KIEV, May 15 - Rinat Akhmetov, the wealthiest Ukrainian and a financial sponsor of opposition Regions Party, is one of investors in the off-shore oil exploration project led by U.S. company Vanco Energy, the company announced Thursday.
Akhmetov’s DTEK, or Donbas Fuel and Energy Co., Ukraine’s biggest privately-owned power conglomerate, is among four investors, while others include Vanco Energy, Integrum Technologies Ltd, and Shadowlight Investments Ltd.
Jeffrey L. Mitchell, Senior Vice President, Exploration and Business Development at Vanco Energy, said all four investors behind the oil and gas exploration control roughly the same stakes in the project.
The revelation explains why Prime Minister Yulia Tymoshenko, who has been persistently attacking Akhmetov’s interests over the past several months, has moved to cancel Vanco’s exploration license a week ago.
The move to cancel the license triggered concerns over Ukraine’s investment climate and led to a meeting between top officials at the office of President Viktor Yushchenko with western diplomats on Wednesday.
Yushchenko’s office on Wednesday called on the government to suspend the move.
Vanco Energy warned earlier this week it would contest the government’s licnse decision in international court of arbitration unless the parties make an agreement within the next 60 days.
Vanco Energy, a Houston-based independent oil and gas company, is engaged in international exploration, emphasizing deepwater.
In October 2007, Vanco and the Ukrainian government led by then Prime Minister Viktor Yanukovych, the leader of the Regions Party and an ally of Akhmetov, signed a production sharing agreement after more than 1.5 years of talks.
Vanco pledged to initially invest $100 million, adding an energy investment fund backed by the UK branch of the Rothschild’s family would raise cash for the project.
Last week, however, Vanco said the Rothschild’s fund would back out of its role as managing the process of raising cash, and its interest could move to other parties.
The field near Kerch is 12,960 square kilometers at depths of water from 70 to 2,000 meters, the depth level that makes it impossible for Ukrainian companies to extract oil and gas.
Tymoshenko estimated the area may contain 1.5 trillion cubic meters of natural gas worth about $450 billion.
Vanco Energy, through its subsidiary Vanco International, won a tender to develop off-shore Black Sea area near Kerch in April 2006.
At the tender Vanco outbid ExxonMobil and Shell, which filed a joint bid, but also Hunt Overseas Oil Company, the world’s largest privately-held oil company, and UkrNafta, Ukraine’s largest oil company.
Defending the move to cancel the license, Tymoshenko has argued the government must use its own resources to invest through state oil and gas company Naftogaz Ukrayiny in exploration of the vast offshore oil and gas fields.
Tymoshenko’s plan is controversial because Naftogaz lacks deep-sea oil drilling technology that is required to tap the offshore oil fields, while the government lacks money that must be invested in these projects. (sb/ez)