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Ukrainian government to refinances debt of national oil and gas company

August 23, 2013, 19:34 UTC+3

Naftogaz traditionally attracts loans during the summer period for the purchase of natural gas within the framework of preparations for the winter season

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Photo ITAR-TASS/ Sergey Davydkov

Photo ITAR-TASS/ Sergey Davydkov

KIEV, August 23 (Itar-Tass) - The Cabinet of Ministers has decided to refinance the loan debts of the Naftogaz of Ukraine national oil and gas company in the amount of 4.8 billion Ukrainian hryvnia - UAH (USD 600 million), the government’s press service reported on Friday.

“To optimise the payments of Naftogaz of Ukraine on the attracted loan funds, primarily from the state-run Oshchadbank (Savings Bank), the Cabinet adopted a resolution for the issuance of secured interest-bearing registered bonds worth UAH 4.8 billion,” the statement says.

The bonds’ maturity is 3 years, the annual interest rate - 14.3 percent, the payment of income is quarterly.

According to the Ukrainian Ministry of Energy and Coal Industry, the bond issue will make it possible to release from natural gas from the pledge to the bank. It is necessary to take the gas from underground storage facilities to ensure stable operation of generating companies during the winter period.

The need for the bond issue arose because Naftogaz lacks floating assets. On June 13, Naftogaz of Ukraine signed with the state-controlled Ukrgazbank contracts to attract loans worth UAH 2.489 billion (more than USD 300 million): a term loan worth UAH 1.489 billion (USD 185 million), revocable revolving credit line worth UAH 1 billion (USD 125 million).

Naftogaz traditionally attracts loans during the summer period for the purchase of natural gas within the framework of preparations for the winter season. According to the projected balance of supply and distribution of natural gas in 2013, approved by the government, the injection of gas into the country’s underground storage facilities country is envisaged in the amount of 8.457 billion cubic metres, including domestically produced gas - 5.502 billion cubic metres, and imported gas - 2.955 billion cubic metres.

Naftogaz of Ukraine’s net loss grew 2.25 times in the first half of 2013, against the same period in 2012 - to UAH 9.998 billion (USD 1.25 billion). The company’s net revenues from the product sale in the first half of the year fell to UAH 38.14 billion (USD 4.77 billion), against UAH 62.866 billion (USD 7.858 billion) for the same period in 2012. The company’s gross loss amounted to UAH 4.426 billion (USD 553 million), while in the same period last year, Naftogaz had a gross profit of UAH 1.614 billion (USD 200 million).

The National Joint-Stock Company Naftogaz of Ukraine is the largest state-run vertically integrated oil and gas company, enterprise of which produce more than 97 percent of the country’s oil and gas. The company is engaged in oil and gas production and oil and gas field development, transportation and sale of petroleum products through its own network of filling stations.

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