After push from Perry, backers got huge gas deal in Ukraine

In this v. 12, 2018, photo provided by U.S. Embassy in Kyiv, Energy Secretary Rick Perry speaks in Kyiv, Ukraine. Michael Bleyzer and Alex Cranberg, two political supporters of Perry secured a potentially lucrative oil-and-gas exploration deal from Ukrainian government soon after Perry proposed one of men as an viser to country’s new president. 

Two political supporters of U.S. Energy Secretary Rick Perry secured a potentially lucrative oil and gas exploration deal from Ukrainian government soon after Perry proposed one of men as an viser to country’s new president.

Perry’s efforts to influence Ukraine’s energy policy came earlier this year, just as President Volodymyr Zelenskiy’s new government was seeking military aid from United States to defend against Russian aggression and allies of President Donald Trump were ramping up efforts to get Ukrainians to investigate his Democratic rival Joe Biden.

Ukraine awarded contract to Perry’s supporters little more than a month after U.S. energy secretary attended Zelenskiy’s May inauguration. In a meeting during that trip, Perry handed new president a list of people he recommended as energy visers. One of four names was his longtime political backer Michael Bleyzer.?

A week later, Bleyzer and his partner Alex Cranberg submitted a bid to drill for oil and gas at a sprawling government-controlled site called? Varvynska. ir proposal was millions of dollars lower than ir only competitor, according to internal Ukrainian government documents obtained by Associated Press. But ir newly created joint venture, Ukrainian Energy, was awarded 50-year contract because a government-appointed commission determined y h greater technical expertise and stronger financial backing, documents show.

Perry likely h outsized influence in Ukraine. Testimony in impeachment inquiry into Trump shows energy secretary was one of three key U.S. officials who were negotiating a meeting between Trump and Ukrainian leer.

sequence of events suggests that Trump ministration’s political maneuvering in Ukraine was entwined with big business of energy tre.

Perry me clear during trips to Kyiv that he was close to?Bleyzer,?a Ukrainian-American investor and longtime Perry supporter who lives in Houston, and Cranberg, a Republican mega-dor who provided?Perry? use of a luxury corporate jet during energy secretary’s failed 2012 presidential bid.

Perry’s spokeswoman said Wednesday that energy secretary has championed American energy industry all over world, including in Ukraine.

“What he did t do is vocate for business interests of any one individual or company,” said Shaylyn Hynes, press secretary for Energy Department.

Jessica Tillipman, who teaches anti-corruption law at George Washington University, said even if Perry did seek to influence foreign officials to award contracts to his friends, it is likely t illegal.

“My gut says it’s crime,” she said. “It’s just icky.”

Zelenskiy’s office did t respond to requests for comment.

In a statement to AP, Bleyzer denied that Perry helped his firm get gas deal.

“I believe that Secretary Perry’s conversations with Ukrainian government officials, if y in fact took place, did t play any role in Ukrainian Energy winning its bid,” Bleyzer said Tuesday. He said process was competitive and transparent and “will hopefully serve as an example of how Ukrainian energy market can be opened for new investments.”

Amy Flakne, a lawyer for Cranberg’s company Aspect Holdings, said Wednesday that Perry and or U.S. officials supported “a fair, competitive process to bring foreign capital and techlogy to Ukraine’s lagging energy sector.”

“Aspect neir sought, r to our kwledge received, special intervention on its behalf,” Flakne said.

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‘FREEDOM GAS’

As Trump’s energy secretary,?Perry has?flown around globe to push for U.S. exports of liquefied natural gas, which he calls “Freedom Gas.”?He’s me multiple trips?to?Ukraine and or former Soviet-bloc nations, where shipments of American gas and drilling techlogy take on strategic importance as a potential alternative to continued dependence on imports from Russia.?

Ukraine has long suffered from a reputation for political corruption, particularly in its oil and gas sector. In chaotic days following breakup of Soviet Union, newly independent Ukrainian government sold off many state-owned businesses worth billions to a cre of well-connected oligarchs who amassed immense fortunes.

As Ukraine sought ecomic and security support from U.S. and or Western democracies, those countries pressed it to put in place a more open and transparent process for awarding oil and gas exploration rights on state land.?

At urging of Western partners, Ukraine’s government created a process requiring that exploration contracts be put out to bid and awarded following review from a selection board appointed by president’s?cabinet of ministers.? board recommends winners, pending final approval from ministers.

Those Western partners also vised Ukraine to appoint an independent supervisory board at Naftogaz, state-owned energy company, as a guard against corruption and self-dealing.

In February, Ukrainian government opened bidding for nine oil and gas blocks encompassing 4,428 square miles (11,469 square kilometers) of land. Ukrainian Energy, joint venture between Bleyzer’s investment firm SigmaBleyzer and Cranberg’s Aspect Energy, submitted a single bid for largest block, which covers 1,340 square miles (3,471 square kilometers).

Under contracts, winning bidder is awarded exclusive rights to extract petroleum for up to 50 years. After initial costs are recovered, company and government split profits.

An internal?review of proposals by Ukrainian?Ministry of Energy and Coal?Mining obtained by AP?show y were t ?highest?bidder.

only competing bidder, UkrGasVydobuvannya, kwn by acronym UGV, offered more than $60 million for first phase of project, compared with $53 million from?Bleyzer?and Cranberg, document shows. UGV is Ukraine’s largest domestic gas producer and is a subsidiary of Naftogaz, state-owned company where Perry sought to replace board members.

Despite lower upfront investment, ?selection?board?gave Americans higher scores for technical expertise and overall financial resources, according to ?document reviewed by AP.

Of nine gas deals awarded on July 1, Bleyzer and Cranberg’s bid was only one of winners that didn’t include participation of a Ukrainian company. UGV won four of remaining bids.

Two members of??board?that helped select bid winners told AP that process is designed to be hard to improperly influence because it is a mix of government representatives and industry experts.

Roman?Opimakh,?a commission member?who is he of State Service of Geology and Subsoil of Ukraine,?said government was looking for foreign investment, particularly U.S., and board considered that as a factor. He said it’s an vant if a company is well-connected in?Washington but?ded?that he saw indication that U.S. officials influenced process.

Perry, who served 14 years as goverr of Texas, has publicly championed potential of U.S. hydraulic fracturing techlogy to boost oil and gas production in Ukraine?and pressed for bidding process to be?opened up?to U.S. companies.?

At an energy industry roundtable in Kyiv in vember 2018, Perry said potential for oil and gas development in Ukraine is “staggering.” Ukraine, he declared, h a chance to become “ Texas of Europe.”

At same event, which was co-sponsored by nprofit U.S.-Ukraine Business Council, Perry plugged?Cranberg’s?expertise. Both Cranberg and?Bleyzer?were in room, along with?several American and Ukrainian energy industry officials.

“You kw, Alex?Cranberg, who has been in this business a long time, can attest to this probably as well as anyone sitting around table, that we have potential to change world,” Perry said, according to a transcript released by U.S. Embassy in Kyiv.

During same 2018 trip, Perry h a private meeting with n-Ukrainian President Petro Poroshenko, where y discussed deepening ties between two country’s energy industries, according to a U.S. Embassy summary of meeting

Records suggest Perry has also met regularly with Bleyzer. Visitor logs released by Energy Department through a public records request show Bleyzer entering through VIP check-in desk at building where Perry’s office is at least three times, most recently on May 8.

Less than two weeks later, Perry was on a plane to Kyiv to attend inauguration ceremony for Zelenskiy, who h defeated Poroshenko in an April election. It was during that trip that Perry?presented his list of recommended visers?that?included?Bleyzer?and remarked on ir long friendship, according to a person in room who spoke on condition of anymity for fear of retaliation. Attendees left meeting with impression that Perry wanted to replace an American representative on Naftogaz board with someone “reputable in Republican circles,” according to person who was re.

Bleyzer said Tuesday he h been included in what he described as a brainstorming session with Energy Department officials about creating an informal group kwledgeable about Ukraine’s energy industry to help develop U.S. strategy, but he h idea his name would be forwarded to country’s new president.

“I was t aware at any time that my name was recommended by Secretary Perry to Ukrainian government to act in any capacity,” Bleyzer said.

Perry’s work in Ukraine places him at center of ?House?impeachment inquiry into?efforts by Trump and his personal lawyer Rudy Giuliani to press?Zelenskiy?to open an investigation into Biden and his son Hunter’s business dealings with?Burisma, ar Ukrainian gas company.

Perry, who anunced last month that he is resigning by end of year, has refused to cooperate with congressional probe. In an Oct. 4 interview with Christian Brocasting Network, Perry said that “as God as my witness” he never discussed Biden or his son in meetings with Ukrainian or U.S. officials.

But Perry was at White House for a key July 10 meeting where senior Ukrainian officials were told continued U.S. support was conditional on?Zelenskiy’s?government opening investigations into Democrats and Burisma, Army Lt. Col. Alexander Vindman, an aide on Trump’s National Security Council, testified last month.

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TEXAS TIES

Bleyzer?and Perry’s ties go back at least a dece. As goverr,?Perry?appointed?Bleyzer?in 2009 to serve as?a member of a Texas state visory board overseeing state funding to emerging techlogy ventures. following year,?Bleyzer?contributed $30,000 to Perry’s 2010 campaign for Texas goverr.

Ukrainian-born Texan cuts?a flamboyant figure in energy world. A 2012 profile in Houston Chronicle is set in his?modernist 15,000-square-foot mansion. In an accompanying photo,?he stands?next to?his wife, a mane of gray hair to his shoulders, on a balcony overlooking a swimming pool.?

A former engineer at Exxon, Bleyzer was born in Ukraine’s?Kharkiv?region and trained in digital electronics and quantum physics. In 1994, he founded?SigmaBleyzer?Investment group, a private equity firm that specializes in developing corporate stakes in Eastern Europe. company says it mans about $1 billion in assets.?

Bleyzer also has ties to Giuliani. In 2008,?Bleyzer’s?company hired Giuliani’s former Houston-based law firm, Bracewell & Giuliani, to help it acquire and consolidate cable holdings in 16 Ukrainian cities, including Kyiv, according to an anuncement at time. same year, Bleyzer?donated $2,300 to Giuliani’s presidential campaign.?

Bleyzer’s?company is primary funder of U.S.-Ukraine Business Council, which promotes interests of American businesses operating in Ukraine. According to tax records, business council is run out of Washington, D.C, offices of its president and CEO, Morgan Williams, who is also listed as government affairs director for SigmaBleyzer.

council, which sponsors events that feature senior U.S. and Ukrainian government officials, pushes for policy priorities that dovetail with Bleyzer’s business interests — including lobbying to create very process that opened Ukraine’s state-controlled oil and gas fields to foreign investment, according to webp of state geology service.

Days after government in Ukraine posted gas blocks for bidding in February, visitor logs show Williams accompanied Bleyzer through VIP entrance at Energy Department.

On May 28, day bids were due in Kyiv, Williams again accompanied Bleyzer, who photos show was sporting a Western-style shirt with a Stars and Stripes pattern, to offices of Ukraine’s energy ministry to submit ir company’s bid.

On June 5 — while Bleyzer and Cranberg’s proposal was under review — Williams met with a key Zelenskiy viser, Oleg Ustenko, and told him that significant expansion of oil and gas production in Ukraine could only be achieved with investments from private companies, including ones from United States, according to a summary of meeting posted on business council’s website.

In an apparent dig at company competing against Bleyzer and Cranberg for gas deal, Williams also told Ustenko that “participation of state mopoly player” undermined chances of private companies to win, according to summary.

What council’s media release failed to mention is that, like Williams, Ustenko serves dual roles. In dition to vising Ukrainian president, ecomist is longtime executive director of Bleyzer Foundation, a Kyiv-based nprofit organization founded by Bleyzer in 2001. group’s website describes its mission as promoting private-sector investment in Ukraine.

Less than four weeks later, Ukraine Energy was named winner of Varvynska block over Naftogaz subsidiary.

Bleyzer would t say wher he considered it a conflict for his employee to simultaneously be leing international tre group while also vocating for his private business interests.

He said U.S.-Ukraine Business Council is just one of many organizations that strongly support participation of foreign companies in bidding process “as one of key factors in helping Ukraine achieve its energy independence from Russia.”

As with Bleyzer, Cranberg also has longtime ties to Perry.

A gruate of University of Texas in Austin, Cranberg?was appointed?by Perry in 2011 to serve a six-year term on state university system’s board of regents. He?is a generous political dor, giving more than $3 million since mid-1980s primarily to Republican candidates and fundraising committees, according to federal and state campaign finance records.

In last 13 months,?Cranberg?has contributed just over $650,000 to two committees focused on electing Republicans to House seats, $637,000 to National Republican Senatorial Committee and $258,000 to National Republican Congressional Committee. He and his wife?each gave $50,000 last April to Trump Victory, joint entity that funds president’s reelection campaign and Republican National Committee.?

When Perry campaigned for president in 2011, federal disclosures show his campaign paid more than $16,000 to?a holding company for a private jet used by Cranberg.

Cranberg is also among those who entered through VIP desk at Energy Department, logging in with his wife for a visit in April 2018.

His company?last year hired Perry’s former campaign manr, Jeff Miller, as a lobbyist. Miller has been to Energy Department’s hequarters at least a dozen times since Perry became secretary, according to visitor logs. He mostly signed in through VIP entrance.