Fitch's Naftogaz outlook negative

Fitch Ratings said it revised the outlook on OJSC Naftogaz of Ukraine's BB- local and foreign currency ratings to negative from stable. This is to reflect the negative credit implications for the company and its $500 million Eurobond from a significant increase in the pricing of natural gas imports from Turkmenistan.

Although the recent price increase will be partly mitigated by higher transportation tariffs Naftogaz earns to transport Russian gas across Ukraine, Fitch said it does not see the negotiated price increase affecting imports from Turkmenistan.

Naftogaz is now to pay $95 per 1,000 cubic meters of gas, up from $50 paid to Gazprom and $44 paid to Turkmenistan in return for a $1.60 tariff from Gazprom per 100 kilometers transported. At these prices, total cost increases to Naftogaz for Russian gas are $200 million to $250 million, Fitch estimated.

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