Commerce Secretary Carlos Gutierrez offered on Thursday that a growing dispute over the cancellation of a US company's oil exploration contracts could hurt Ukraine's reputation with foreign investors.

Gutierrez spoke to business heads in Kyiv a day after President of Ukraine Viktor Yushchenko ordered his top security advisory council to sort out the dispute involving the Texas-based Vanco Energy Co.

He admitted the Vanco dispute could frighten away investors and that Ukraine needed a clear set of rules for investment.

"Every time there is an agreement that is an opportunity to demonstrate to the world that contracts are respected," he noted.

"Not all businessmen may like the rules," Gutierrez added, "but they should know what the rules are and that the rules are predictable."

The government of Prime Minister Yulia Tymoshenko last month reported it had canceled an agreement 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 US company, whose contract was calculated to be worth some $13 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 future several weeks.

According to the firm, the offshore shelf region known as Prykerchenska covers around 12,900 km2 southeast of the Crimea peninsula.