Naftogaz secures $2bn loan

Ukraine’s state oil and gas monopoly Naftogaz Ukrainy has signed a $2 billion, seven-year credit line agreement with Russia’s Gazprombank to help pay for gas imports this year, according to a notice posted on the state procurement website, Derzhavni Zakupivli.

Naftogaz did not disclose the loan terms, but the reported interest costs for seven years (2012-2019) will be $1.54 billion. This implies an annual interest rate of about 11%, or close to the current yield on Naftogaz’s 2014 Eurobonds, said Dennis Sakva of Dragon Capital. “At current gas prices, $2 billion can buy Naftogaz approximately 4.7 billion cubic metres of gas in addition to a similar volume the company could purchase using the recently announced $2 billion prepayment of transit fees by Gazprom,” commented Sakva on July 9. “This funding could thus secure close to 10 Bcm of gas, or the bulk of the volume Naftogaz plans to pump into its underground storage facilities ahead of the fall-winter heating season,” he added.

It is the second major loan secured in recent times from Gazprombank to pay for gas imports. In November 2011 Naftogaz reported it had secured a $550 million loan from Gazprombank to pay for Russian gas.