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Naftogaz, Ukraine's oil and gas Company, to invest $800 mln

NAK Naftogaz Ukrayny, Ukraine's state- run oil and natural-gas company, will invest $800 million this year in oil and gas extraction and pipelines, as it tries to lessen its dependence on imported energy.

„We will review all our projects and will concentrate on the most profitable,” Oleksandr Kovalko, the chief finance officer at NAK Naftogaz Ukrayny, said today at a press briefing in Kiev. Ukraine depends on imports, mostly from Russia, for about 80% of its energy needs. The country wants to invest in gas and oil extraction abroad and the Black Sea with international oil companies to diversify. Naftogaz will invest as much as $30 million exploring for oil and gas in Egypt.

Naftogaz plans to borrow $495 million to $554 million abroad and more from Ukrainian banks, for a total of $653 million, to refinance loans, according to Kovalko. The company's current debt totaled $2.5 billion at the end of 2006. Naftogaz will probably resume borrowing by the end of spring, Kovalko said. „We will attract loans and we may also issue bonds,” said Kovalko. „Everything depends on the situation in the world markets and our financial results.”

Naftogaz got a $350 million loan at the end of last year and a $200 million loan in February from Credit Suisse, Kovalko said, without giving any other details. „We used this money to repay our $200 million debt to ABN AMRO in the end of February this year,” he said. Kovalko said Naftogaz would increase its net profit this year by cutting jobs and cost. The government will also help to raise Naftogaz profit by allowing it to raise prices for households in the H2 of 2006 after Russia doubled the price it charges Ukraine for natural gas in January last year and raised them again by 37% this year. Controlled prices for gas in the H1 of 2006 caused Naftogaz to lose $731 million, Kovalko said. (Bloomberg)