Summary sheet
This operation will finance the acquisition of long-term gas reserves, technically equivalent to cushion gas. In parallel, the Promoter will be contractually required to allocate a comparable amount of financing to sustainable energy and decarbonisation projects. These projects are expected to be linked to this operation in the medium term, in accordance with the framework loan allocation procedures. As such, the operation addresses immediate energy emergency needs while also supporting the Promoter’s medium-term sustainability objectives.
The project will support the well-functioning of Ukraine's gas storage part of transmission system, which is a key priority given the continuous attack on Ukraine's energy infrastructure. The imported volume of gas, working capital financed by the project, would help compensating the production losses due to recent attacks and will thus contribute to restore the long term gas reserve needed for the normal operation of the Promoter. In turn, this will help Naftogaz implementing renewable and decarbonisation investment on schedule in the context of substantial and temporary loss of revenues. The implementation of renewables and/or decarbonisation projects will translate Naftogaz decarbonisation plan into tangible actions consistent with the Paris Agreement. The promoter will decide the share between renewables and decarbonisation investments based on national & corporate strategic goals and subject to EIB appraisal & approval.
This operation supports the Promoter's emergency needs for strategic gas reserves which correspond to the long-term storage of gas, save for cases of emergency, and provided that in such cases, equivalent volumes of gas shall be replaced within three months, and the Promoter's decarbonisation plans based on its commitment to reinvest the loan-equivalent amounts into EIB-eligible renewables/decarbonisation projects.
The Project is consistent with the principles of the EU assistance to Ukraine within the context of war, Ukraine's Energy Strategy until 2050 and the EIB's Ukraine Energy Rescue Plan.
The Project further addresses risks identified in Ukraine's Fourth Rapid Damage and Needs Assessment.
The Project has excellent economic return and broader social benefit considering the different non-monetized benefits (emergency support in time of crisis, emerging renewable energy market).
The Bank's financing addresses the Promoter's needs in terms not available on the market. EIB contribution is excellent as the operation contributes to the diversification and stability of Promoter's financing, through the provision of financial and technical support, as well as predictability and flexibility required to develop green investment in the country, amidst a context of uncertainty. The Promoter is an experienced energy group, with relatively strong technical capacity, but its experience in RES development is still relatively limited.
The purchase and import of natural gas to fill in existing underground gas storages are not likely to have direct significant impact on environment. The project will not add gas capacity and therefore will not have negative climate impact. AThe proposed operation will ultimately support investments in renewable energy and decarbonisation actions. Renewables and decarbonisation components will be appraised upon submission of the corresponding request under the framework loan. Where and when applicable, the requirements of the environmental legislation will be verified during appraisal. Positive social impacts include the improved availability of gas-fuelled heat and electricity to population and businesses.
The promoter shall ensure that the project is implemented in accordance with the EIB's Guide to Procurement and the applicable EU public procurement regulations. Furthermore, the promoter shall comply with the conditions set out in the Ukraine Guarantee Facility, as required. At this stage, the promoter has not yet identified the main suppliers or contractors for the project implementation.
The operation is a unique opportunity for EIB to provide a combined response addressing the country's resilience, energy emergency needs and supporting medium term green objectives of Ukraine.