05.06.2008
A top executive from the US company Vanco Energy on Thursday warned of as much as a 10-year delay to new oil and gas offshore drilling in a key sector of the Black Sea if a dispute with the Ukrainian government goes to court.
Vanco President Gene Van Dyke predicted to the Interfax news agency a wait of "between five and 10 years before work can even start" if a row between his firm and factions of the Ukrainian
government over planned development of the Pikierchensky sector of the Azov Sea must be settled in international court.
Vanco in April 2006 won rights to develop the 13,000-square- kilometer region thought to contain useful deposits of and oil and gas, and signed a production contract with Ukraine's Ministry of Resources in October 2007.
Elements of the Ukrainian government last month initiated a campaign against the terms of the contract, arguing the field would be better developed by the Ukrainian state-owned firm Ukrnafta.
The dispute has pitted Ukrainian President Viktor Yushchenko on Vanco's side against his theoretical subordinate Prime Minister Yulia Tymoshenko on the Ukrnafta side.
The total value of Vanco's planned investment in the project is between 100 million and 300 million dollars, Korrespondent magazine reported.
Yushchenko has argued Vanco should be allowed to develop the field unhindered as part of a policy of Ukrainian support to foreign investors.
Tymoshenko has argued development rights should be transferred to Ukrnafta as the Ukrainian company can do the work more cheaply, and because of alleged corruption in the government decision to award rights to the field to Vanco.
Ukraine's Ministry of Resources, which is allied to Tymoshenko, in April cancelled Vanco's license to develop the field.
Ukraine's Cabinet of Ministers, which is loyal to Tymoshenko, on May 21 voted to abandon Vanco as a partner.
Ukraine's National Security Council, which is loyal to Yushchenko, overruled the cabinet on Wednesday, ordering the tender to go forward with Vanco as the contractor, on grounds of Ukrainian national security.
A Vanco affiliate in late May sued, alleging breach of contract. If the dispute is not resolved in 60 days, the conflict would by the terms of the tender agreement go to an international court of arbitrage in Stockholm.
Ukraine has one of the worst records of attracting foreign investment of any former Soviet republic, receiving every decade roughly the same amount of foreign investment as neighboring Poland receives every year, Channel 5 television reported.
Foreign investors usually name government corruption, bureaucracy, substantial taxes, and the difficulty of enforcing contract terms in the country's courts as the main disincentives to doing business in Ukraine.
Source: Deutsche Presse-Agentur
