You're reading: Controversial offshore oil rig arrives, but controversy lingers

President Viktor Yanukovych’s administration has beefed up the capabilities of domestic state companies to explore and drill in deep-water offshore areas by purchasing two state-of-the-art rigs from Singapore.

One of the rigs, Petro Hodovanets (above), arrived on Ukraine’s Black Sea coast several weeks ago and is being prepared to start drilling for new hydrocarbons at depths Ukraine-made rigs can’t reach.

Last year’s purchase of the two rigs, however, have been clouded with controversy and allegations of corruption.

A year of investigative reporting by Ukraine’s ZN.ua weekly newspaper and TVi television channel suggests that state energy company Chornomornaftogaz purchased them through offshore intermediaries at inflated prices.

The reports have pointed the finger at Ukraine’s Energy Minister Yuriy Boyko. He has steadfastly denied wrongdoing, but documents and interviews with individuals involved in the issues have sparked speculation that the scheme was used by interests close to government officials to siphon funds from the state budget.

Ukrainian journalists have over the past year battered Energy Minister Yuriy Boyko (right) with questions about why a state energy company purchased two deep-water hydrocarbon exploration and production drilling rigs from an offshore intermediary company at what seem to be hugely inflated prices. (UNIAN)

One of the oil rigs was, for example, purchased for about $400 million from Highway Investments Limited. That’s nearly twofold their price original price tag, according to the investigative reporting done by ZN.ua and TVi. Evidence of high-level fraud has been uncovered. Reporters from TVi travelled to Latvia to interview a local citizen who owns this company on paper, but denies having any relations to the company in reality.

Ukrainian authorities have accused journalists investigating the purchases of trying to undermine the nation’s efforts to improve energy security.

Authorities have in recent weeks suggested that the higher price tags include not only the value of the rigs, but other services that are to be rendered. A report by TVi journalists, however, has provided evidence that these additional services were added on as part of a cover-up that included forgery, namely back-dated contracts.

Apart from the oil rigs, the administration has invited the world’s top energy companies in to explore for hydrocarbons, especially to explore the nation’s untapped shale deposits.