KIEV, June 16 – Ukraine seeks to borrow $4 billion from European banks to secure massive natural purchases gas within the next two months to prevent supply disruptions in the winter, Prime Minister Yulia Tymoshenko said Tuesday.

Tymoshenko, who traveled to Luxembourg for talks with European Union officials on Tuesday, asked for the loan after Russia had declined to lend the money leaving Ukraine struggling with the payments.

“We need to purchase gas to be stored in the gas tanks, and this is not only a Ukrainian issue,” Tymoshenko said in comments released by her press service. “The overall happiness of Ukraine, Russia and the EU must be financed by somebody.”

European leaders agreed to hold the talks as Ukraine is responsible for 80% of Russia’s Europe-bound gas supplies. Any significant dispute and disruption may affect more than 20 countries that rely on Russian gas supplies.

Ukraine has huge underground gas tanks that it has been traditionally filling with gas in the summer - when demand from consumers is weak - to be used later in the year when demand sharply accelerates.

The tanks have a total capacity of 32 billion cubic meters, and Ukraine had about 19 billion cubic meters of gas stored as of early June, according to government officials.

The massive purchases of gas have been usually financed by RosUkrEnergo, a gas trader, but Tymoshenko had removed the trader from being the gas supplier, instead accepting Gazprom as the source of gas.

But Gazprom, and the Russian government, have both refused to provide the credit to Ukraine, leaving the cash-strapped Tymoshenko government scrambling with ways of paying for the purchases.

“This is normal practice, but today there is a financial crisis and there is no way how to borrow $4 billion,” Tymoshenko said. “The pumping of gas to the tanks is equally important for the EU, Russia and Ukraine.”

Naftogaz Ukrayiny, the state-owned energy company, has been struggling with the payments for gas over the past two months.

In early June the National Bank of Ukraine was forced to print 3.8 billion hryvnias and quickly convert them to $500 million to allow Naftogaz make the payment of $650 million for gas imported in May.

In early May, Naftogaz was forced to borrow $450 million from Gazprom to be able to pay for gas imported in April.

President Viktor Yushchenko last week criticized Tymoshenko for the fact that Naftogaz has been facing financial troubles, and asked the prime minister to increase domestic gas prices to market levels to reduce Naftogaz losses.

But Tymoshenko quickly rejected the demand, suggesting that she has “promised” the people that gas prices will not increase this year.

Yushchenko accused Tymoshenko's government of pursuing policies that will bankrupt Naftogaz, including the use of credits to purchase imports of Russian gas. Yushchenko said Naftogaz credits to be repaid totaled 74 billion hryvnas ($9.7 billion) compared to 56 billion hryvnas at the start of the year. (tl/ez)