The National Joint Stock Company, Naftogaz Ukraine, signed a loan agreement with Citi and Deutsche Banks for a euro-denominated line of credit for the purchase of gas, equivalent to $500 million. The funds must be used solely for the purchase of gas, as reported by the company on Saturday, December 31st. The agreement itself was signed the day before.
According to Naftogaz’s press service, the credit line is secured by the World Bank, which in turn, is guaranteed by the Ukrainian Government with its energy fund.
This credit line will be in effect for four years, two years for the purchase of gas and two for the repayment of the loan. Under the conditions of this loan, Naftogaz will continue to buy gas according to the existing contracts. The company will have to pay the loans over a period of 12 months from the day they were obtained. The repayment of the loan is guaranteed by the World Bank.
Naftogaz will be able to use this credit facility to purchase gas from both the Eastern and Western suppliers. The decision in this regard will be made based on the competitive proposals for the gas supply. "These funds will help Naftogaz ensure stable gas supplies to Ukrainian consumers this winter," the CEO, Andriy Kobolyev, said.
In late December the reserves of gas in Ukrainian underground storage facilities were decreased to almost 12 billion cubic meters. According to experts, these volumes will last until the end of the heating season, provided that there is no extremely cold weather during January and February.