Ukraine borrowed 150 million euros ($187 million) from the European Investment Bank on Monday to upgrade its section of pipelines that carry gas from Russia to Europe, The Associated Press (AP) reported. The money would be sent to the state-owned pipe operator Ukrtransgaz.
The government plans to replace a 74-mile portion of the pipeline along with an upgrade to compressor stations as part of the four-year long reconstruction. The upgrade of the section of pipes that run between Urengoy-Pomary-Uzhgorod will also focus on ways to reduce emissions and increase energy efficiency, AP reported. The European Bank for Reconstruction and Development is also expected to give Ukraine a $200 million loan for this purpose, although the final approval will only come on Dec. 10, the Kyiv Post reported.
"A new pipeline will be laid, which will give us a chance to call a tender to buy pipes, from Ukrainian producers, I hope,” Ukraine’s Prime Minister Arseniy Yatsenyuk, said Monday, according to Kyiv Post, adding: “This will additionally contribute to the Ukrainian economy.”
The upgrade is expected to be conducted by Interpipe, a major manufacturer of gas pipes in Ukraine that used to sell 44 percent of its output to Russia, until bilateral relations between both sides soured after Moscow's annexation of Crimea.
Although the money is earmarked to upgrade Ukraine's gas transport infrastructure, Yatsenyuk hopes that a Ukrainian company is awarded the project, AP reported. The pipeline can currently supply 142.5 billion cubic meters of gas to Europe every year.
"I hope that Ukraine won't be bypassed through South Stream," Yatsenyuk said, according to the Kyiv Post, adding: "South Stream is an unnecessary political project of Russia, and Ukraine once again calls on all the European and U.S. partners to invest in the Ukrainian gas transportation system."