RIA Novosti reported that the European Bank for Reconstruction and Development and the European Investment Bank plan to grant USD 300 million to Ukraine national oil and gas company Naftogaz to modernize the Ukrainian gas transportation system following memorandums signed recently.

Under the memorandums, the banks will grant USD 154 million each this year.

Mr Andre Kuusvek EBRD Director for Ukraine said the EBRD loan will be granted against sovereign guarantees for a period of 15 years. Consulting firm Mott MacDonald will submit a report on the modernization project to the bank in September after which the bank will hold a meeting to decide on the loan disbursement.

He said that "We hope to sign the project this year, adding that further reconstruction of the country's gas-transportation system could also be backed by the EBRD.”

Ukraine plans to invest a total of USD 5.3 billion within seven years to modernize its Soviet-era gas transportation system. The first stage of the upgrade was launched on Tuesday with the reconstruction of the Urengoi-Pomary-Uzhgorod pipeline. The first stage will require USD 538.87 million in investment of which USD 230.87 million will be provided by Ukraine and the remainder by investors.

Ukraine accounts for 80% of Russian gas transit to EU nations. Kiev has long been trying to persuade Moscow to abandon the idea of building the Nord Stream and South Stream gas pipelines which will significantly reduce gas transit volumes through Ukrainian territory.

Ukraine gas network which includes more than 37,500 kilometres of pipe plus 71 compressed air plants and 13 underground gas storage facilities, pumps 141 billion cubic meters of gas to Europe a year.

(Sourced from RIA Novosti)