Brussels - Ukraine is set to borrow up to 1.7 billion dollars from international lenders over the next 18 months to upgrade its gas transit network and prevent a winter gas crisis in Europe, European Union officials said Friday.

The loans will be conditional on Ukraine's ability to reform its gas network in line with Western demands, officials stressed.

The EU's executive, the European Commission, and international lenders have "reached agreement with Ukraine on the reform of the Ukrainian gas network," the commission said in a statement.

The head of the commission, Jose Manuel Barroso, hailed the deal, saying that it "should provide the stability needed to significantly reduce the risk of a further gas crisis between Ukraine and Russia and therefore provide the security of supply that member states and our consumers expect."

Under the deal, the European Bank for Reconstruction and Development is ready to lend Ukraine up to 750 million dollars to buy gas before the winter and to upgrade its transit network.

The World Bank is prepared to lend up to 500 million dollars for structural reforms in Ukraine.

And the European Investment Bank, the EU's financial arm, is willing to provide up to 450 million dollars to upgrade Ukraine's gas network, the statement said.

The deal was clinched after Ukrainian Prime Minister Yulia Tymoshenko pledged a series of planned reforms, with deadlines, to Ukraine's gas-network management.

"Further reforms, based on a broad political consensus, are essential in order to ensure a sustainable, reliable and accountable gas sector in Ukraine operating for the benefit of the Ukrainian public and consumers," the lenders said in a statement.

The commitments "should ensure increased transparency and long- term viability of Ukraine's gas sector, and I very much hope that the strict timeframes set out in the reform agenda are fully respected," Barroso said.

A quarter of the gas burned in the EU comes from Russia, and 80 per cent passes through Ukrainian pipelines.

Traditionally, Ukraine has bought gas in the summer, stored it and sold it on to local and EU consumers in winter.

But under the impact of the financial crisis, Tymoshenko has warned that Ukraine will be unable to buy the usual amounts - potentially lighting the fuse for a winter gas shortage in Europe.

EU officials hope that Friday's deal, which follows a 3.3-billion- dollar loan to Ukraine from the International Monetary Fund (IMF), will secure Europe's gas supplies by allowing Ukraine to play its traditional role of middleman between Russia and Europe.

A row between Ukraine and Russia over unpaid bills at the end of last year saw Russia cut off gas supplies to and through Ukraine, triggering a two-week shortage in parts of the EU.

Friday's deal "should help Ukraine become a more reliable energy partner for the benefit of both the EU and Ukraine's own people," Barroso said.(dpa)