Ukraine energy scheme backers revealed - FT

A company owned by Ukraine’s richest man, Rinat Akhmetov, revealed on Thursday it was one of three financial backers for a strategically important hydrocarbon project whose fate was cast into doubt this week by Kyiv’s prime minister.

DTEK, Mr Akhmetov’s energy holding, revealed at a press conference in Kyiv that it held a quarter interest as financial backer in a Black Sea exploration project led by Houston-based Vanco Energy Company.

Vanco’s other two partners, each also with 25 per cent, were identified as Shadowlight, owned by Russian businessman Evgeny Novitsky, and Integrum Technologies, a subsidiary of an undisclosed Austrian investment holding.

The investors came forward days after Yulia Tymoshenko’s government pulled Vanco’s licence to explore a vast 12,900km field off the Crimean peninsula. In identifying its financial backers, Vanco officials said they hoped to end speculation triggered by Ms Tymoshenko this week that Russia’s Gazprom, or partners of the Russian energy giant, could be involved.

Vanco officials called for fresh negotiations with her government to restart the project. But Oleksandr Hudyma, energy adviser to Ms Tymoshenko, said the project’s fate remained very much in the air, saying: “The ownership question remains a conspiracy. It is still very unclear who has interests in this project, and who represents whom.”

Vanco inked a production-sharing agreement last year when Kyiv’s government was headed by the Moscow-friendly Viktor Yanukovich, considered to be a political ally of Mr Akhmetov. Delayed by 18-months of negotiations, the agreement represented the first sizable natural gas and oil exploration project on Ukraine’s Black Sea coast.

Ms Tymoshenko pulled the licence this month, citing concern that Gazprom could, through partners, gain a hidden interest in the project that was originally intended to diversify energy supplies by boosting domestic production. Ms Tymoshenko also suggested past governments might have compromised Kyiv’s “national interests” by yielding such a large field and unjustifiable proceeds to a single group.

Vanco’s senior vice-president, Jeffrey Mitchell, expressed hope a compromise could be reached, suggesting the project could “generate energy independence” for Ukraine. Heavily dependent upon gas and oil imports from Russia and Central Asia, Kyiv’s economy has struggled in adjusting to three stiff natural gas price increases in as many years, and rising oil costs. Experts say Ukraine holds significant amounts of untapped reserves.

Vanco’s financial partners denied speculation raised by Ms Tymoshenko this week that their companies could be holding talks on selling their stakes to Gazprom. But Mr Mitchell struggled to identify the beneficial owner of Integrum Technologies, saying: “I plead ignorance.”

Eckert Gerhard, a Vienna-based lawyer representing Integrum, refused to identify the beneficial owners or parent group. Mr Novitsky, a top executive at Russia’s Sistema diversified holding, said he was the owner of Shadowlight, which he described as an investment fund.

Mr Hudyma accused Mr Yanukovich’s government of handling negotiations with Vanco last year on a production-sharing agreement in non-transparent manner. He suggested parties in the project today could have ties to close associates of the former prime minister. Earlier this week, Ms Tymoshenko criticised her political rival, President Viktor Yushchenko, suggesting he may have backed the Vanco project ignoring possible drawbacks.

Serhiy Lyovochkin, who served as chief of staff for Mr Yanukovich in the government last year, said: “I do not see any corruption here. Ms Tymoshenko cannot by her word alone decide who is corrupt without legal underpinnings.”

By Roman Olearchyk in Kyiv, Financial Times