Russian gas giant Gazprom said it was aware of actions by Ukrainian oil and gas firm Naftogaz to enforce an arbitration court ruling.
Naftogaz said earlier today it had initiated the enforcement of a $2.6 billion award from the Stockholm arbitration court from Gazprom.
"The company confirms that it has asked the Swiss courts to enforce the award, and understands that Swiss authorities already have taken measures against Gazprom's assets there," Naftogaz said.
The ruling, made by the Stockholm arbitration court in February, was meant to conclude a legal battle over gas deliveries. But Naftogaz said Gazprom had not complied with the ruling which obliged the Russian company to resume gas supplies to Ukraine at a market reflective price and to pay $2.6 billion.
"Despite the awards and timely pre-payment by Naftogaz, Gazprom refused to resume deliveries to Naftogaz as agreed on 1 March 2018," Naftogaz said.
Legal officers visited the office of Nord Stream AG in Switzerland but they did not execute any property seizure orders, a source with knowledge of the situation.
"Legal officers have visited the office, but there was no [property] seizure," Sputnik cited the source as saying.
Nord Stream AG is the operator of an existing gas pipeline of the same name, while Nord Stream 2 AG is the operator of the Nord Stream 2 project, which envisages the construction of two gas pipelines that will run from the Russian coast through the Baltic Sea to a hub in Germany.
In March, Chief Commercial Officer of Ukrainian oil giant Naftogaz Yuriy Vitrenko said that his company did not exclude the possibility of appealing to a Swiss court to demand the seizure of Nord Stream AG and Nord Stream 2 AG shares to recover Gazprom's debt related to the decision of the Stockholm Arbitration Court.
In February 2018, the Stockholm arbitration court partially satisfied Naftogaz claims over what it said was the failure of the Russian energy giant to supply agreed volumes of gas for transit, ordering Gazprom to pay $4.63 billion to the Ukrainian company. However, taking into account the amount of money previously awarded to Gazprom in relation with the gas supply contract, the mutual offset of liabilities resulted in Gazprom's obligation to pay $2.5 billion.
Gazprom appealed against the Stockholm ruling in April, and the case is ongoing.
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 Gazprom will not tolerate such a situation. "The Stockholm arbitration court has already been convicted by Gazprom of dishonesty: an outsider expert signed the arbitration decision, which is not supposed to happen. Therefore, Gazprom will file a claim and its struggle with Naftagaz will continue for a very long time," he said.
"For Europe, it is extremely important that gas flows through Ukraine, so that it receives transit money from Gazprom and fills its budget, but it is more important for European consumers, to have the Ukrainian gas transportation system under control. I think, as a result, this trial will lead to the fact that Europe will start making decisions faster. The Stockholm arbitration court is not considered the ultimate authority, and if Gazprom proves that the conclusion was written not by an arbitrator but by an unauthorized person, then this will be an essential factor to reconsider the whole case, as well as an unpleasant incident for the Stockholm arbitration court," Valery Bessel stressed.
A senior analyst of 'Uralsib Capital', Alexei Kokin, noted that the fine itself is not significant for Gazprom. "If you look at its revenue for the first quarter of this year, it exceeded 2 trillion rubles (about $38 billion). That is the amount wanted by Naftogaz is less than 7% of the of Gazprom's quarterly revenue. Gazprom can afford to pay this money in case of emergency, while it is clear that it will fight to the end," he said.
Naftogaz, in turn, will try to put as much pressure on Gazprom, including the seizure of the company's property. "An appeal against a decision of the Stockholm arbitration court is still in the review process, which means that Naftogaz will try to freeze Gazprom's assets in Europe as soon as possible. Of course, it can be called a rather aggressive behavior," Alexei Kokin concluded.
