Releases 2022-06-15T04:33:32+03:00
Ukrainian news
A Member of the Parliament is trying to jeopardize significant foreign investment into oil & gas production in

A Member of the Parliament is trying to jeopardize significant foreign investment into oil & gas production in Ukraine

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Kyiv, October 29, 2021: Announced on May 8th, 2020, York Energy, a UK affiliate of Alpha Energy, a US oil & gas company, won a tender to enter a production sharing agreement (PSA) with the Ukrainian government for the Ichnyanksaya subsoil block. For the last 18 months, York Energy, its principals, and professional advisors have expended considerable effort and resource to address all required legal formalities as quickly as possible in order to begin work in the field without delay. York drafted the actual PSA agreement at its own expense, despite the provision of a draft agreement being an obligation of the Inter-Agency Commission (IAC) representing the Ukrainian government. York then patiently waited for months for the IAC and relevant authorities to provide comments to the draft PSA. When finally received, York responded quickly and constructively, agreeing to or negotiating an acceptable compromise for all outstanding points. The PSA is now in agreed and executable form, ready for signature, and York remains prepared to begin work. We have this week signed a Memorandum of Understanding with Halliburton to provide a wide range of drilling and development services.

Unfortunately, with the deadline of executing the PSA only a week away, constructive progress was abruptly stopped, raising serious concerns as to the positive outcome. On 26 October 2021, after agreeing all remaining technical points, the IAC was expected to vote its recommendation to the Cabinet of Ministries of Ukraine to execute the PSA. Instead, just prior to voting, one of the IAC's members who is also a member of the Ukrainian Parliament objected, emotionally and groundlessly, alleging that York Energy is not a bona fide investor and that it and its parent, Alpha Energy, should be required to provide an additional, unquantified and unspecified, financial guarantee. This individual’s comments disrupted the constructive proceeding and derailed the scheduled vote, leading the IAC to delay the matter until a meeting scheduled for Monday, November 1st. As the statutory deadline for the PSA's execution is November 8th, 2021, such a delay and the resulting uncertainty it causes introduces significant concern as to whether the project will be approved.

The underlying unfair and unjustified claim challenges the investor's good and well-established reputation and creates a serious risk for its planned investment in Ukraine. Alpha Energy is legally qualified by the United States and the United Kingdom to operate oil and gas properties, both on- and offshore. Alpha Energy is currently an operator of over 100,000 acres (app.405 km2) of oil and gas leases in Texas, Colorado, and the United Kingdom. The investor has prepared for actual work in the Ukrainian field by investing in field development engineering and planning, including identifying specific drilling locations and well designs. The company is ready to get to work and drill first wells, as soon as the Ukrainian documentation and permitting processes can be completed. Contrary to all these facts and the outcome of the PSA tender awarding the project to the investor in compliance with all Ukrainian legal requirements, a member of the IAC claims that York Energy and Alpha Energy are not qualified to work in Ukraine and asks for the provision of additional and unspecified financial guarantees which are not required by law and have never been requested from the other investors on the already executed PSAs thus making this suggestion clearly discriminating.

Besides the absurdity and discriminatory nature of the statements made within the IAC, from the perspective of Rule of Law this is a very strange position to take, at this time. Ukraine is actively seeking international investors, particularly in energy. York has complied with the requirements of the PSA process and with the laws of Ukraine. There are no legal, technical, or commercial issues outstanding in the PSA draft. This process has been ongoing for one and a half years, the deadline for executing the PSA is approaching, and there is no alternative investor or other path to the development of the field. The choice is to pursue Ukraine's energy independence, as was the intent of offering the PSAs in the first place, or allow individual special interests to interfere with this path.

Here is the outstanding question - Why, after 1.5 years of work and with an agreed contract ready to execute, is a last-minute groundless claim from a member of the IAC threatening to deprive a foreign investor of a business opportunity, and Ukraine of significant foreign investment in a critically important sector of the economy?

York Energy requests that Ukrainian authorities intervene to insure that the rights of York Energy are upheld, and that the IAC acts in its procedures in accordance with law and in the best interest of Ukraine. 

For additional information, please contact Maria Bukhtoiarova - project manager at CFC Big Ideas, by e-mail. at: [email protected] or by phone: +380 99 317 93 46.

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