Naftogaz secures USD 1 bln insurance from Chinese corporation

Ukraine’s natural gas state company Naftogaz signed on
Apr. 1 a MoU with Chinese state-owned export and credit corporation Sinosure
for a USD 1 bln insurance quota that will allow Naftogaz to attract loans and
investments of that size, the company reported on Apr. 2. In the nearest
future, Naftogaz will use that insurance to attract a USD 160 mln loan to
finance the drilling of new wells. About USD 800 mln of financing will be used
for other projects that will be agreed upon with Chinese side later, the
company said.

Alexander Paraschiy: The insurance for USD 1 bln provides solid financial backing for
Naftogaz, which was planning but failed to attract up to USD 1 bln from a
Eurobond placement last year. Although such financing is limited to cooperation
with Chinese companies and new projects, it improves Naftogaz’s financial
flexibility, thereby reducing the need to attract Eurobond financing and at the
same time raising the chance for a successful placement of such a bond, if the
company decides to use this option in the future. Expanded well drilling
operations will allow Naftogaz to implement its plan to raise hydrocarbon
output.