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Vancover-based Vanoil Energy Ltd. spent six years and more than $3 million in the East African country of Rwanda, working under a Technical Evaluation Agreement (TEA) with the Rwandan Ministry of Natural Resources.

The TEA gave Vanoil the exclusive right to negotiate a Production Sharing Contract (“PSC”) for “any promising oil discoveries identified in the East Kivu Graben Basin” — an area covering 1,631 square kilometres beneath Lake Kivu.

But after months of trying to negotiate a PSC, in June Rwanda “without notice or justification, summarily terminated negotiations and, with that, terminated Vanoil’s exclusive rights to develop the East Kivu Graben Basin,”

This month, Vanoil said it would start “conciliation” discussions with the Rwanda government to resolve the dispute.

“Conciliation is the first-step in the commercial arbitration process agreed to by both Vanoil and the Rwanda government to resolve any commercial dispute,” Vanoil said.

In a statement, the company said

Vanoil has selected a lawyer to participate on the three-person conciliation panel. The Company understands that Rwanda has also selected its representative to the conciliation panel and it is expected that a third panellist will also be selected shortly by the parties.

Meanwhile, Rwanda President Paul Kagame is visiting Toronto’s business community Friday, hoping to attract investment.

What’s Vanoil’s view of that?

“I think what President Kagame has to understand is that he has to respect the legal rights of foreign investors,” Vanoil director Don Padgett told the Financial Post. “Without that, he’ll have a very tough time attracting any serious Western investment.”