Update (8/8/08): I’ve appended a quote from today’s Ekonomicheskie Izvestia article on Marathon’s quiet exit from Ukraine. The article also includes a funny caricature featuring Tymoshenko…
The Vanco situation is pretty well documented. Other stories are less so.
Following its London IPO in June, Cadogan Petroleum saw its share price plummet when two of its licenses were called into question last month by the Ukrainian courts. (In 2007, the EBRD had purchased a 5.2% stake in Cadogan as a way to help promote independent oil and gas production in Ukraine.)
In all, 73 subsoil licenses have been revoked by the Ministry of Environmental Protection, with another 83 still under threat. The majority of these were granted in 2006-7, under former PM Viktor Yanukovich’s government. Back in December, the new Yulia Tymoshenko-led government announced plans for a major check of all licenses, in an alleged attempt to root out “speculators” who were sitting on valuable reserves but not investing into their development.
When Tymoshenko came to power in 2005, she made a similar push. By February 2006, 504 licenses granted between June 23rd and December 31st, 2004 (again, under Yanukovich), had been revoked.
Rooting out corruption is one thing; shooting yourself in the foot is another, a point that President Yushchenko seems to be trying to make as he cites problems with foreign investor relations at Kryvorizhstal and the new terminal at Boryspil airport.
Ukraine seems to be struggling at reaching a balance between making the country attractive for foreign investment, preventing corruption from spreading, and engaging in revenge by attacking past moves made by political opponents.
Meanwhile the oil major Shell continues to have a presence in Ukraine, both with downstream retail and a exploration and production joint venture. The company has committed $100 million for developing a project in the Dnieper-Donets basin, but it remains in the early stages (seismic surveys are expected to be completed by next summer, last I heard).
Successfully implementing this project, with potentially a couple hundred million tons of oil equivalent at stake, would be a huge boon to Ukraine’s foreign investment climate, and might make up for some of the pummeling it’s been getting lately.
Update (8/8/08): From today’s Ekonomicheskie Izvestia article “Marathon left on the sly“:
An industry specialist within the Ministry of Fuel and Energy structure told Ekonomicheskie Izvestia that, “Marathon decided to close their Kyiv office and leave the market without any extra noise in order to not attract any extra attention to the event. They got tired of waiting for progress in negotiations with the Ukrainian government for further cooperation and decided to end the study of their posible perspectives within the country. Marathon’s mood was also negatively affected by the problems with the license of the American company Vanco for work on the Prykerchenskaya section of the Black Sea.”