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U.S. voices concern over crime ties in Russian, Ukrainian Energy Sectors

U.S. Ambassador to Ukraine Carlos Pascual expressed concern in late May over the influence that Russian organized crime was having on a gas-supply deal signed on 5 December between Russian gas monopoly Gazprom and the Hungarian shell company Eural TransGas. A similar contract was reportedly signed by Ukrainian state gas company Naftohaz Ukraine with Eural TransGas on 4 December. Speaking at the sixth international "Energy Security in Europe" conference in Kyiv on 28 May, Ambassador Pascual said, according to the embassy's website (

"By the end of 2000, Ukraine had taken concrete steps to advance its gas security. An agreement with Turkmenistan covered over 38 percent of Ukraine's gas needs up until 2006, reducing Ukraine's dependence on one single supplier from Russia. Itera was the transporter, supplier, and operator, providing Naftohaz with relative security that supplies would reach the Ukrainian border. NAK Naftohaz also agreed with Gazprom on the precise gas debt, $1.4 billion. In 2001, Gazprom accepted that the debt would not be sovereign guaranteed. In December 2001, Ukraine signed a deal with Russia that also decreased barter-based transactions. "Some of these successes are now at risk. In December 2002, just a few months ago, Ukraine signed several agreements that increase Gazprom's control over NAK Naftohaz and its activities. Itera, seen by many as a Gazprom competitor, was pushed out of the Ukrainian market and substituted for a new Gazprom intermediary, Eural TransGas. According to press accounts, Eural TransGas was registered in Hungary the day before the contract was signed with just $12,000 in charter capital. In addition, media reports link Eural TransGas with organized-crime figure [Semen] Mogilevich, who was recently indicted in the United States. "The Gazprom deal to purchase all of Turkmenistan's natural gas production capacity and more starting in 2007 would once again make Ukraine fully dependant on Gazprom for its natural gas imports. If Ukraine wants to strengthen its competitive position on gas transit, it should consider several steps:

"1) Approach Gazprom to renegotiate the Eural TransGas transit arrangements given recent revelations about the nature of this company. Both Gazprom and NAK Naftohaz should find it in their interests to revisit.

"2) Explore whether Ukraine can offer Turkmenistan a more compelling alternative than a deal that would seal Turkmenistan's dependence on Russia. Turkmenistan does not have the technical capacity to achieve the Turkmen-Russia deal without major investment. If Ukraine can offer Turkmenistan a long-term reliable market, Turkmenistan would also be better off having more than one customer. Ukrainian consumers would benefit from a competitive market involving multiple suppliers."

The Ukrainian media avoided any mention of this portion of Ambassador Pascual's speech. When RFE/RL's Ukrainian Service ( interviewed a spokesman for NAK Naftohaz Ukraine on 3 June, he told the station that the U.S. ambassador "should not teach Ukraine how to go about doing business." Replying to the question of whether there was in fact a contract between Naftohaz Ukraine and Eural TransGas, the spokesman refused to divulge any information and stated that this was "confidential company information." Mogilevich, presently living in Russia, has been placed on the FBI's "most wanted" list ( for alleged securities-fraud, wire-fraud, mail-fraud, and money-laundering charges. He is characterized as "armed and dangerous and an escape risk."

The United States and Russia have no mutual extradition treaty.


In a series of articles published in 2003, RFE/RL Organized Crime and Terrorism Watch stated that the Hungarian company Eural trans Gas was controlled by Semen Mogilevich and his organized-crime group. One of these articles, entitled "Naftogaz Ukrainy - A Study in State-Sponsored Corruption," stated that Russian Interior Ministry General A.P. Mordovetz had sent a letter to the head of Russian Interpol descibing contacts between Eural Trans Gas managing director Andras Knopp and Mogilevich. Organized Crime and Terrorism Watch has since received a copy of a sworn declaration from General Mordovetz affirming that he never wrote any such letter. Based on this declaration, Organized Crime and Terrorism Watch has concluded that the letter in question cannot be relied upon as genuine. Moreover Organized Crime and Terrorism Watch has no evidence that demonstrates that Eural Trans Gas is, was, or has ever been controlled by Mogilevich. We regret the error.


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