Naftogaz hoping to agree key conditions for OPIC-secured financing gas pumping to inventories by 2017

National joint-stock company Naftogaz Ukrainy hopes to agree the key conditions for further financing of gas pumping to Ukrainian underground storage facilities secured by the Overseas Private Investment Corporation (OPIC), a U.S. government agency, by the end of this year, Naftogaz Commercial Director Yuriy Vitrenko has said.

"All details will be fixed in documents finally and we hope it will happen by the end of the year," he told reporters in Kyiv on Tuesday.

Vitrenko said that under the project the U.S. will create a Special Purpose Vehicle (SPV) that would buy gas in summer (mainly imported), pump it to underground storage facilities and sell to Naftogaz Ukrainy in winter.

"U.S. companies invest money in gas trade in Ukraine, and OPIC secures their political risks – this is the sense of the deal," he said.

He said that it would be more beneficial for Naftogaz to work with the SPV than independently buy gas in summer and pump it to underground storage facilities.

"The difference between the summer and winter price set by SPV will reflect only the cost of international financing… This is more attractive than the interest rates when Naftogaz can borrow funds from Ukrainian banks to buy gas independently," he said.

As reported, OPIC has approved a project under which it is planned to provide guarantees worth $400 million for gas pumping into Ukrainian underground gas storage facilities in the interests of Naftogaz Ukrainy.

The project assumes that Goldman Sachs investment bank under the OPIC guarantees will fund gas injection into Ukrainian underground gas storage facilities.