UK seizes assets of Russia's gas conglomerate Gazprom

The UK has followed Switzerland and the Netherlands in the seizure of Gazprom assets.

Despite the appeal filed at the Swedish Arbitration Institute and the suspension of the enforcement of the $2.6 billion fine in favor of Naftogaz Ukraine, the London Commercial Court has authorized the freezing of Gazprom’s assets in the UK, TASS reported, citing the Ukrainian company’s press service.

The order to take interim measures was issued on Monday: in the next 48 hours, Gazprom must provide Naftogaz with a list of its assets in England and Wales which are worth more than $50,000.

The court also prohibited Gazprom from attempting to withdraw capital from the country and reduce the value of the frozen assets.

“If Gazprom refuses to comply, it can expect fines and other sanctions,” Naftogaz’s press service observed.

Such interim measures were first implemented in Switzerland, where Gazprom’s subsidiaries Nord Stream AG and Nord Stream 2 AG are registered, the companies responsible for the gas pipelines with the same names. Court officers made an inventory of the companies’ property, and Nord Stream 2 AG reported that it had received a notice on the freezing of its assets.

One week later, at the start of June, Gazprom’s shares in its subsidiary companies in the Netherlands were seized.

In response, Gazprom filed a petition at the Svea Court of Appeal to suspend the implementation of the Stockholm Arbitration Institute’s ruling from February 28, 2018.

Gazprom claims that this request has been granted. Naftogaz Ukraine clarified that the order from the Court of Appeal only implies a temporary suspension of further action, but does not nullify the Arbitration Institute’s ruling, and does not give Gazprom an opportunity to demand $2.1 billion from Naftogaz, as this amount was taken into account in the arbitrators’ ruling as compensation to Kyiv.

The seizure of its European assets has already effectively cut Gazprom off from the European capital market. In the middle of June, the company, which is financing the construction of gas pipelines to China, Turkey and around Ukraine using foreign borrowings, had to call off its placement of eurobonds in British pounds. The risk arose that the funds solicited by Gazprom might be immediately seized as part of the Arbitration Institute’s interim measures, the company told Interfax.

The eurobond placement was meant to be part of a record in Gazprom’s borrowing history: the Russian holdings planned to attract 417 billion rubles in the year, one third of the amount needed for the construction sites (1.2 trillion rubles).

Since the start of the year, Gazprom has already issued investors bonds denominated in rubles (30 billion), euros (750 million) and Swiss francs (750 million), and solicited a 600 million euro loan from Credit Agricole.

  Gazprom, UK