Swedish court suspends enforcement of multibillion Gazprom award to Naftogaz

The Svea Court of Appeal in Sweden ruled on June 13 to
suspend the enforcement of the Feb. 28 award
of the Stockholm arbitration court ruling that Gazprom (GAZP RU) owes Ukraine’s
Naftogaz USD 4.63 bln for breaching the conditions of their natural gas transit
contract, the Interfax news agency reported on June 14, referring to Gazprom.
Last week, Gazprom filed a request to suspend the enforcement of the ruling
while its appeal of the award is being considered. The latest ruling deprives
Naftogaz of the grounds for freezing Gazprom’s assets abroad, Gazprom claims.

In its press release the same day, Naftogaz confirmed
the ruling of Svea Court of Appeal, stating it “is temporary and was made
without Naftogaz being heard”. Naftogaz wrote it “will request that the
decision be reversed based on decisive counter-evidence, and expects that its
request will be granted shortly.” It also claims the ruling “does not
automatically reverse” the already implemented enforcement actions that
resulted in freezes of Gazprom’s assets.
Also, it does not affect the validity of Stockholm arbitration award, Naftogaz
said.

In other news, Interfax, citing its sources, reported
that Gazprom cancelled a Eurobond placement scheduled for mid-June, referring
to a risk that the money to be raised from the placement could be frozen as a
result of Naftogaz’s claims.

Alexander Paraschiy: As we earlier expected, Gazprom will do its best to postpone the award
payment, including such appeals. At the same time, we expect the Russian
monopoly will eventually have to pay, but it will try to avoid paying in cash
or any other liquid asset. As one of its options, Gazprom may try to pay
Naftogaz with Ukraine’s defaulted Eurobonds held by a Russian state fund. To make such a transaction possible, Gazprom
needs to wait until the ruling of English Court of Appeal that most likely will recognize Ukraine’s
obligation under these bonds.