Ukraine Inks First-Ever PSA in Deepwater Black Sea with Vanco

On June 27, 2008, the Government of Ukraine signed the Prykerchenska Production Sharing Agreement (PSA) with Vanco International Ltd., a subsidiary of Houston-based independent Vanco Energy Company. The agreement represents the culmination of the tender process through which in April 2006 Vanco was granted the right to negotiate the first license to explore the deepwater part of Ukraine’s Black Sea. The signing of the landmark Production Sharing Agreement gives Vanco the opportunity to explore and develop the highly prospective Prykerchenska Block. Work will begin immediately on a detailed exploration program which will include an extensive 3D seismic survey in 2008 followed by deepwater drilling.

Located to the southeast of the Crimean Peninsula, the Prykerchenska block covers nearly 13 thousand square kilometers or about one-third of Ukraine’s deepwater area with water depths ranging from 500 meters to over 2,000 meters. Exploration will concentrate on the Tetyaev High, in water depths greater than 2,000 meters where Vanco has identified a series of large structures, and on the shallower Sudak Folded Belt where Vanco has identified numerous attractive prospects.

The approval for Vanco comes as Ukraine seeks to boost oil and gas output by a third within the next several years. If exploration efforts are successful, the development of the project will require investments of more than $20 billion. “With the Prykerchenska Production Sharing Agreement now in place,” says Vanco’s Chairman and President Gene Van Dyke, “we can proceed with plans to explore fully this frontier area of Ukraine’s deep Black Sea.”

Dedicated to international deepwater exploration since 1996, Vanco has successfully operated drilling programs offshore Morocco and Côte d’Ivoire in the last three years. In addition to Ukraine, the Houston independent has deepwater exploration programs offshore Gabon, Equatorial Guinea, Ghana and Côte d’Ivoire.

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