China Insures Ukrainian Gas Monopoly's Borrowing

State monopoly Naftogaz Ukrainy and China Export and Credit Insurance Corporation (Sinosure) concluded a memorandum of understanding April 1 for a $1bn insurance quota. This will enable loans and foreign direct investments from China within the said amount, Naftogaz said.

The insurance from Sinosure does not require sovereign guarantee, which means that Naftogaz will not rely on Ukraine’s state budget while enabling the group to attract $1bn into the oil and gas industry. The first practical use will be to fund subsidiary Ukrgazvydobuvannya (UGV)'s production. It will borrow "about $160mn" to fund ongoing contracts with Chinese corporations supplying drilling equipment and turnkey drilling services.

Thanks to Sinosure’s insurance coverage in 2018, Naftogaz said, UGV acquired 13 drilling rigs costing nearly $140mn with a five-year payment deferral. The rigs were bought from Honghua International, which is part of China Aerospace Science and Industry Corporation.