Naftogaz to spend World Bank-secured loan on 1.1 bcm of gas in March

Ukraine`s oil and gas giant, NJSC Naftogaz of Ukraine, will buy 1.1 billion cubic meters (bcm) of natural gas in March, using letters of credit worth more than EUR 220 million under a loan agreement with Citi and Deutsche Bank against the World Bank`s guarantees, according to the company`s press service.

”The first 15 letters of credit have been issued for Naftogaz under a loan agreement with Citi and Deutsche Bank, which was secured by the World Bank. The letters of credit totaling more than EUR 220 million will be used this March to purchase natural gas from European suppliers to be selected in accordance with the World Bank`s bidding procedure. Up to 1.1 bcm of gas is to be bought. The suppliers will get paid using a letter of credit as soon as gas shipment to Ukraine is made in April,” the press service said.

Naftogaz is obliged to repay the loan within 12 months since the disbursement.

Earlier, Ukraine stopped importing gas from Russia`s monopoly Gazprom in November 2015. Ukraine imported 11.1 bcm of gas from the EU in 2016. In particular, 9.1 bcm arrived from Slovakia, 1 bcm from Hungary, and 1 bcm from Poland. Naftogaz`s share was about 74% of total imports, or 8.2 bcm.

In order to finance imports, Naftogaz uses loans from the European Bank for Reconstruction and Development (EBRD), credit lines opened by Citi and Deutsche Bank, as well as loan guarantees worth $500 million obtained from the World Bank. Moreover, Naftogaz plans to sign documents necessary for guarantees from U.S. OPIC (Overseas Private Investment Corporation) to finance American traders` gas supplies.

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