September 12, 2019 / 5:11 PM / 3 days ago

Ukraine strips U.S. firm Trident of oil exploration rights in Black Sea

KIEV (Reuters) - Ukraine’s new government on Thursday stripped U.S.-based Trident Acquisitions of the right to explore and develop oil and gas reserves in the Black Sea shelf, prompting the company to say Ukraine had lost out on $1 billion in new investment.

A subsidiary of Trident, whose chief executive is a former Russian opposition lawmaker who was awarded Ukrainian citizenship this year, had won a tender in July to develop the offshore Dolphin Block.

Trident promised to invest up to $1 billion if enough reserves were found. But critics said the tender process was too short and effectively shut out major international companies who may have wanted to invest.

The tender was awarded under the previous government of Prime Minister Volodymyr Groysman, who lost power after a July snap election that brought a new government formed by President Volodymyr Zelenskiy’s party to power. But Groysman did not give his final approval before leaving office.

“We think that Ukraine has lost a billion dollar investment,” chief executive Ilya Ponomarev told Reuters.

Zelenskiy wants to make Ukraine more business friendly and is targeting big-ticket foreign investment in order to accelerate economic growth, but wants the tender process to start afresh.

“We canceled the decision,” Minister of Energy and Environmental Protection Oleksiy Orzhel was quoted by Interfax Ukraine as saying.

The Association of Gas Producers of Ukraine was among those who had criticized the original tender process as opaque and rushed, and welcomed the decision to cancel the tender award to Trident.

“We approve the decision and invite all companies to participate in the new competition, including Ilya’s company,” executive director of the association Roman Opimakh told Reuters.

Ponomarev in 2012 took part in street protests in Moscow and two years later was the only Russian deputy who voted against Russia’s decision to annex Ukraine’s Crimea peninsula.

Ukraine is seeking to develop its own energy resources especially since relations with traditional supplier Russia collapsed after the Crimea annexation and a conflict in eastern Ukraine that has killed more than 13,000 people.

Ukraine and Russia will hold talks next week on future gas transits after their existing agreement expires in January.

Editing by Matthias Williams and Toby Chopra

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