You're reading: Ukraine hopes for $10-12 billion from Naftogaz sales

KIEV, Sept 7 (Reuters) - Ukraine hopes to raise between $10-12 billion next year from the privatisation of companies arising from a restructuring of state oil and gas firm Naftogaz, Energy Minister Yuri Boiko said on Wednesday.

The sprawling behemoth, which both resells Russian gas in Ukraine and ships supplies onwards to Europe, is due to be reshaped into separate companies covering transport, trade and extraction to bring it more into line with European standards.

The restructuring has political overtones in light of Ukraine’s dispute with Moscow over the price it pays for Russian gas under an agreement signed between Naftogaz and Russia’s gas giant, Gazprom , in 2009.

"Next year we will privatise these companies either by means of an IPO or on the stock exchange. This will give us additional money of between $10-12 billion which will be used for raising energy-effectiveness and increasing gas extraction," Boiko told reporters.

He gave no details about the future companies arising from the Naftogaz restructuring or the size of the share offers. But he said Ukraine would retain a controlling stake in each company.

The figure of $10-12 billion was higher than an earlier estimate of $5-6 billion which Boiko set on sale of a minority stake in Naftogaz’s restructuring last March.

Last week Prime Minister Mykola Azarov put a figure of between $5-10 billion on an IPO sale of part of Naftogaz.

Boiko said Naftogaz sales would help pay off its debts and be used to make additional investments in fuel extraction.

"As of January 1 2015 we will be extracting not (the present day) 20 billion cubic metres of gas per year but 25 billion cubic metres," Boiko said.

The ex-Soviet republic is involved in an increasingly bitter dispute with Russia over the price it pays for Russian gas to power its key metals and chemicals industries.

President Viktor Yanukovich, in a newspaper interview published on Tuesday, said Russia’s attitude in the affair was "humiliating" for him and the state.

Kiev is now threatening to challenge the 2009 agreement — the basis for the present gas pricing structure — in an international arbitration court if Moscow does not agree to review its terms.

The Kiev government has refused a call by Russian Prime Minister Vladimir Putin to merge Naftogaz with Gazprom.

But as an incentive to Moscow to relent on the 2009 gas deal, Ukrainian officials are believed to be offering Russian companies a stake in Naftogaz’s restructuring.