Gazprom Rejects Dutch Court's Asset Request: Naftogaz (Update)

(Attributes headline to Naftogaz; adds details of subsidiaries and response from Gazprom)

Most of Gazprom's Dutch subsidiaries have refused to co-operate with a Dutch court's attempt to recover $2.6bn owed by the Russian export monopoly to the Ukrainian state-owned monopoly Naftogaz, the latter said June 5.

Naftogaz filed a petition for an attachment of Gazprom’s shares in its Dutch subsidiaries and any debts owed from these subsidiaries to Gazprom, to secure Naftogaz's right to money owed following the successful arbitration case award in February 2018. Gazprom has refused to accept the ruling and six of its seven subsidiaries have not complied, Naftogaz said.

None of the subsidiaries were named in the statement, and nor did Naftogaz reply to NGW's request for the list at the close of business June 5. Gazprom has registered several companies in the Netherlands, including South Stream, Blue Stream, Sakhalin Holdings, E&P International and Gazprom Finance. It also owns the cushion gas in Bergermeer Storage, but has no shares in that business.

Gazprom said it was aware that Naftogaz was seeking the forcible payment of the arbitral awards made in the February 28 decision by the Stockholm court, on Dutch territory. But it said in a June 5 tweet that it could not comment until it had thoroughly studied the documents it was supposed to have received, and at the time of the tweet they had not arrived. It added it would defend its rights fully in accordance with the law. It has appealed the Stockholm decision and refused to pay.

Naftogaz said this refusal does not affect the validity of the court's actions and it would "use all legitimate measures and tools available to us to enforce the decision and fully recover the amount awarded from Gazprom. Unfortunately, the company is not acting in good faith."

“The tribunal has ruled that Gazprom has to reimburse to Naftogaz $4.63bn in damages for failing on the transit contract. We have already effectively received $2.1bn which pursuant to the award in the transit case was offset against the payment for gas Naftogaz had purchased from Gazprom before. Now we are working to recover the remaining amount,” explained CCO Yuriy Vitrenko.

In April 2014, Gazprom increased the gas price for Naftogaz by over 80% within days following the occupation of Crimea by the Russian Federation. Naftogaz challenged the ill-grounded price hike in the arbitration, and the tribunal decreased the payment for gas off-taken in 2014-2015 by about $1.8bn. In addition, the tribunal rejected Gazprom’s take-or-pay claim as unconscionable, resulting in nearly $77bn savings for Naftogaz until the expiry of the contract in 2019.

Naftogaz has moved to attach assets in other jurisdictions as well, including the shares of Gazprom’s subsidiaries Nord Stream and Nord Stream 2 in Switzerland. The bailiffs are working on effecting the freeze after the Swiss court supported the petition.

Gazprom’s appeal against the Stockholm arbitration awards does not postpone the Russian company’s obligation to settle immediately and has no effect on the enforcement process, which was confirmed by the swift decisions of courts in various European jurisdictions late May or early June, Naftogaz said.

Separately, Naftogaz has awarded key employees bonuses reflecting the part each played in the arbitration process. The total reward equals $46.3mn, 1% of the awarded $4.6bn. Personal income tax and other deductions from this amount paid to the state of Ukraine will exceed $9mn.