EXTRANCHECK: PRE-LICENSE CHECK:

UNCLAS MOSCOW 001866 SIPDIS SIPDIS USDOC FOR 532/OEA/MHAMES/LRITTER USDOC FOR 3150/USFCS/OIO/CEENIS/MCOSTA E.O. 12958: N/A TAGS: BEXP ETRD ETTC RS SUBJECT: EXTRANCHECK: PRE-LICENSE CHECK: SEVMORNEFTEGEOFIZIKA (SMNG),MURMANSK, RUSSIA, LICENSE NO. D371224 REFTEL: USDOC 01279 ¶1. Unauthorized disclosure of the information provided below is prohibited by Section 12C of the Export Administration Act. ¶2. Reftel requested a Pre-license check to determine the legitimacy and reliability of the end-user, Sevmorneftegeofizika, Murmansk, Russia. The company is listed on BIS license application D371224 as the ultimate consignee of a Syntrak active receiver array. These items are controlled for national securities reasons under ECCN 6A001. The licensee is Ocean Geophysical Services, Inc., 10850 Richmond Ave., 165, Houston, TX 77042. ¶3. On April 19, 2007, Export Control Attache Donald Pearce and FSN Natalya Shipitsina conducted the requested pre-license check at the offices of Sevmorneftegeofizika (SMNG),17, K. Marks St. Murmansk, Russia. The export control team met with Sergey Rabey, Head of Foreign Economic Relations Department and Mikhail Zhestkov, Head of Sea Works Department. ¶4. SMNG was founded in 1979 to provide oil and gas geophysical and geological exploration services in the arctic seas of the former Soviet Union. SMNG was a Federal-State Unitary Enterprise until 2003, when it was transformed into an Open Joint Stock Company. Currently the Government of Russia (GOR) owns 100% of the shares, though recently the Duma (GOR legislative branch) approved the full privatization of the company. Mr. Rabey stated that Gazprom, Rosneft and several foreign companies have expressed interests in obtaining shares of SMNG. The company employs around 540, and is headquartered in Murmansk, with offices in Gelendzhik (SMNG South) and a data processing center in Moscow. ¶5. SMNG has a fleet of seven vessels. Four of the vessels are designed for deep-water operations, and three principally used in littoral areas though they can be employed on the high seas as well. Currently four of the seven vessels are at sea on projects, with one heading into port for maintenance, one in port for overhaul, and a third in long-term dry-dock in Bulgaria due to lack of business activity in the area. The last three years have been very profitable for SMNG, which has lead the company to reinvest profit to upgrade the capabilities of the fleet and shore installations. The company works in the Arctic zone from May through September, and then transfers vessels to warmer climes for winter work. SMNG's clients are the GOR Ministry of Natural Resources and many major oil and gas companies. SMNG provided a CD-ROM with detailed information on the organization services provided, which is available from post upon request. ¶6. The equipment in reftel will be installed aboard the Iskatel-5 (Searcher-5),a catamaran built in 1987. The vessel provides two-dimensional geophysical charting from shallow waters, through the littoral transition zone, to deep waters. The equipment will be secured aboard the vessel, and the crew maintains a 24-hour watch while the vessel is in port. ECO Pearce inquired about foreign contract work, specifically requesting information about potential contracts involving Iran, Syria, North Korea, and Cuba. Mr. Rabey stated that Iskatel 5 would only be employed on projects in the Barents Sea along the coasts of Russia and Norway. Both Mr. Rabey and Mr. Zhestkov are familiar with U.S. export controls, as the company utilizes U.S. equipment and technology on several vessels, and assured the ECO that license conditions will be strictly observed. NOTE: the CD-ROM noted in paragraph 5 indicates that Iskatel-5 has operated in Cuban waters in the past. END NOTE. ¶7. Recommendations: While post believes Sevmorneftegeofizika, Murmansk, Russia, to be a reliable recipient of sensitive U.S. origin commodities, we call the licensing officer's attention to the fact that the company has participated in contract work in the Caribbean, including Cuban waters. ECO recommends a specific license condition to prohibit the use of the equipment in Cuban territorial waters. It is requested that post be notified of final disposition of the application, and of any shipments for this organization in order to conduct appropriate FCS follow-up and statistical reporting. (FCS MOSCOW/SBOZEK/DPEARCE) BURNS