Ukraine and the European Investment Bank (EIB) have signed an agreement to finance the modernization of the Urengoi-Pomary-Uzhgorod gas pipeline for EUR 150 million.

The agreement on the implementation of a project for the reconstruction, overhaul and re-equipment of the Urengoi-Pomary-Uzhgorod gas pipeline was signed by Ukrainian Prime Minister Arseniy Yatseniuk on behalf of Ukraine and by EIB President Werner Hoyer on behalf of the EU, an Interfax-Ukraine correspondent reported.

As was reported, Ukraine's Cabinet of Ministers on October 22, 2014, issued resolution No. 1143-r to borrow up to EUR 150 million from the EIB and up to $200 million from the European Bank for Reconstruction and Development to upgrade the Urengoi-Pomary-Uzhgorod gas pipeline. In keeping with the resolution, the funds will be transferred to state-run Ukrtransgaz as a subloan at 2% per annum to implement the pipeline modernization project.

The EIB in the second half of October approved the provision of a EUR 150 million financing to reconstruct the Urengoi-Pomary-Uzhgorod gas pipeline, which is used to supply Russian gas to Europe by the Ukrainian gas transport system operator Ukrtransgaz.

In addition, the EBRD could provide up to $200 million to reconstruct the Urengoi-Pomary-Uzhgorod gas pipeline. The EBRD board is to approve the project on December 10, 2014.

Ukrtransgaz, which is 100% owned by Naftogaz Ukrainy, operates a system of trunk pipelines and 12 underground storage facilities in Ukraine. The capacity of Ukraine's gas transport system is 288 bcm at the entrance and 178.5 bcm at the exit, of which 142.5 bcm goes to European countries and 3.5 bcm goes to Moldova.