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. Last Updated: 07/27/2016

New Pipeline Will Pay Ukraine Debt

KIEV -- Ukraine's state oil and gas company agreed to pay off part of its huge gas debt to Russia by building a $250 million pipeline, the company's chief said Thursday.

Naftogaz Ukrainy will construct a pipeline some 555 kilometers long, stretching between the towns of Ananiv and Ismail in southern Ukraine, Naftogaz chairman Ihor Bakai said.

Russian gas giant Gazprom, which supplies Ukraine and was originally to have done the construction, will use the pipeline as part of its network for exporting gas to Western Europe.

Ukraine currently owes Gazprom about $1.1 billion, according to Bakai, and is one of its largest debtors.

Bakai said Naftogaz would also supply Gazprom with $26 million worth of pipeline equipment.

Ukraine relies on Russia for about 70 percent of its gas needs.