The Urengoy-Pomary-Uzhgorod pipeline has been designed to transport gas from Russia towards European markets as well as allows gas flows from the EU to Ukraine.
EBRD energy and natural resources managing director Riccardo Puliti said: "This project is one of the cornerstones of the EBRD reform-anchoring and crisis response package for Ukraine.
"This is not only a project about modernising infrastructure but, through the conditions inserted in the financing documents, an opportunity to improve the corporate governance of both NAK Naftogaz and Ukrtransgaz and to contribute to the overall transparency of the energy sector in Ukraine."
NAK Naftogaz subsidiary Ukrtransgaz will carry out the upgrades, which will enhance the efficiency and safety of the 120km of the pipeline whilst reducing gas loss during transportation by a fifth.
Ukraine Foreign Affairs Minister Pavlo Klimkin said: "The money will be invested in making one of Ukraine’s key gas transmission routes more energy efficient, robust and secure."
The financing will also be used to upgrade a gas compression station in the town of Romny, Ukraine.
The European Commission responsible for the Energy Union vice-president Maroš Šefcovic said: "This complements the loan agreement signed between the EIB and the Ukrainian authorities on 1 December 2014 and, together with the recently launched European Commission-World Bank Trust Fund on the reform of Naftogaz, is a very significant step forward in ensuring that the Ukrainian gas transmission system remains a reliable transportation route."
Image: Ukraine secures €150m financing to upgrade Urengoy-Pomary-Uzhgorod pipeline. Photo: courtesy of The European Bank for Reconstruction and Development.
