Vanco Wins Black Sea Deepwater Tender

Vanco International Ltd., a subsidiary of Houston-based independent Vanco Energy Company, has won a competitive tender for the right to conclude a Production Sharing Agreement with the Government of Ukraine for the highly prospective Prykerchenska Tender Area located in the Black Sea, offshore Ukraine. This will be Ukraine's first deepwater license award and Ukraine's first Production Sharing Agreement for hydrocarbons. JNR Eastern Investments Limited, London, an investment company representing the interests of the Rothschild Family, is an equal partner in Vanco's application.

In an open ceremony last Wednesday (April 19) in Kiev, a Ukrainian Intergovernmental Committee on Production Sharing Agreements announced that it had recommended Vanco as the winner of the Prykerchenska PSA Tender Area. Among those present were other contenders for the much sought-after block, including Shell (joint bid with ExxonMobil) and Hunt Overseas Oil Company, TPAO (Turkiye Petrolleri), bidding with Alfex One Ltd., and UkrNafta, Ukraine's largest oil company.

The Prykerchenska PSA Tender Area covers 3.2 million acres (12,900 square kilometers), and is located offshore the Crimea near the Kerch region where water depths range from 500 meters to over 2,000 meters. In its northern shallower part, the Tender Area contains a prominent Tertiary folded belt with numerous prospective structures that are on trend with the recently announced Subotina oil and gas discovery. The deeper (below 2,000 meters) southern part of the block contains large structural closures, including the Tetyaev High.

Ukraine hopes to boost its gas output from its offshore natural gas deposits by a third to 30 billion cubic meters annually within the next several years. The Ukrainian government expects that this Kerch region project could generate up to $2 billion in foreign direct investment into oil and gas exploration and extraction.

Since 1996, Vanco has achieved deepwater success as a leading license holder offshore in West Africa. Active offshore Morocco, Cote d'Ivoire, Ghana, Equatorial Guinea, Gabon and Madagascar, Vanco achieved successful operation of two deepwater wells in the last two years: a 2,125-meter well offshore Morocco in 2004 - a first for the country, and a 3,100-meter well offshore Cote d'Ivoire last year.

While in Kiev for the announcement last week, Vanco Chairman and CEO Gene Van Dyke said, "The Ukrainian Intergovernmental Committee demonstrated its commitment to a fair and transparent tender process. We are very happy with the result. The success of this exploration project will be a major boost to Ukraine's efforts to become more energy independent. While deepwater exploration is very risky, I believe that Ukraine's Black Sea represents an extremely attractive opportunity for Vanco. And, Vanco in association with JNR has the requisite deepwater expertise and financial capability needed to successfully explore the tender area."

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