GAZPROM-OWNED STROYTRANSGAZ ON SYRIA, OTHER

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 005497

SIPDIS

SIPDIS

DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND WRIGHT
EUR/CARC, SCA (GALLAGHER, SUMAR)
DOE FOR HARBERT, HEGBORG, EKIMOFF
DOC FOR 4231/IEP/EUR/JBROUGHER

E.O. 12958: DECL: 11/02/2017
TAGS: EPET ENRG ECON PREL RS IR IZ SY
SUBJECT: GAZPROM-OWNED STROYTRANSGAZ ON SYRIA, OTHER
INTERNATIONAL ACTIVITIES

REF: STATE 153799

Classified By: Econ MC Eric Schultz for Reasons 1.4 (b/d)

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SUMMARY
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1. (C) In a November 20 meeting with Econoff, Leonid
Bokhanovskiy, First Vice-President of the Gazprom-owned
construction firm Stroytransgaz, confirmed that the company
had completed a gas treatment facility in Syria as well as a
gas pipeline from Egypt to Syria. He indicated that the
company would like to do more projects in Syria, but did not
yet have concrete plans. Separately, news reports indicate
that Stroytransgaz is a bidder on a refinery project in
Syria. Bokhanovskiy said the company plans to continue
growing its international business, including into Iran and
Iraq. End Summary.

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STROYTRANSGAZ AND SYRIA
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2. (C) In response to reftel, we approached Gazprom-owned
construction company Stroytransgaz and asked about its work
in Syria. First Vice-President Leonid Bokhanovskiy, in
charge of international business development, said the
company completed a pipeline from Egypt to Syria as well as a
gas treatment facility there. He added that his company
would like to do more business in Syria, but would not
elaborate further. (N.B. Press reports indicate the company
is a bidder on a refinery project in Syria and is working on
a second gas treatment facility.)

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STROYTRANSGAZ GROWING AND EXPANDING GLOBALLY
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3. (SBU) Bokhanovskiy also briefly outlined his firm,s
international work and rapid growth. The company, which
specializes in oil and gas infrastructure, was founded in
1990 and, last year, had revenues of $2.3 billion - expected
to grow to $3 billion this year. International business
accounts for 30% of the firm's revenues, but that share is
growing. Bokhanovskiy said recruitment of trained personnel
is one of the biggest challenges to Stroytransgaz's continued
growth. He noted that the company uses workers from India,
Pakistan, and the Philippines, among others.


4. (SBU) In Russia, Bokhanovskiy said the firm is the biggest
of its kind, with 30% of the market. Its domestic
competitors include Lukoil affiliate Globalstroy and Gazprom
Engineering. Storytransgaz also intends to develop some oil
and gas fields it owns in Russia, and is expanding into
building power plants, including nuclear ones. Bokhanovsky
stressed that Stroytransgaz operates "completely
independently" of Gazprom.


5. (C) In addition to the pipeline in Syria, the company has
worked on projects in India, Algeria, Saudi Arabia, Greece,
Turkey, Finland, Sudan, and several of the former Soviet
Republics. Storytransgaz is interested in the Iranian market
but, remarked Bokhanovsky, it is "very difficult to do
business there since they prefer to use their own companies."
He added that U.S. policies toward Iran "make it even more
difficult" to deal with Iran. The company is also looking at
Iraq, but is concerned that the situation is not yet stable
enough.


6. (SBU) According to Bokhanovskiy, Stroytransgaz has enjoyed
"long-term cooperation" with American firms Fluor, Bechtel,
KBR, and GE. The company even built a small pipeline in
Nebraska in the 1990s. Stroytransgaz is working with KBR on
developing an LNG gasification terminal on the Baltic coast;
it would be at least a year before the project begins.

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COMMENT

MOSCOW 00005497 002 OF 002


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7. (C) While Stroytransgaz's activities in Syria and
elsewhere are likely driven by profits, being profit-driven
does not automatically make the company a legitimate player
in the global marketplace. Like other Gazprom subsidiaries
and state-controlled entities in Russia, Stroytransgaz's
ownership structure and dealings are less than transparent.
The company has been accused of shady deals in the past, and
before Putin's appointment of Alexey Miller, Stroytransgaz
was widely believed to be owned largely by the children of
former Gazprom chairman Rem Vyakhirev and former Prime
Minister Viktor Chernomyrdin (now Russian Ambassador to
Kyiv). Putin and Miller allegedly arranged for the previous
owners to be bought out. While it is not entirely clear who
owns Stroitransgaz, it is clear that this company has
attracted an abnormal amount of political attention in its
lifetime. Moreover, Bokhanovskiy, while coming across as an
executive looking to expand his company's business, was not
entirely forthcoming about its activities, despite his stated
interest in transparency. End Comment.
BURNS