Ukraine's Naftogaz Seeks $2Bln.

10 June 2008KIEV — State oil and gas company Naftogaz Ukrainy said Monday that it sent proposals to a range of banks to raise a loan of $2 billion to fund the purchase of natural gas, as it grapples with severe financial difficulties.

"We have sent invitations to 24 banks," spokesman Valentyn Zemlyansky said. "These funds are for the purchase of gas."

Naftogaz has been pushed toward bankruptcy, Ukraine's president and prime minister have said, after steep rises in the price of gas imported through Russian pipelines.

Ukraine now pays Gazprom $179.50 per 1,000 cubic meters of gas against $130 last year, $95 in 2006 and just $50 in 2005.

Naftogaz is in the process of negotiating a new price for next year with Russia. On Friday, Russian Foreign Minister Sergei Lavrov said the price might double because Central Asian states will raise their prices.

Naftogaz narrowly avoided default on its eurobond because it failed to hand bondholders its 2006 audited accounts. After missing several extended deadlines, it complied in May.

But its auditors, Ernst & Young, cast doubts over Naftogaz's financial future despite government measures to help.

In January, the government gave the company a $2.4 billion sovereign guarantee to be used if Naftogaz defaults on any debt.

It also plans to raise subsidized household gas prices.