Switzerland starts seizing Gazprom assets

Naftogaz Ukraine has begun the procedure of exacting from Gazprom a fine of $4.6 billion, which was awarded to the Ukrainian company in February 2018 by the Arbitration Institute of the Stockholm Chamber of Commerce.

The first to be hit were the Russian company’s assets in Switzerland, where the companies Nord Stream AG and Nord Stream 2 AG are registered. The first company oversees the Nord Stream and is 51% owned by Gazprom, the second belongs to Gazprom completely, and is constructing the Nord Stream 2 pipeline.

On Tuesday evening, bailiffs arrived at the Nord Stream AG office in Switzerland’s Zug canton, TASS reported with reference to a source in the industry. The bailiffs created an inventory of property in order to take interim measures to ensure that the Stockholm arbitration court’s ruling is carried out.

Gazprom’s Nord Stream and Nord Stream 2 shares have been frozen, another informed source told Interfax.

According to the source, these assets are the target of Naftogaz, which is seeking to enforce the collection of the fine.

In addition to Switzerland, the Ukrainian company is preparing to take similar action to seize Gazprom’s assets in the Netherlands and the UK, a source in Ukraine’s government told Interfax-Ukraine.

“Gazprom will probably contest the seizure in the local courts. If the court declines, then one can say that seizure has been imposed,” he said.

Nord Stream 2 confirmed on Wednesday that it had been notified concerning the freezing of its assets. The company emphasized that this would not affect the Nord Stream 2 gas pipeline project in any way, Reuters reports.

The litigation between Gazprom and Naftogaz in the Stockholm arbitration court was related to the conditions of a contract on gas transit through Ukraine which was made eight years ago.

On February 28, the court ordered Gazprom to pay Naftogaz $4.63 billion for the shortfall in supplied gas.

The contract stipulated that each year Gazprom was to transfer at least 110 billion cubic meters of gas for supplying the EU, but in 2017, 15% less was exported through the Ukrainian gas transportation system – 93.4 billion cubic meters. The year before, it was only 82 billion, and in 2015, only 67.1 billion.

At the same time, the arbitration court declined Gazprom’s request to fine Naftogaz for illegally sampling gas transit volumes.

Taking into account what the Ukrainian company owes Gazprom, the Russian company has to pay roughly $2.6 billion.

The arbitrators also ordered Gazprom to pay Naftogaz for transit based on $2.35 billion for 110 billion cubic meters per annum until the end of the contract in 2019.

On March 30, Gazprom appealed the ruling, demanding for it to be partially revoked, and at the end of May it sent a new statement to the Svea Court of Appeal (Sweden) demanding the revocation of the entire arbitration court ruling. It motivated its demand citing a serious violation of Swedish law. “Additional examination of the text of the ruling with the involvement of a world recognized expert linguist indicated that a significant part of the arbitration ruling was not written by the arbitrators, but by other people,” the company claims.

  Switzerland, Gazprom, Ukraine, Stockholm Arbitration Court, Nord Stream 2