Naftogaz Works with Goldman Sachs, OPIC, IFC to Secure Winter Supply Financing

Naftogaz is working with Goldman Sachs, the Overseas Private Investment Corporation (Opic), and the International Finance Corporation (IFC; a private arm of the World Bank) to secure financing to ensure stable winter gas supply, a Naftogaz official has said.

In a posting on his Facebook account on March 30, Yuriy Vitrenko, Naftogaz's director for business development, said that securing the private financing is "important not only for Naftogaz, but for the entire economy."

According to Vitrenko, the collaborative project is an example of attracting international private investment when the Ukrainian risks are insured by the US, in this case Opic. It also shows the cooperation of private investment banks and international financial organisations, he said.

Ukraine has previously struggled to maintain adequate winter gas supplies, partly owing to conflicts with primary gas supplier, Russia. However, Ukraine has been increasingly motivated and active in recent years to ensure that it has enough gas in storage to meet its needs. 

Notably, last September, Naftogaz secured a €300mn European Bank for Reconstruction and Development (EBRD) loan to meet its winter gas storage needs, a development the EBRD called "important."

The EBRD loan, from the Ukrainian government's perspective at least, appears to have been a successful measure, particularly in reducing Ukraine's dependence on Russian gas. In November 2015, gas supply from Russia to Ukraine was halted in light of a dispute over advance payments. Though in previous years, the halting could have signalled a serious blow to Ukraine's winter energy security, the impact was minimised by Ukraine's underground gas stores and supplier diversification.

In February, Ukraine's prime minister Arseniy Yatsenyuk said it was the first time in Ukraine's history as an independent state that it had not purchased "a single [cubic] metre of Russian gas."

"Now the Ukrainian company Naftogaz purchases natural gas under transparent and open contracts from the European Union member states, from six largest European companies," he said. 

Erica Mills