Ukraine arrests $2.5 bln of Gazprom assets in Europe

 Ukraine arrests $2.5 bln of Gazprom assets in Europe

Ukraine's Naftogaz succeeded in arresting more than $2.6 billion of Gazprom foreign assets, chief executive of Naftogaz Andrei Kobolev said.

Kobolev added that hearings will be held in Switzerland, Britain and the Netherlands, noting that Gazprom's assess in these countries were already been arrested.

According to him, the amount of assets arrested by Naftogaz exceeds the Russian company's total debt to the Ukrainian one.

The executive vice-president of NewTech Services, professor of the Gubkin Russian State University of Oil and Gas, Valery Bessel, speaking to Vestnik Kavkaza, noted that the arrest of assets by Naftogaz will not affect Gazprom’s business contacts with European companies. "As for the arrest of assets, they can be returned, because Gazprom has the right to appeal," he said.

One also should not expect a complete rupture of Gazprom’s business contacts with Naftogaz. "We have a joint gas transmission system. Moreover, not only Ukrainian business made money on pumping Russian gas through Ukraine, but the Russian business as well. Now the only problem is that these pipelines are old, and repairing them is more expensive than building Nord Stream 2. Therefore, Gazprom is building alternative routes," Valery Bessel pointed out.

Deputy director of energy policy of the Institute of Energy and Finances, Alexey Belogoriev, agreed with Bessel. "This situation has no effect on relations with Europe. Risks are associated only with part of the arbitration decision on the supply agreement, because it allows the take-or-pay rule to be revised, but these concerns will not affect prices. Only a further escalation of the situation around the transit through Ukraine can cause a problem for Europe, if it is not possible to conclude a contract with Naftogaz for 2020 in time. As the contractual obligations of both parties expire on December 31 of this year, Gazprom agreed about holding a bilateral meeting with Naftagaz, brokered by the European Commission," he said.

On February 28, 2018, the Arbitration Institute of the Stockholm Chamber of Commerce satisfied Naftogaz’s motion to get reimbursed for undelivered gas for transit worth $4.63 bln against Gazprom. Meanwhile, the court confirmed the debt of the Ukrainian company to Gazprom for the gas supplied in 2013-2014 amounting to $2 bln. This brings Gazprom’s debt to Naftogaz according to results of the two arbitration proceedings in Stockholm to $2.56 bln.

The Ukrainian gas company announced a court-ordered forced collection of funds through the arrest of Gazprom’s assets in Switzerland, Britain and the Netherlands in the summer. The Court of Appeal in Sweden upheld Gazprom’s appeal, ruling to suspend the enforcement of the company’s assets seizure by Naftogaz, which in its turn vowed that it would continue its efforts to freeze the Russian gas company’s assets.

Early this year, Naftogaz of Ukraine filed a new claim in the amount of $12 bln against Russian gas holding Gazprom due to a potential impairment of the Ukrainian gas transport system (GTS).