Ukraine to upgrade production, gas transport

Eric Watkins
Senior Correspondent

LOS ANGELES, Mar. 23 -- Naftohaz Ukrayiny, the state oil and gas company of Ukraine, expects to receive the first $350 million installment in early April of a $2 billion loan from Deutsche Bank for modernizing oil and gas production and gas transportation.

Oleksiy Ivchenko, appointed chairman of Naftohaz Ukrayiny in early March, told Ukraine's Zerkalo Nedeli newspaper the 5-year loan can be extended to 7-9 years and has a provisional interest rate of 8%/year. He said the company will use initial installments for modernization of production and later installments for the gas transport system.

Ivchenko acknowledged the need for additional participants in the transport consortium of Naftohaz Ukrainy and Russia's OAO Gazprom.

The bilateral arrangement "absolutely fails to take account of the interests of the gas purchasers," he said. He said that the consortium should include a transit agent and that Germany's Ruhrgaz has been invited to join the scheme.

Promising to sustain relations with Gazprom and Russia, Ivchenko said he would consider supplies from other producers, adding "Why do we have to be tied exclusively to one gas supplier?"

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