KIEV, Sept. 15 - Naftogaz Ukrayiny, the state oil and gas company, and Societe General, a French investment bank, reached an agreement over ?2.5 billion five-year credit financing, a Naftogaz official said Thursday.
The agreement comes six months after Naftogaz signed a similar deal with Deutsche Bank that calls for ?2 billion seven-year financing for modernization and acquisition projects.
Naftogaz team traveled to France earlier this year to reach the agreement with Societe General, Oleksiy Ivchenko, the head of Naftogaz, said at a press conference.
"The nest step will be signing separate agreements on lending for separate projects that will specify exact borrowing volumes," Ivchenko said. "The funds will go for modernization of gas pipeline system."
Naftogaz runs a vast natural gas pipeline system that channels which more than 80% of Russian natural gas shipments to European markets, ans such supplies are likely to increase in the future.
Investments in modernization of gas pipelines, but also construction of new pipelines, is one of the key policy priorities for Naftogaz, which planned to spend between $3 billion and $4 billion on these projects within the next three years.
Naftogaz recently completed a natural gas pipeline to Poland, its second pipeline link between the two countries, and plans to expand on Polish gas market as a regional supplier, officials said.
Naftogaz already obtained a $300 million loan from Deutsche Bank in April and is currentrly preparing to get $200 million within the previously agreed 2 billion euro loan, Ivchenko said. The money is lend for 5 years at 8% annual interest, but the agreement may be expended, official said. (sb/ez)