Ukraine revoked the oil and gas license of U.S. company Vanco International, a subsidiary of Vanco Energy Company on April 25.
"The Cabinet of Ministers has decided to unilaterally withdraw from the agreement, which was signed by the previous government with Vanco. We will return the shelf to the state," Olexandr Turchynov said.
Ukrainian Prime Minister Tymoshenko earlier called for an international investigation into the license scandal, describing the Vanco deal as "plundering of Ukraine's mineral reserves" and accused President Viktor Yushchenko of lobbying for the U.S. firm.
However, Presidential spokesperson Irina Vannikova dismissed the allegations, while Yushchenko demanded the license be returned to Vanco.
The Ukrainian Prosecutor General's Office also ordered the country's environmental ministry Tuesday to revoke its decision to strip Vanco of the mineral license.
Vanco International signed a 30-year production sharing agreement with former premier Viktor Yanukovych's government in October 2007, covering the Prykerchenska area just south of the Crimean Peninsula.
Under the deal, the company received a 65% stake and Ukraine 35% at the prospecting and development stage. The sides were to go 50-50 with the launch of commercial production.
Vanco Energy Company is an integrated independent oil and gas company which operates its exploration and production activities through its wholly owned overseas subsidiary and subsidiaries of Vanco International Ltd.
The company holds and operates six large licenses in five countries, including the Ivory Coast, Ghana, Equatorial Guinea and Gabon.
