The Ukrainian prime minister cast a shadow over a strategically important hydrocarbon exploration project yesterday, openly accusing a US energy company leading the venture of holding backroom talks with Russia's Gazprom. Announcing her government had repealed an exploration licence off Ukraine's Black Sea coast for Houston-based Vanco Energy, Yulia Tymoshenko also raised the stakes in a long-standing rivalry with Viktor Yushchenko, the president. Ms Tymoshenko, who returned as prime minister last December after a brief stint in 2005, accused Mr Yushchenko and past governments of going against Kiev's "national interests" by yielding Vanco too large a field for exploration and more hydrocarbon proceeds than justified. "Everything that happened, happened - without a doubt - in accordance with the directives of the president and against the national interests of Ukraine," she said. At stake is a vast field in the Black Sea off the Crimea peninsula as well as Ukraine's energy security, says Ms Tymoshenko. Kiev's economy has struggled in adjusting to three stiff natural gas price hikes in as many years, and rising oil costs. Russia and central Asia cover most of Kiev's import needs. Experts say Ukraine holds significant untapped reser-ves, and the government has in past years stepped up efforts to boost domestic production. A production-sharing agreement signed last year with Vanco represented the first sizable gas and oil exploration project on Ukraine's Black Sea coast. But Ms Tymoshenko said yesterday her government had cancelled Vanco's licence, insisting the country's state energy holding, Naftogaz, should lead in strategic exploration projects. She said past government agreements to yield Vanco rights over the Prykerchenska field were unfair, and that her government had evidence talks were held on reselling rights to other companies, including Gazprom. "Nowhere in the world are such [large] shelves handed out to a single company. De facto, we are talking about theft," she said. Both Gazprom and Ukraine's presidential office declined to provide immediate comment. Ms Tymoshenko estimated gas reserves in Ukraine's Black Sea region at some 1,500 billion cubic metres, equivalent to 30 per cent of national reserves. Estimates suggest there could be millions to billions of barrels of oil, and billions to thousands of billions of cubic metres of gas. Vanco signed its production sharing agreement with Ukraine last year, pledging to invest an initial $100m. Jeffrey L. Mitchell, senior vice-president of Vanco, said his company warned Ukraine's government it would defend its interests through international arbitration. Mr Mitchell insisted his company had no intention to resell rights to any company. A Gazprom spokesman was not immediately able to comment. Mr Mitchell argued that the agreement would give Ukraine more than 70 per cent of the proceeds, taking taxes and other fees into consideration. "Around 750m barrels of oil out of 1bn will go to the government," he said. Mr Mitchell said an energy investment fund backed by the UK branch of the Rothschild's family could back out of its role in managing the process of raising investment for the project. "Their interest could move to other parties," he said. He added that an announcement revealing a new partner could come "within a week" but contractual obligations prevent Vanco from providing further details now. Copyright The Financial Times Limited 2008