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Naftogaz, Deutsche in talks on $1.55 bln loan

Ukraine’s energy monopoly Naftogaz is in talks with Deutsche Bank for a loan of $1.55 billion this year, which it will use to buy gas, spokesman Valentyn Zemlyansky said on Friday.

He said the loan was part of a credit line from Deutsche opened for the ailing energy firm in 2005. Naftogaz had already borrowed $600 million under that agreement. “We are in talks with Deutsche Bank for a loan of $1.55 billion,” Zemlyansky said. Naftogaz’s finances have taken the brunt of steep gas price rises from Russia because it has to sell the gas on to domestic consumers at prices set by the government and usually lower than what it paid.

Ukraine pays $179.5 per 1,000 cubic meters, compared with $130 last year and just $50 in 2005. Gazprom officials have said the price could more than double to $400 next year. It was in technical default of a Eurobond because it failed to provide bondholders its 2006 audited accounts. It handed the accounts over in May, but its auditors wrote they had doubts over the company’s financial future. Zemlyansky said the company wants to issue a bond next year and is in talks with various banks, including Russian ones. (Reuters)