KIEV, Ukraine -- U.S. Commerce Secretary Carlos Gutierrez suggested Thursday that a growing dispute over the cancellation of a U.S. company's oil exploration contracts could damage Ukraine's reputation with foreign investors.
Gutierrez spoke to business leaders in Kiev a day after President Viktor Yushchenko ordered his top security advisory council to sort out the dispute involving the Texas-based Vanco Energy Co.
He said the Vanco dispute could frighten away investors and that Ukraine needed a clear set of rules for investment.
"Every time there is a contract, that is an opportunity to demonstrate to the world that contracts are respected," he said.
"Not all businesspeople may like the rules," Gutierrez said, "but they should know what the rules are and that the rules are predictable."
The government of Prime Minister Yulia Tymoshenko last month said it had canceled a contract with a Vanco subsidiary to explore for oil and gas on a deep-water shelf off the Black Sea Crimean peninsula.
The government said the 2006 production-sharing agreement amounted to "plundering Ukraine's mineral reserves."
Tymoshenko also accused Yushchenko of lobbying for the U.S. firm, whose contract was estimated to be worth some US $13 million (€8.25 million).
Yushchenko met with Gutierrez on Wednesday. His press office later issued a statement saying that Yushchenko had ordered the head of his National Security and Defense Council, Raisa Bogatyryova, to work toward restoring the contract to Vanco in the next few weeks.
According to the company, the offshore shelf region known as Prykerchenska covers around 5,000 square miles (12,900 square kilometers), southeast of the Crimea peninsula.
Development of the entire Prykerchenska project would require more than US $20 billion (€12.7 billion) in investments, the company says.
Yushchenko and Tymoshenko were allies during the 2004 Orange Revolution against voter fraud, but they have repeatedly clashed over various policy matters, mainly concerning oil and gas.
Tymoshenko used to head one of Ukraine's main energy companies.