The Ukrainian side recalls its proposals on peaceful settlement of the conflict with Vanco Prykerchenska Ltd., because the Ministry of Justice, which was commissioned to hold negotiations with the company on behalf of the Ukrainian government, received an official confirmation that the company filed for international arbitration with Ukraine at the Stockholm Chamber of Commerce.

According to Minister of Justice Yevhen Korniychuk, regardless of the Ukrainian side’s proposal to carry out talks to settle the conflict and to recall the application from the Stockholm arbitration, Vanco Prykerchenska Ltd. did not do that. The company did not respond to the official written address of Ukraine with a proposal of peaceful talks, which was sent to the company as early as a month ago. Considering this facts, the Ukrainian side recalls its proposal of talks, and will give its answer within frames of the arbitrary procedure in the nearest future.

According to Korniychuk, Vanco Prykerchenska Ltd. is not any subsidiary of Vanco Energy (USA). Vanco Energy is just a minority shareholder of Vanco Prykerchenska Ltd., which is an off-shore company with dominating Ukrainian interests and interests of other inter-connected off-shore companies, the owners of which remain undisclosed. Namely Vanco Prykerchenska Ltd., and not the American company Vanco Energy, initiated the arbitration in Stockholm.

Korniychuk stressed that the government of Ukraine spoke for fair talks with Vanco companies to achieve mutually acceptable mechanisms to settle the conflict. For several times the government of Ukraine proposed Vanco companies an agenda of talks stipulating a discussion of all conditions that caused the dispute, including the conditions of the initial tender, won by Vаnсo International Ltd.

The acting Justice Minister of Ukraine also stressed that the decision of Vanco Prykerchenska Ltd. to file for arbitration was incompatible with previous statements of this company, as well as with principles of fair and productive talks.

“The government informed Vanco companies that there will be no talks if Vаnсo International Ltd. does not stop its arbitration in Stockholm”, Korniychuk stressed, adding that the government of Ukraine will defend interests of Ukraine with any available legal means, including on basis of the concrete mechanism set out in the Agreement on Production Distribution. According to his information, the Justice Ministry of Ukraine has involved Freshfields Bruckhaus Deringer law firm as its advisor to defend interests of Ukraine at all talks on the conflict with Vanco.

As reported earlier, Vanco Prykerchenska Ltd. said it had filed for international arbitration with Ukraine, after the government cancelled a 30-year license to explore and extract oil and gas in the Black Sea shelf.

Prime Minister Yulia Tymoshenko has said Vanco broke conditions of the agreement, that the company structure was unclear and has voiced concern that it could sell on the licenses to Russia`s gas export monopoly Gazprom. Vanco has denied the allegations.

Industry sources have said that within Vanco`s company structure in Ukraine lies DTEK, an energy group that is part of the vast empire of firms belonging to Rinat Akhmetov, Ukraine`s richest man and a leader in the opposition Regions Party.

The contract allowed Vanco to explore and extract in the Prykerchensky block - an area of just under 30,000 square km at the northern end of the Black Sea and 13 km offshore.

The initial contract was won by Vanco Energy in early 2006.



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