KYIV. July 10 (Interfax) - U.S. energy company Vanco Prykerchenska Ltd (registered in the British Virgin Islands) has denied its alleged appeal to the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) over the dispute with the Ukrainian government about the Prykerchenska oil and gas field.
Vanco Prykerchenska did not lodge an appeal with the Arbitration Institute of the Stockholm Chamber of Commerce because it received an official letter from First Deputy Justice Minister Yevhen Korneichuk on July 5, 2008, a company representative said. In his words, the official asked for 60 days for consultations.
Vanco Prykerchenska informed the Ukrainian government of its readiness to extend the period of consultations if the government confirmed Korneichuk's negotiating powers in writing before July 11, 2008.
Next week the company will make an official statement on the status of consultations with the Ukrainian government or announce the beginning of the arbitration process in line with the production sharing agreement, the company representative said.
In December 2005, the Ukrainian government called a tender for the right to conclude a PSA for oil and gas extraction on the Black Sea shelf within the boundaries of the Prykerchenska oil and gas field. Vanco International Limited (the Commonwealth of the Bahamas), a subsidiary of Vanco Energy Company (U.S.), won the tender in 2006.
It took 18 months to coordinate the production sharing agreement and it was signed eventually on October 19, 2007.
In October 2007, Vanco International Limited passed on the PSA rights and obligations to Vanco Prykerchenska formed in August 2007. The Vasyl Dzharta Environment Ministry issued the company with a license to geological survey and production of oil, gas and gas condensate at the aforesaid field.
The new environment minister, Heorhiy Fylypchuk, said in spring that some Ukrainian laws were broken during the conduct of the tender for the right to conclude a PSA and in the issuance of the license to Vanco Prykerchenska. It also announced that Vanco International Limited violated some provisions of the PSA.
In April, the Ministry canceled Vanco Prykerchenska's license, prompting the government to unilaterally withdraw from the agreement with Vanco International.
A government resolution to that effect was issued on May 21, 2008, and Ukraine withdrew its approval of the production sharing agreement.
The Prykerchenska field is 12,960 square kilometers. The sea depth is 70 to 2,000 meters above the field. According to preliminary Ukrainian estimates, the density of field hydrocarbons (D + C2 + C3) amounts to 30,000 tonnes of fuel per one square kilometer while total reserves stand at 10.8 billion cubic meters. No drilling has been done as yet.
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Story Source: Daily News Bulletin; Moscow - English