EBRD Lends €200 Million to Naftogaz for Strategic Gas Reserves, Bolstering Ukraine’s Energy Security Amidst Conflict

EBRD Lends €200 Million to Naftogaz for Strategic Gas Reserves, Bolstering Ukraine’s Energy Security Amidst Conflict

(IN BRIEF) The European Bank for Reconstruction and Development (EBRD) is extending a €200 million loan to Ukraine’s state-owned gas entity, Naftogaz (NAK), to support the establishment of strategic gas reserves during the second winter heating season since the Russian invasion in February 2022. This financing follows a €300 million loan provided last year as part of a €500 million donor support package, including a grant from Norway. The agreement, finalized in Kyiv, demonstrates the EBRD’s commitment to enhancing Ukraine’s energy stability and security during wartime conditions. The collaboration with Naftogaz aligns with EBRD President Odile Renaud-Basso’s pledge to support Ukraine’s energy security as a top investment priority. Norway and The Netherlands are partnering with the EBRD to share the risk in this venture, with Norway contributing €54 million in support of Ukraine’s critical energy security needs. The EBRD’s ongoing efforts in Ukraine encompass energy security, essential infrastructure development, food security, trade, and support for the private sector. The EBRD also recently fulfilled its commitment to invest €3 billion in Ukraine during 2022-23 and is seeking a €4 billion capital increase to further assist Ukraine’s reconstruction efforts, subject to approval by the Board of Governors by the end of 2023.

(PRESS RELEASE) LONDON, 23-Nov-2023 — /EuropaWire/ — The European Bank for Reconstruction and Development (EBRD) is lending €200 million to help Ukraine’s gas entity Naftogaz (NAK) build up strategic gas reserves in the second winter heating season since the Russian invasion in February 2022. The latest finance for Naftogaz follows €300 million lent last year, part of a package of €500 million of donor support including a grant from Norway.

The signing took place in Kyiv, with the EBRD represented by Matteo Patrone, Managing Director, Eastern Europe and the Caucasus, and Naftogaz by Oleksiy Chernyshov, the company’s Chairman of the Board and Chief Executive Officer.

“We are proud of our collaboration with Naftogaz, which has also been improving its governance and, after difficulties in the past, has successfully completed the restructuring of its bonds – we stand ready to support them further,” said Matteo Patrone.

“This is a very important step towards strengthening the energy stability of our country in wartime conditions. I am sincerely grateful to the EBRD and Matteo Patrone for their cooperation and consistent support of Ukraine in this difficult time,” said Oleksiy Chernyshov.

This signing brings to fruition an agreement initially made in June at the Ukraine Recovery Conference in London, between EBRD President Odile Renaud-Basso and Ukraine’s Prime Minister, Denys Shmygal. It is part of EBRD efforts to boost the country’s energy security – one of five investment priorities for the EBRD’s support of Ukraine’s real economy.

All EBRD investments in Ukraine involve risk-sharing with donors and partners, in this case with Norway and The Netherlands.

“The people of Ukraine is facing another cold winter under Russian attack,” said Norwegian Minister of Foreign Affairs Espen Barth Eide. “Norway will continue our support to Ukraine to maintain critically important energy security and meet the needs for heating for homes, businesses and public institutions. We are proud to support these efforts by EBRD with EUR 54 million. The EBRD is a key partner for Norway’s five-year comprehensive support programme for Ukraine. So far, Norway has funded efforts by the EBRD within energy alone with EUR 300 million in 2022-23.”

The EBRD, which has a relationship with Ukraine dating back more than three decades, working both on projects and on support for the Ukrainian authorities’ reforms, has significantly increased its support there in wartime, focusing on energy security, vital infrastructure, food security, trade and support for the private sector.

Last month the Bank fulfilled its commitment to deploy €3 billion there in 2022-23. And, earlier in November, directors asked the Board of Governors to approve a €4 billion capital increase to enable the EBRD to provide significant and sustained investment for Ukraine, raising its funding levels further when the time comes for full reconstruction.

Governors – who agree that support for Ukraine should be the Bank’s highest priority, now and in the future, following Russia’s full-scale invasion of the country, whilst also ensuring that the EBRD can continue to pursue its strategic priorities across all its economies of investment – will make a final decision on the proposed capital increase by the end of 2023.

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SOURCE: EBRD