OREANDA-NEWS. June 9, 2008. Vanco Prykerchenska Ltd. (Virgin Islands) appreciates the decision of the Council for National Security and Defense of Ukraine regarding recognition of the legitimacy of the Production Sharing Agreement for Hydrocarbons to be extracted within the Prikerchinskaya field area of the continental shelf in the Black Sea, between the state of Ukraine, represented by the Cabinet of Ministers of Ukraine and Vanсo International Ltd., expressing its readiness to enter the negotiation process with the Cabinet.

The above is stated in a message from Vanco to have been communicated by UNIAN.

The statement specifies that at the meeting of the CNSD on the 31st of May, the Interagency Working Group announced the results of the work on the issues concerning abidance of the law when signing the Production Sharing Agreement (PSA). The Interagency Commission has come to the conclusion that the tendering for the right to sign the agreement was carried out in compliance with effective Ukrainian legislation on the basis of collegiality with observance of the established procedures.

‘The transfer by Vanсo International Ltd. to Vanco Prikerchenska Ltd. of its rights and liabilities related to the sharing of hydrocarbons meets effective Ukrainian legislation’, Vanco’s statement says.

The company also admits that the commission verified that the order of the Environmental Protection Ministry dd. 25.04.2008 on the cancellation of the special permit for sub-surface use had been passed, violating effective Ukrainian legislation and the PSA provisions and, therefore should be revoked.

‘Our company is happy with the positive changes in the situation. Vanсo is ready to launch a negotiation process with the Cabinet of Ministers of Ukraine. Gene Van DYKE, the owner and president of the company, intends to visit Ukraine for the above reason’, - stressed Jeff MITCHELL, the Vice-President of Vanсo International Ltd.

UNIAN Reference. In 2006, Vanсo International Ltd. won the first open tender and concluded a Production Sharing Agreement (PSA) with the Cabinet of Ministers of Ukraine in October 2007. The product will be extracted within the Prikerchinskaya field area of the continental shelf in the Black Sea.

Therewith, Vanco International passed all of its rights and obligations under the PSA to Vanco Prikerchenska.

On the 25th of April, the Environmental Protection Ministry cancelled the license for sub-surface use of Vanco Prickerchenska Ltd.

Following that decision, Vanco initiated international arbitral proceedings against the government of Ukraine and stated that in its opinion, the withholding of the license had not been legitimate.

On the 21st of May, at its meeting, the Cabinet of Ministers of Ukraine took the decision to withdraw from the production sharing agreement with Vanco unilaterally.