Ukraine`s Naftogaz seeks JVs with Gazprom-paper

09:44, 07 July 2008
Ukraine
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Ukraine`s state energy firm Naftogaz thinks...

Ukraine`s state energy firm Naftogaz thinks Gazprom should join it in joint ventures to explore for oil and gas on the Black Sea shelf and in Russia, the company`s head said in a newspaper interview on Saturday, according to Reuters.

Ukraine is usually wary of too much Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) participation in its energy markets -- relations between Moscow and Kiev are periodically strained over gas prices and the Russian giant supplies Ukraine with most of its gas needs.

"I would propose talks on joint development of Ukraine`s (part of the) Black Sea with Gazprom and talks about joint development of gas deposits on the territory of the Russian Federation," Oleh Dubyna told the weekly Zerkalo Niediela newspaper.

"They are most likely to be interested in the oil on the shelf. We are ready to develop Ukrainian deposits on the shelf and give them oil in return for gas, in which we are more interested," he said.

Gazprom has an oil unit, Gazprom Neft (SIBN.MM: Quote, Profile, Research, Stock Buzz).

In May Ukraine cancelled an exploration licence that had been awarded to U.S. firm Vanco, accusing it of breaking a number of rules and conditions. But it also voiced concern that Vanco would sell the licences to Gazprom itself.

Prime Minister Yulia Tymoshenko said in May that Naftogaz should explore and extract oil and gas in the Black Sea, but investors could be allowed into production sharing deals giving them what she called "international norms" of 30-40 percent.

BAD DEBT MARKET

Dubyna also said Naftogaz was unable to find a good deal amongst foreign banks to raise a syndicated loan of $2 billion and will now turn to the domestic market.

"We laid out our propositions to 12 banks and eight have already replied and presented their conditions for the credit," he said.

"But the majority of the conditions do not suit us, so we are conducting talks with a pool of Ukrainian banks, together with the central bank, in order to receive the money which we need." Naftogaz was in technical default of a $500 million Eurobond for several months earlier this year for not providing in time its 2006 audited accounts. As gas import prices from Russia have sharply risen, its financial health has deteriorated.

President Viktor Yushchenko and Prime Minister Yulia Tymoshenko have said the firm was on the verge of bankruptcy.

But the government has provided a $2.4 billion sovereign guarantee, and Dubyna has said before that the firm could break even this year.

Dubyna made no mention of a possible gas price for next year, which Gazprom said could more than double to $400 per 1,000 cubic metres from $179.5 now. (Writing by Sabina Zawadzki)

 

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