA News of 29.11.2007

 

Boris Berezovsky appeared in the scandal connected with the murder of Ukrainian journalist Georgy Gongadze.

As the press was writing, a former employee of the State Security Service of Ukraine, Major Mykola Melnichenko secretly recorded his conversations when working in the administration of the President Leonid Kuchma. In late 2000 some of the records were made public; that provoked a “cassette scandal” in Ukraine: it was an opportunity to accuse Leonid Kuchma and his closest associates of the murder of journalist Georgy Gongadze, as well as – of the pressure on the deputies and judges, and of sales of radars «Mail» to Iraq.
lenta.ru with other links on Correspondent.net on 05/03/2005

 

Media reported that in 2002 Nikolai Melnichenko sold part of his archive to Boris Berezovsky.
Nezavisimaya Gazeta № 261 (3659) from 01.12.2005

 

And in March 2005, Melnichenko turned to Berezovsky for ensuring his safety as he was the last witness in the case of Gongadze murder after the strange suicide of former Interior Minister of Ukraine, Yuri Kravchenko.
Law and Business № 49 (725) on 03.12.2005, Today (Ukraine) # 1993 from 05.03.2005

 

As reported, in April 2006 already Melnichenko accused Berezovsky of films manipulations. According to him, the patron attempted to publish only some parts of the film, hiding the rest.
Nezavisimaya Gazeta № 261 (3659) from 01.12.2005

 

A little later the relationship between Melnichenko and Berezovsky had completely spoiled. The first said that Berezovsky conspired with the senior Ukrainian government in order to rig the criminal investigation of the Gongadze murder. Representatives of the latter accused Melnichenko of the fact he had forbidden to make public records and possibly fabricated part of the transcripts.
lenta.ru with reference to the phrase (Fraza.com.ua) from 05.12.2005 and from 06.12.2005

 

The press wrote about the scandal caused by Berezovsky’s visit to Georgia under a different name. According to media reports, on September 12, 2003 Berezovsky was granted a political asylum in Britain. The London Court dismissed the case for his extradition to Russia. In the same year, British authorities issued a travel document to Berezovsky under the name of Platon Elenin. In December 2003, Berezovsky met with his business partner Badri Patarkatsishvili in Georgia, and then he presented documents in the name Elenin on the border.
Source BBC News, Russian service from 23.01.2004, Kommersant »# 166 (2769) on 13.09.2003,” Nezavisimaya Gazeta» № 40 (3720) of 01.03.2006

 

Newspapers wrote about the Brazilian prosecutors’ interest to Boris Berezovsky.

It was reported that according to unconfirmed reports, Berezovsky managed the company Media Sports Investment (MSI) through his trustee – Iranian Kia Joorabchian, and was the general sponsor of the soccer club “Corinthians” (Corinthians) – champion of Brazilian championship in 2005.
Source Kommersant № 80 (3411) on 05.05.2006 and # 81 (3412) on 10/05/2006

 

According to press reports, in 2005 the Brazilian authorities for combating financial irregularities became interested in the possible involvement of MSI in money laundering. Brazilian law enforcement authorities could not understand what the source of funds was, enabling the company to buy and sell the leading Latin American players (the press called Media Sports Investment the sponsor of the Brazilian soccer club Corinthians).

According to media reports, May 5, 2006, Berezovsky was arrested by theBrazilian police in the airport Kumbika in city of Sгo Paulo, and gave testimonies for several hours. The reason for the detention was a criminal case on money laundering through the football clubs in Brazil.

According to press reports, in September 2006 the Prosecutor’s Office in Sгo Paulo prepared a report, according to which some of the money allegedly laundered through the Corinthians, “in fact belonged to Berezovsky, Patarkatsishvili, and Dzhurabchan (by the time the latter had already left his post as head of MSI).
“Vision” from 06.05.2006, “Labor» № 171 from 16.09.2006

 

Brazilian general prosecutor demanded to arrest the leaders of the investment group Media Sports Investment; it suspected them of money laundering and forming a criminal group. In July 2007, it was reported that the Brazilian court issued a warrant for the arrest of Mr Berezovsky, as well as other co-owners of MSI, including – Kia Joorabchian, and financial director of the investment group “Noyana bedru”. Since all the three at the time had been outside of Brazil, the request for their arrest was handed over to Interpol, and the MSI’s accounts were frozen in all the country’s banks.
ITAR-TASS on 13/07/2007

 

But in September 2008, as the media reported, the criminal case was closed, and the warrant for the arrest of Berezovsky was withdrawn. The press accosiated Such an odd final with the violations committed during the investigation.
lenta.ru with reference to the Associated Press on 17/09/2008

 

The press described a conflict between Boris Berezovsky and another oligarch – Roman Abramovich. According to the press, in the second half of 1995 Berezovsky and Abramovich did not conflict, but instead organized a joint business in the petroleum sector. Abramovich was engaged in organizational matters, while Berezovsky – in lobbying

project in the administration of President Yeltsin.
“Business news” (Omsk) from 27.04.2005

 

According to press reports, in August 1995 “Siberian Oil Company (Sibneft) was established by a decree of Boris Yeltsin.
“Moskovsky Komsomolets” on 02/06/1999

 

It was reported that several companies established by Abramovich and Berezovsky were engaged in the acquisition of Sibneft’s shares – they became winners of investment tenders either independently, or through subsidiaries.
Conflict.Rosbalt.Ru on 14/12/2003

 

Thus, as the press was wrote, the controlling stake in the company cost Abramovich and Berezovsky 25 times cheaper than its market value.
“interlocutor” on 05/03/2003

 

According to press reports, the open stage of the conflict began in July 2005 when Mr Berezovsky announced that he and Patarkatsishvili had received about 1 billion dollars from Roman Abramovich for their shares in Sibneft Russian Aluminum, and ORT. Berezovsky claimed that this sum was far below the real value of securities sold, and announced that he was going to file a lawsuit to Abramovich in the UK.
«Vedomosti» № 121 (1402) from 05.07.2005

 

It was reported that the suit was brought to the Supreme Court of Justice in London on June 1, 2007.
“Kommersant» № 52 (3869) on 29/03/2008

 

On October 6, 2007 press described an incident in one of the trendy shops in central London. Berezovsky found Abramovich there and tried to give him a summons to court. It was reported that Berezovsky gave several papers to Abramovich, but the latter put his hands behind his back, and the papers fell to the floor.

Later, Berezovsky told reporters that that was the agenda. And according to British law agenda is considered to be handed, even if it was thrown at the feet of the recipient in front of witnesses.
lenta.ru with reference to The Daily Mail dated 06.10.2007; IA cursor on 10/07/2007

 

According to the press, the judicial war between Berezovsky and Abramovich has not yet ended. At the moment, reportedly Berezovsky accuses Mr Abramovich that he forced him to sell half of Sibneft at a reduced price – Boris Berezovsky received 1.3 billion dollars for his package, while in 2005 Gazprom paid to Roman Abramovich for that package 10 times more.
wek.com.ua on 11/09/2009

 

Television channels broadcasted a person who introduced himself as “Peter”, and reported that in 2003, Berezovsky allegedly offered him money for false testimony in court. Supposedly Berezovsky needed it in order to obtain political asylum in the UK and to avoid extradition to Russia. “Peter” was asked to pose as an agent of the FSB, who was sent to London to kill Berezovsky. By the words of “Peter”, he declined the offer. But they slipped psychotropic substances in coffee, made an audio record with false confessions, and presented it in court. “Peter” also said that Litvinenko knew the scheme of obtaining political refugee status by Berezovsky; allegedly on that reason he had been killed.
lenta.ru with other links on the “News of the Week” from 08.04.2007

 

Berezovsky, as written in the press, said that the real name of the mysterious “Peter” was Vladimir Teplyuk; he had already been mentioned in the press in January 2006 in the article of the deputy, Alexander Khinshtein. According to that article, in 2003 Berezovsky allegedly intended to use Teplyuk as a fallback for political asylum in Britain. As reported, Teplyuk the initiator of the meetings. He was so insistent that Litvinenko had even begun to suspect him a FSB officer.
Source Kommersant »№ 53 (3629) on 02.04.2007, № 81 (3412) on 06.05.2006, Gazeta.ru from 02.04.2007

 

According to press reports, in March 2010 the High Court in London ruled on the suit of Boris Berezovsky to VGTRK (on the television channel “Russia” in VGTRK which had shown the program “News of the Week” with “Peter”). The Court acknowledged that the program contained false accusations against the businessman who allegedly had been granted political asylum in Britain by deception. Reportedly, Boris Berezovsky was awarded compensation in the amount of 150 thousand pounds ($ 223 thousand). Defendants stated that they intended to appeal the decision.
finansmag.ru on 10/03/2010

 

April 13, 2007, as the press reported, Boris Berezovsky launched a new international scandal. The British newspaper The Guardian published an interview with Berezovsky, in which he declared his involvement in a coup in Russia. Disgraced oligarh accused Putin of creating an unconstitutional regime, power centralization, closure of democratic reforms, and the actual destruction of the political opposition.
lenta.ru with reference to The Guardian, 13.04.2007

 

As the press reported, Russia’s chief prosecutor Yuri Chaika due to the statement by Mr Berezovsky ordered to bring a new criminal case against him.
Gazeta.Ru on 13/04/2007

 

Soon the Prosecutor General of Russia indeed brought criminal case against the entrepreneur under Article 278 of the Criminal Code (violent seizure of power “), providing imprisonment for a term of 12 to 20 years.
lenta.ru with reference to The Times of 16.06.2003

 

However, Russia’s Foreign Minister Sergei Lavrov accused Berezovsky of abusing the political refugee status and, based on this, said that Britain should have extradited him.

As reported, the Ministry of Foreign Affairs of Great Britain also condemned the statement of Mr Berezovsky. By the evening of the same day, Berezovsky softened his stance; he said in an interview with The Guardian that he had not meant the forced overthrow of Russia’s power.
gzt.ru on 13/04/2007

 

On July 18, 2007, the British press once again burst with scandal associated with Boris Berezovsky. The businessman told reporters that they intended to kill him. From the words of Mr Berezovsky, he had been warned by the British police and advised to temporarily leave the country. Berezovsky said that he had been receiving threats for too long, which had been the result of “the Russian intelligence services activities”. On the same day comment appeared in the British press from official sources in Scotland Yard, which confirmed they arrested a man in London, who had determined to kill Berezovsky.
lenta.ru with reference to The Times of 18.07.2007

 

Only in 2008 information appeared in the press that the British suspected the Chechen criminal “authority” Atlangeriev of preparingthe assassination of Berezovsky and deported him to Russia.
“Kommersant» № 62 (3879) of 14.04.2008

 

On July 30, 2007 the press reported on the regular claims to Boris Berezovsky from the Prosecutor General of Russia. The olygarh was suspected of embezzling 13.7 million dollars of SBS-Agro. As reported, the position of the investigation lied in the fact that Berezovsky organized a criminal group, together with which he fraudulently obtained a loan of SBS-Agro in 1997. According to investigators, Berezovsky spent the money on the purchase of real estate on the Mediterranean coast of France. A corresponding criminal case was opened June 29, 2007, and, as reported by Berezovsky’s lawyers, was the eleventh criminal case having brought against their client in Russia. As press wrote, the prosecutors sent a petition for the arrest in absentia of Berezovsky to the Basmanny court.
RIA Novosti on 30/07/2007

 

On August 7, 2007 the Basmannyy Moscow court sanctioned the arrest of Berezovsky in absentia. Judge substantiated decision on the fact that the entrepreneur had had extensive contacts in law enforcement and commercial structures, and might have affected the investigation.
Interfax news of 07.08.2007

 

In autumn 2009 the press reported that the Investigation Committee of the Prosecutor (ICP) charged the political emigrant Boris Berezovsky under article 159 (fraud) and section 174 (money laundering) of the Criminal Code. According to investigators, Berezovsky obviously was not going to return the money to “SBS-Agro”, and brought the money abroad through accounts of the company Forus controlled by him, and then got real estate on the Mediterranean Sea.
http://www.finansmag.ru on 22/09/2009

 

One more criminal case on Boris Berezovsky was associated with the embezzlement of “AvtoVAZ”. According to press reports, in November 2008 the case against Boris Berezovsky and the former director general LogoVAZ “Yuli Dubov was transferred in the Krasnogorsk City Court of the Moscow region. They were accused of theft of AvtoVAZ funds in 1995, and of the legalization of funds derived from the criminal activity. According to investigators, Berezovsky and Dubov had not paid the company for the more than 5.5 thousand Zhiguli cars of different models, set by the plant LogoVAZ, and thus had kidnapped 143.7 billion non-denominated rubles. The press noted that prior to the criminal case delivered in the court, the arbitration courts had recognized that transaction legal.
“Kommersant» № 215 (4032) 26/11/2008

 

Media reported that in June 2009 the Krasnogorsk city court found Berezovsky and Dubov guilty of embezzling the funds of the company AvtoVAZ. Boris Berezovsky was accused of embezzling 58 million rubles from the company AvtoVAZ, and was sentenced to 13 years imprisonment. Yuli Dubov was sentenced to 9 years of imprisonment. As the press reported, Prosecutor General of Russia announced their intention to send a new request to Britain for Berezovsky’s extradition.
BBC News on 26/06/2009

 

According to press reports, in March 2008 the Investigative Committee at Russia’s prosecutors filed a new case against Boris Berezovsky. It was “on the fact of knowingly false denunciation, connected to the artificial creation of prosecution evidence”. Under such an article the petition of the entrepreneur in the UK Ministery of Internal

Affairs had been brought in 2001; he wrote on 96 pages that in Russia he had been persecuted for political reasons, his business had been taken, etc. He pointed out that Russia’s security services were going to kill him. Russia’s investigators believe that Berezovsky did that for the subsequent receipt of refugee status.
“Kommersant» № 46 (3863) on 21.03.2008, gzt.ru № 51 21.03.2008

 

In January 2010, as written in the press, the Basmanny Court in Moscow seized the businessman’s New York apartment. The decision was taken in a framework of the criminal case against Berezovsky on providing false information in order to obtain political asylum in Britain. Boris Berezovsky reacted to news of the arrest by stating that he has no apartments in New York.
trud.ru from 22.01. 2010

 

According to media reports, by the end of January 2010 there have been 12 criminal cases investigated against Berezovsky in Russia. The latter charge was on the organization of a criminal community; he was charged in absentia in September 2009. That charge was a part of the criminal case initiated in 2007 – of theft in the credit bank “SBS-Agro”. In total, reportedly Berezovsky has been charged in absentia over a dozen cases. Those were the accusation of actions aimed at seizing power (it was a series of interview with Mr Berezovsky in early 2006), the illegal acquisition of house and land in Zhukovka in the Moscow area, as well as fraud, money laundering, etc. Berezovsky said to journalists that all the cases against him were just a “political farce”, and forbade his lawyers to participate in any trials in Russia. According to media reports, the Prosecutor General’s Office of Russia has repeatedly appealed to the British authorities requesting for Berezovsky’s extradition, but the positive response has not been received yet.
gzt.ru on 22/01/2010

 

 


Russia’s Gazprom ,Barroso,,The Iraqi Kurds and the Moscow Corruption – The Gazprom Cables

BAGHDAD (AP) — A Middle East subsidiary of Russia’s Gazprom Neft has inked two oil deals with Iraq’s self-ruled northern Kurdish region, becoming the fourth major oil company to enter into agreements with Iraqi Kurds that bypass the central government in Baghdad.

The Kurds and the central government are at loggerheads over rights to develop resources. Baghdad wants to manage its energy resources nationwide, but Kurds insist the constitution doesn’t require them to go through Baghdad.

Since the 2003 U.S.-led invasion, the Kurds have signed scores of oil deals with small and mid-sized oil companies. But the entry of the oil majors may be a game changer that could lead to de facto policies the Kurds have long sought.

In a statement issued on Wednesday, the St. Petersburg-based company said it has acquired a 40 percent share in the 1,780-square-kilometer (687-square-mile) Garmian block. The Canada-based WesternZagros company will also hold a 40 percent share.

In the second deal, the company will hold an 80 percent share in the 474-square-kilometer (183-square-mile) Shakal block. The Kurdish Regional Government will hold a 20 percent share in each contract.

Both blocks are located in the southeastern part of the region and are expected to hold about 3.6 billion barrels of oil reserves. Gazprom’s up-front payment is to be around $260 million.

“Gazprom Neft considers the territory of the Kurdistan Region of Iraq promising for further geological study and consequent production at the fields,” First Deputy CEO, Vadim Yakovlev said.

With its latest deals, Gazprom has joined France’s Total S.A., U.S. oil majors Chevron Corp. and Exxon Mobil Corp. who have already made their own forays into the region.

Iraq’s post-invasion governments have until recently blacklisted energy companies that signed contracts with the Kurdish government to prevent them from working elsewhere in the country or purchase crude oil.

But in the case of Exxon Mobil, the Iraqi government has had a light hand. Baghdad prevented the U.S. company from taking part in Iraq’s fourth energy bidding round in May but has not touched its deal to develop the 8.6 billion West Qurna field near the southern city of Basra along with Royal Dutch Shell PLC.

No moves have been made against Total, which has a share in a consortium led by China’s National Petroleum Corporation to develop the 4.945 billion barrel Halfaya field in the south. Gazprom is developing the 100 million barrel Badra field in central Iraq.

Baghdad has so far only blacklisted Chevron, which has no deals with the government.

There is considerable incentive to work directly with the Kurds — unlike the flat fee the central government pays for each of barrel of oil extracted, the Kurds offer lucrative contracts allowing the developers to claim a share in reserves and the oil produced.

Also Wednesday, the Iraqi Kurds announced that they will resume crude oil exports from their region in the first week of August after they were halted in April over a payment row with Baghdad.

In 2011, the two administrations struck a tentative deal by which the Kurds send oil to Baghdad, which then sells it and each side then takes 50 percent of the revenues. But exports were halted in April by the Kurds who claimed that Baghdad failed to send them the money. In return, Baghdad accused the Kurds of keeping billions of dollars that ought to go to government coffers and also of smuggling oil.

The Kurdish statement said the exports will start at 100,000 barrels a day for a month as a “confidence-building” measure and if payments were forthcoming, they could move swiftly up to 200,000 bpd. If not, the exports will be halted again.

Since 2008, Iraq has awarded 15 oil and gas deals to international energy companies, the first major investments in the country’s energy industry in more than three decades.

The original goal was to boost daily production from about 3 million barrels now to 12 million barrels by 2017. That may be revised downward to fewer than 10 million barrels however, given infrastructure bottlenecks and a possible falloff in demand on international markets [source]

BARROSO AND PUTIN LOCK HORNS ON GAZPROM

Putin has signed a decree giving the government the right to protect natural gas
giant Gazprom from a stupid antitrust probe of Barroso. Galileo muttered the
phrase Eppur si muove, And yet it moves, after being forced
to recant in 1633, before the Inquisition, his belief that the Earth moves
around the Sun. Similarly the new inquisition of regulators forces executives
to admit something they did not do, in order to get smaller penalties. Eppur si
muove!

There is an Antitrust Armageddon in Europe between tiptop companies and Fourth
Reich(EU). Eurokleptocrats are willing to do anything in order to get kickbacks
from industry leaders. The European antitrust laws have the unfortunate
consequence of harming Europeans by chilling innovation and discouraging
competition. Instead of protecting competition, EU laws protect competitors who
give kickbacks to kleptocrats! Kickback is the lubricant that allows a European
industry to run smoothly! No European machinery can run without lubricant! Eppur
si muove!

The new Russian law prohibits companies deemed strategic from disclosing
information, disposing of assets or amending agreements without Russian
authorities’ ratification in the case that the claims are initiated by foreign
states or entities.

European antitrust law is wielded most often by favor-seeking businessmen and
their kleptocrat allies. Instead of focusing on new and better products,
disgruntled rivals try to exploit the law by consorting with kleptocrats. EU
officials routinely direct antitrust regulators to bend the rules in pursuit of
political ends. In reality, the threat of abusive EC power is far larger than
the threat of oligopoly. Eppur si muove!

Gazprom declares it is incorporated beyond EU jurisdiction, and is a company
which under Russian law exercises functions of public importance and has the
status of a strategic organization controlled by the state.

When a company is forward-thinking, proactive, innovative, and productive, it
will produce good products that customers want to buy. As a result, it will win a
large market share. If the company is much better than its competitors, it might
win most, or almost all, of the market. This is the case with Microsoft. It has
earned its market share by producing good products that customers want to buy.

Barroso is investigating whether Gazprom, the world’s largest gas exporter,
resorted to unfair competition and price-fixing in Central and Eastern Europe’s
natural gas markets. The EU, which gets 25% of its gas from Russia, wrongfully
claims that Gazprom has hindered the free flow of gas across its member states,
preventing supply diversification and limiting customer choice in delivery
points. Barroso also suspects Gazprom of imposing unfair costs on its customers
by linking the prices of gas and oil.

A company that wins a large market through its own productive efforts deserves
accolades. This is because justice, morally, tells us that we must reward the
good. However, to the government, a large market share is taken as evidence of
anti-competitive behavior, which makes the company a target for antitrust
action. This seems to be the motive behind the antitrust suits against Microsoft
and Google.

Barroso notes Gazprom’s long-term supply contracts linking gas prices to oil
prices are no longer justified because of the appearance of a spot market for
gas and increased supplies of shale gas. Gazprom may face a
fourteen-billion-euro penalty, according to estimates based on the fact that
companies found to breach EU competition rules can be fined as much as 10% of
annual revenue.

European antitrust laws lead to huge corruption, because government officials
ask for kickbacks in order to erase the alleged violation. The standard kickback
in EU is 10% of the erased penalty! Many Greek officials were caught on tape
asking for the corrupt tithe! Many European political parties make up their
election expenses from kickbacks on antitrust cases! This is the worst possible
blackmail, where tiptop ethical companies are held hostage by European
kleptocrats. Eppur si muove!

Putin warns Barroso that there would be losses on both sides if the thorny issue
isn’t tackled. Putin accuses Barroso of trying to burden Russia with the
subsidizing of formerly communist EU states by forcing Gazprom to reduce prices
for customers in Eastern and Central Europe. Gazprom says the Barroso
investigation is an attempt to reduce gas prices, and it won’t give discounts to
Barroso without the Russian government’s go-ahead. [source]

The Gazprom Cables ‘Not a Competitive Global Company’

Gas giant Gazprom was meant to catapult Russia back into its role as a global superpower. Executives dreamed of the “most valuable company in the world.” But secret cables from the US Embassy in Moscow provide a different picture: The Americans consider the mega firm to be chaotically organized and corrupt.

June 10, 2009, Moscow: “Too many political constraints”
XXXXXX: Redacted by the editors. Important note on the dispatches…

<>

10.06.2009 11:02

09MOSCOW2528

Embassy Moscow

CONFIDENTIAL

09MOSCOW367|09MOSCOW403|09MOSCOW971

VZCZCXYZ0000

PP RUEHWEB

DE RUEHMO #2528/01 2791102

ZNY CCCCC ZZH

P 061102Z OCT 09

FM AMEMBASSY MOSCOW

TO RUEHC/SECSTATE WASHDC PRIORITY 4993

INFO RUCNCIS/CIS COLLECTIVE PRIORITY

RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY

RHEHNSC/NSC WASHDC PRIORITY

RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY

RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

TAGS: EPET, ENRG, ECON, PREL, RS

SUBJECT: GAZPROM’S REVERSAL OF FORTUNE, PART ONE

REF: A. MOSCOW 971

C o n f i d e n t i a l moscow 002528

Sipdis

Dept for eur/rus, eeb/esc/iec gallogly and wright, s/eee

morningstar

doe for hegburg, ekimoff

doc for jbrougher

nsc for mmcfaul

E.o. 12958: decl: 10/05/2019

Tags: epet, enrg, econ, prel, rs

Subject: gazprom’s reversal of fortune, part one

Ref: a. Moscow 971

b. Moscow 403

c. Moscow 367

Classified By: Econ MC Matthias J. Mitman for Reasons 1.4 (b/d)

1. (U) This is the first of a two-part report on the new

economic realities facing Gazprom, Russia’s state-owned gas

sector giant.

——-

summary

——-

2. (SBU) Far from reaching its ambitions of becoming “the

most valuable company in the world,” Gazprom’s fortunes have

reversed dramatically in the past year. The company’s market

value, production, and sales have all plummeted since the

onset of the economic crisis. With dramatically reduced

cash-flow, the company has been forced to cut back on capital

expenditures and its ambitions, despite political rhetoric to

the contrary. However, as we will examine in part two of

this report, Gazprom’s problems are likely longer term. End

summary.

————————————

massive reversal in major indicators

————————————

3. (U) Major indicators of Gazprom’s performance have all

reversed course dramatically in the past year. (Note:

Figures in this report are taken from Gazprom reports,

statements, and presentations, unless otherwise indicated.

End note.)

Market capitalization —

4. (U) At its peak in May 2008, Gazprom’s market valuation,

based on the small percentage of its shares that trade

publicly, was over $350 billion, and company president Alexey

Miller declared Gazprom would become “the most valuable

company in the world.” Miller suggested Gazprom’s market

capitalization would reach $1 trillion in the near future.

By May 2009, in the midst of the global economic and

financial crisis, the company’s market capitalization had

dropped to its recent low of approximately $75 billion, but

has since rebounded to approximately $120 billion.

Production —

5. (U) Gazprom’s gas production peaked in 2006, at 556

billion cubic meters (bcm). In 2008, it was 550 bcm. In the

first seven months of 2009, however, Gazprom’s production was

down almost 25% over the same period in 2008. As of

September 2009, Gazprom expects 2009 production to reach just

474 bcm, and many analysts believe that figure to be overly

optimistic. In a September note on Gazprom, investment bank

Troika Dialog predicted Gazprom would have difficulty even

reaching 460 bcm. On the low end, some analysts estimate

Gazprom could produce just 450 bcm or less in 2009 — a 100

bcm or more decline from its peak production. Even this

massive drop in production is masked to some degree by the

halt in gas imports from Turkmenistan since April (ref A).

In 2008, Gazprom imported 42 bcm from Turkmenistan, nearly

all of which was re-exported to Ukraine. Having halted these

imports, Gazprom itself is supplying the Ukrainian market out

of Russian production.

Revenues —

6. (U) The Russian Customs Service reports that Russian gas

export revenues were down 50% in the first 7 months of 2009,

compared to the same period in 2008, a decline of almost $20

billion. While Gazprom’s official results for 2009 will not

be published until well into 2010, a back-of-the-envelope

calculation using Gazprom’s own projections for average price

and volumes of exports to Europe in 2009 (ref C) indicates

the company might receive about $30 billion less from exports

to Europe in 2009 than in 2008. This represents a loss of

about 2% of Russian GDP and is in line with estimates from

various analysts. (Note: Given the relative significance of

export sales to Europe (excluding FSU), the relative

reliability of the figures, and to avoid exchange rate

complications, we focus only on export revenues here.

According to its recent bond prospectus, Gazprom’s exports

are divided into sales to the FSU, and to Europe. Sales to

the FSU and Europe represent 16% and 63%, respectively, of

its sales by revenue — meaning exports represent 79% of

Gazprom’s revenues. End note.)

Domestic sales —

7. (U) Gazprom’s domestic sales are not down as dramatically

as one would expect given the economic crisis, due primarily

to artificially low domestic prices, which prop up demand.

While Gazprom has not yet reported official results for the

first half of 2009 (1H09), various analysts predict a drop of

about 10% in gas volumes to the domestic market.

Export volumes —

8. (U) Gazprom’s overall exports peaked in 2008 at 281 bcm.

Gazprom’s sales to the FSU peaked in 2007, at 101 bcm,

dropping slightly to 97 bcm in 2008. Sales to the rest of

Europe peaked in 2008, at 184 bcm. (Note: Interim

statements regarding 2009 sales often do not coincide in

definition with audited annual reports. Thus 1H09 sales

estimates only give an indication of the trend and are not an

exact comparison with 2008 figures. Gazprom has not yet

released official results for 1H09 and only released first

quarter (1Q09) results on August 26. End note.) Through

1H09, Gazprom has said it shipped about 33% less gas to

European customers than in 1H08. In a recent statement, the

company said its exports to the FSU in 1H09 dropped 54%

compared to 1H08. A weighted average of those estimates

indicates overall exports shrunk by about 40% 1H09.

9. (U) As Gazprom and many analysts point out, however, 2H09

should be much better for Gazprom exports as many European

customers restrained purchases in 1H09, knowing that prices

— which are tied to oil prices with a six to nine month lag

— would drop dramatically in 3Q09. Furthermore, export

volumes in 2H08 were already dropping rapidly due to the

economic crisis and high gas prices that were reaching their

peak in 4Q08. Results for 1H09 were also significantly

affected by the 21 day gas cutoff to Ukraine and 10 day

cutoff to Europe in January. That said, 2009 will still be a

dismal year for Gazprom export volumes.

—————

forced cutbacks

—————

10. (C) Facing financial realities, Gazprom recently cut its

capital expenditure budget by $7.5 billion, or about 25%,

including cuts to Shtokman and Yamal development. However,

Gazprom and GOR leadership continue to take the tack that

“everything is fine” (ref B). One attendee at the recent

gathering of the “Valdai” group of international Russia

experts told us that Gazprom CEO Alexey Miller told the group

that the company’s plans for the Nord Stream and South Stream

gas pipelines, and for the development of the Shtokman and

Yamal gas fields are “all on track.”

11. (C)xxxxxxxxxxxx told us recently that

Miller’s and other GOR leaders’ public statements on Gazprom

should be ignored. xxxxxxxxxxxx said these leaders understand well

that Gazprom is in trouble but they just don’t know what to

do about it.

12. (C) According to xxxxxxxxxxxx, Gazprom simply doesn’t have the

money to move forward on all its so-called “priorities,” and

it will need to choose which are most important, while facing

insatiable political demands on its revenue streams. xxxxxxxxxxxx, told us

recently that he believes Gazprom has “a heck of a lot of

cost-cutting capacity” still available, but that the company

has too many political constraints preventing it from taking

the most necessary and painful measures. Furthermore, he

figures the company needs to spend about $5 to $8 billion a

year just to maintain its aging system and that these costs

will rise in the future. xxxxxxxxxxxx is thus also very

skeptical of Gazprom’s other major commitments such as South

Stream and Shtokman.

——-

comment

——-

13. (C) Gazprom’s capital expenditure cuts reflect an

understanding that, public rhetoric aside, the company can’t

spend money it doesn’t have. However, Gazprom’s longer-run

problems are largely beyond its control and require

fundamental reforms that will be difficult to achieve. In

part two of this report, we examine the constraints to

Gazprom’s return to dominance.

Beyrle

Gazprom headquarters in Moscow: “Private bank accounts and dirty deals”

Gas giant Gazprom was meant to catapult Russia back into its role as a global superpower. Executives dreamed of the “most valuable company in the world.” But secret cables from the US Embassy in Moscow provide a different picture: The Americans consider the mega firm to be chaotically organized and corrupt.
Info

High-ranking representatives of Russian gas giant Gazprom are hard to pin down for appointments. So when American diplomats finally got the chance, they cut right to the chase: What are the giant energy company’s actual business aims?

The Gazprom man was candid. The first priority, he said according to US diplomatic cables obtained by WikiLeaks and shared with SPIEGEL and other partners, is to provide reliable and affordable gas to the domestic population. The second, he said is to “fulfill its social obligations,” including charitable projects all across Russia.

The American envoys persisted in their questioning. Was it not also the goal of the company to maximize its shareholder value and its market share? Yes, of course. The cable cites the official also adding a third priority to his company’s goal: to maximize “control over global energy resources.”

A “Gazprom official describes the company as a socialist rent-seeking monopolist,” the US envoys reported after a September 2008 meeting in a dispatch cabled to Washington.

‘Huge Wealth, but Inefficient’

That’s the tenor of a number of secret US Embassy reports about the model Russian company, cables that are filled with critical American assessments about a bureaucracy that has gone overboard and a mafia-like political system in Russia.

But the assessments are particularly pointed when it comes to Gazprom, the company the Russians themselves most like to celebrate and to deploy in their battle to regain lost power in the world. Even as recently as May 2008, Chairman Alexei Miller was pledging that Gazprom would soon be “the most valuable company in the world,” with market capitalization that would reach $1 trillion in the near future. But around one year later, in the midst of the global economic and financial crisis, the company’s market capitalization had dropped to $75 billion.

“Gazprom is,” the Americans summed up in one cable, “what one would expect of a state-owned monopoly sitting atop huge wealth — inefficient, politically driven, and corrupt.” The American diplomats also painstakingly detailed the sectors in which the energy giant is engaged in and in which falling gas prices are creating problems for it.

Falling Demand for Gas

Their results are sobering. One 2009 cable states: “Far from reaching its ambitions of becoming ‘the most valuable company in the world,’ Gazprom’s fortunes have reversed dramatically this year. The company’s market value, production, and sales have all plummeted since the onset of the economic crisis.” With dramatically reduced cash-flow, the cable reads, the company has been forced to cut back on capital expenditures and its ambitions, despite political rhetoric to the contrary.

The US diplomats described Gazprom’s problems as likely being “longer term,” and not just a by-product of the crisis. That’s because demand for gas in Germany and Europe is in decline because industrial production there and across Europe has become more efficient.

At the same time, a cable noted, few new markets are opening up in the former Soviet states. Ukraine, for example, indicated it was considering halving its gas purchases. Gazprom Chairman Miller has for some time now been longing to establish a new market in the US but, as a cable states, the country is “looking more and more saturated every day with ever larger estimates for domestic production.”

According to the assessment by the US diplomats, Gazprom’s greatest problem is the company’s own Byzantine structures. “Gazprom is not a competitive global company,” the assessment reads, despite sitting on the world’s largest gas reserves. “Gazprom is the legacy of the old Soviet Ministry of Gas and still operates much the same way.”

A Top Executive with a Love for Hockey

There were many indications that this was the case. The Americans learned from an informant that a senior partner in an international accountancy firm needed two years just to unravel Gazprom’s holdings. The empire included one of Russia’s largest banks, an important Russian media company and a major construction firm.

Originals: Key Gazprom Cables

July 10, 2009, Moscow: “Huge wealth … corrupt’
XXXXXX: Redacted by the editors. Important note on the dispatches…

<>

10.07.2009 13:42

09MOSCOW2541

Embassy Moscow

CONFIDENTIAL

09MOSCOW2528|09MOSCOW854|09VLADIVOSTOK110

VZCZCXRO4339

PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR

DE RUEHMO #2541/01 2801342

ZNY CCCCC ZZH

P 071342Z OCT 09

FM AMEMBASSY MOSCOW

TO RUEHC/SECSTATE WASHDC PRIORITY 5023

INFO RUCNCIS/CIS COLLECTIVE PRIORITY

RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY

RHEHNSC/NSC WASHDC PRIORITY

RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY

RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

TAGS: EPET, ENRG, ECON, PREL, RS

SUBJECT: GAZPROM’S REVERSAL OF FORTUNE, PART TWO; COMEBACK

REF: A. MOSCOW 2528

C o n f i d e n t i a l section 01 of 04 moscow 002541

Sipdis

Dept for eur/rus, eeb/esc/iec gallogly and greenstein,

s/eee morningstar

doe for hegburg, ekimoff

doc for jbrougher

nsc for mmcfaul

E.o. 12958: decl: 10/06/2019

Tags: epet, enrg, econ, prel, rs

Subject: gazprom’s reversal of fortune, part two; comeback

unlikely

Ref: a. Moscow 2528

b. Vladivostok 110

c. Moscow 854

Classified By: Ambassador John R. Beyrle for Reasons 1.4 (b/d)

1. (U) This is part two of a two-part cable on the new

economic realities facing Gazprom, Russia’s state-owned gas

sector giant.

——-

Summary

——-

2. (C) Gazprom faces many external and internal constraints

to renewed growth, following a dismal year in which all main

indicators of its performance deteriorated dramatically. The

globalizing gas market, a gas glut that shows no signs of

reversal, and politicized management likely mean that Gazprom

will not reach the heights of revenues and power achieved at

its peak in 2008. Unfortunately, the types of reforms (e.g.

privatization) that would result in a more valuable and

productive gas industry are stymied by the GOR’s seemingly

firm belief in a state-controlled sector. While Gazprom will

remain a major economic force, its influence on GOR policy

and its relative role in the Russian economy likely will

diminish in the short- and medium-term. End summary.

———————————

external constraints to a rebound

———————————

3. (SBU) Gazprom’s current problems (ref A) are not solely

the result of one-off contractions in demand due to the

economic crisis. Gazprom faces a fundamental shift in the

gas demand picture at a time of increasing competition.

Demand stabilization and decline —

4. (SBU) xxxxxxxxxxxx told us recently that Gazprom was simply unprepared

for the inevitable leveling off and current decline in

European gas demand. He explained that Gazprom’s management

has only known rapidly rising European demand for Russian gas

as most European countries “gassified” their economies over

the past two decades. He noted that anyone looking at the

trend could have been excused for thinking it would continue

perpetually; but now the period of gassification is over.

According to xxxxxxxxxxxx demand for gas in Germany is

actually in decline, as industrial production in Germany (and

across Europe) has become more efficient and as much of it

has been outsourced.

Competition —

5. (SBU) Gazprom not only faces a demand problem, but also

competition from an increasingly globalized gas market —

“for the next 5 to 10 years, gas will clearly be a buyers

market,” said xxxxxxxxxxxx has calculated (using data

from the BP Statistical Review of World Energy) that

Gazprom’s share of EU 27 gas imports has dropped steadily

from about 50% in the mid-90s (when gassification increased

demand) to just 34% in 2009. xxxxxxxxxxxx expects Gazprom’s share to

decline to about 30% and stabilize at that level. xxxxxxxxxxxx also

calculated that LNG’s contribution to EU imports over the

last decade has increased from about 10% to about 20%, a

figure he projected to continue to grow. In addition,

Gazprom will have to cope with massive new volumes of LNG on

the global market from projects already underway in Qatar and

elsewhere (ref C).

No help from other markets —

6. (C) Gazprom is unlikely to get any relief from its former

Soviet Union(FSU) customers either. Despite the likely rise

to “market prices” for gas sales to the FSU, lower demand

will continue to hurt Gazprom. Ukraine, Gazprom’s major

export market outside of non-FSU Europe, earlier signed a

take-or-pay contract which outlines a minimum amount of gas

which Ukraine is obliged to purchase from Russia. Ukraine

Moscow 00002541 002 of 004

has recently indicated it might take as little as 50% of the

52 bcm of gas it had earlier agreed to buy in 2010. Russian

government officials remain concerned over Ukraine’s ability

to pay for gas this winter and are already signaling they are

prepared to shut off exports to Ukraine in the event of

non-payment.

7. (SBU) Global markets will also offer little hope for

Gazprom, at least in the medium-term. Gazprom executives

have often expressed the expectation that the company would

become a global gas supplier, perhaps through newly expanded

LNG capacity. However, their preferred future export

destination, the U.S., is looking more and more saturated

every day with ever larger estimates for domestic production.

In a recent meeting with Embassy officials in Sakhalin,

Shell oil representatives stated that no LNG had been shipped

from the Sakhalin II facility to the U.S. due to soft prices

in that market. Much of this LNG has been shipped to Japan

instead.

Domestic market —

8. (SBU) Gazprom often touts future revenue gains from

domestic market price liberalization. However, it neglects

to account for demand elasticity in the wake of sharp

proposed increases in prices. With one of the most energy

intensive economies in the world, future hikes in domestic

gas prices would likely cut domestic demand substantially, as

evidenced in other countries that have implemented rational

pricing. Thus Gazprom’s revenue gains from higher domestic

prices would be at least partly offset by lower sales volumes.

External politics —

9. (SBU) In addition to the headwinds from market forces,

Gazprom faces the political and PR difficulties in external

markets that it has largely brought on itself through the gas

cutoffs of 2009 and 2006. Despite some pain in certain

Central and Eastern European countries, Ovchinnikov

explained, the 2009 gas cutoff showed that Europe could get

by without Russian gas. This should bolster EU determination

to minimize its dependence on Russian gas, and to explore new

options to diversify energy supplies.

——————————

internal constraints to growth

——————————

The Ministry of Gas —

10. (SBU) A Gazprom that behaved more like a competitive

global company would probably find a new path to growth more

quickly. But Gazprom is not a competitive global company,

despite sitting on the world’s largest gas reserves. Gazprom

is a legacy of the old Soviet Ministry of Gas and it still

operates much the same way. As a Gazprom executive himself

admitted to us, the company’s first two priorities are to

provide reliable and affordable gas to the domestic

population, to “fulfill its social obligations.” One contact

with direct information told us it took a senior partner from

a major accounting firm two years of full-time investigation

just to unravel Gazprom’s holdings, which include one of

Russia’s largest banks, one of Russia’s major media

companies, and a major construction company.

Technologically backward —

11. (SBU) Gazprom’s legacy and the government’s ownership of

the company also mean that it must act in the interests of

its political masters, even at the expense of sound economic

decision-making. From building unneeded pipelines (ref B) to

maintaining employment at some unneeded facilities, Gazprom

declines to solely act on financial and economic grounds. As

a state-controlled monopoly during the flush times of the

past decade, Gazprom had little incentive to develop new

technologies and capabilities long enjoyed by other global

oil and gas companies. Despite management’s interest in

expanding Gazprom’s LNG capacity, the company has only one

LNG export terminal, which it took over by forcibly becoming

the majority owner in a Shell-led consortium. Rapid

Moscow 00002541 003 of 004

expansion of LNG export capacity is unlikely without the help

of international oil companies (IOCs), who are still trying

to find an acceptable future working model in Russia.

Inability to adapt —

12. (SBU) Gazprom’s inability to meet competitive pressures

is apparent in the current European gas market. According to

xxxxxxxxxxxx Gazprom is the only major European supplier that

has had to cut production. xxxxxxxxxxxx blames Gazprom’s “self

inflicting wound” of tying gas prices to oil prices. He said

this convention dates back to when gas was a substitute for

fuel oil for heating. xxxxxxxxxxxx explained that this oil

price link has made Gazprom the high-price supplier in

Europe, a situation that is likely to continue into the near

future. xxxxxxxxxxxx said that with European gas demand unlikely to

recover to pre-crisis levels until 2013 and Europe facing

“excess supply” for at least the next decade, Gazprom will

have a very tough time just maintaining market share. A

major oil company senior executive echoed this analysis in a

recent meeting with us, noting “if you are a European

consumer, the last molecule of gas you want to buy is from

Gazprom.”

—————————————

possible tensions, but reforms unlikely

—————————————

13. (SBU) The tough times may be creating (or exacerbating)

tensions within Gazprom and the GOR over the company’s

future. Several contacts have told us they have heard of

such tensions. One Russian company executive said he has

heard that xxxxxxxxxxxx has been pushing for dismantling

Gazprom, to at least take away its control over the domestic

gas pipeline system. An executive at a Western company told

us recently that there are two camps within the upper levels

of the GOR on the issue of Gazprom’s direction. One camp

favors the current “one national company” approach, while the

other favors competition to spur a more efficient and modern

gas sector. Unfortunately, this executive explained, “the

number one factor” in managing Gazprom from the GOR

perspective is “how to increase government revenues from the

company.”

14. (C) xxxxxxxxxxxx, brushed off rumors of infighting

at Gazprom as nothing new. xxxxxxxxxxxx said there has always been

infighting at the company because it is such a bureaucratic

behemoth. “Everyone is always looking to make others look

bad in order to move ahead themselves,” xxxxxxxxxxxx said. While

xxxxxxxxxxxx acknowledged Gazprom’s substantial problems, xxxxxxxxxxxx did

not think any major reforms would be forthcoming.

15. (SBU) Rumors aside, nobody with whom we have talked

believes Gazprom is in any danger of losing its monopoly on

exports or its preferred status within the Russian economy.

Nor is the government likely to give up control of the

company anytime soon. Without such fundamental reforms, it

is difficult to see how Gazprom can transform itself into a

modern corporation in the current environment.

——-

comment

——-

16. (C) Gazprom is what one would expect of a state-owned

monopoly sitting atop huge wealth — inefficient, politically

driven, and corrupt. For years, with its exports and export

prices rising rapidly, it could easily pretend that all was

well and that the future was bright. That pretense may now

be giving way to the new reality of declining sales, lost

market share, and an inability to maneuver adeptly in the

face of global competition. Although Gazprom will likely

muddle along as a major corporation and major contributor of

jobs and budget funds, its economic contribution will likely

be diminished. While Gazprom can still shut off gas to

Ukraine or to other parts of Europe, each such threat further

undermines the company’s credibility as a reliable energy

supplier, and underscores the fact that Gazprom is

Moscow 00002541 004 of 004

politically subordinate to the Kremlin. Gazprom’s influence,

both domestic and international, has been directly tied to

its cash flow — money that funds employment, suppliers,

budgets, charities, foreign ventures, and, surely, many

private bank accounts and dirty deals. Unfortunately for

Gazprom and for the GOR, the massive revenues and profits

that the company produced in 2008 are unlikely to return

anytime soon. End comment.

Beyrle

Experts estimated that the company had to also spend between $5 billion and $8 billion on keeping its aging infrastructure in good working order — costs that will only increase in the future. A prominent Western oil executive told the US diplomats that while drilling a borehole in Canada only took 10 days in Russia it took twice as long.

A meeting with top Gazprom executives, such as Deputy CEO Alexander Medvedev, were also sobering. In a discussion with US diplomats, the hockey fan complained that there was still no cooperation between the Russian and American hockey leagues — and fulminated against Ukraine, which he claimed had orchestrated the gas dispute with Russia.

The Americans’ conclusion is devastating: “Gazprom’s legacy and the government’s ownership of the company … mean that it must act in the interests of its political masters, even at the expense of sound economic decision-making.” The company had made funds available for many “private bank accounts and dirty deals,” one cable wrote, though it lacked any concrete proof for this claim. Gazprom itself has consistently defended itself against accusations of corruption.

In any case, the Gazprom money was not flowing as much as previously, the US diplomats wrote. “Unfortunately for Gazprom and for the Russian government, the massive revenues and profits that the company produced in 2008 are unlikely to return anytime soon,” one cable reported. Although Gazprom would remain a major company, its economic contribution was likely to be diminished, the US diplomats concluded.
[read the full article]

 


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