#Gazprom has enough assets in Europe to enforce $2.6bn Stokholm arbitration award to Ukraine’s #Naftogaz. Following the Swiss court decision, the Dutch court has ruled to arrest Gazprom assets in Netherlands as well. Experts see no risk to natural gas supplies to Europe.

Gazprom’s assets in the Netherlands have been arrested to implement the Stockholm arbitration court ruling which obliged the Russian gas company to pay $2.6bn to Ukraine’s Naftogaz, the Ukrainian company wrote in its Twitter account.

Naftogaz, which operates Ukraine’s gas transportation system, specified the asset seizure concerned Gazprom’s stakes in six of seven subsidiaries in the Netherlands that refused to cooperate with court officers but this fact should not affect the assets arrest procedure.

What does Gazprom own in the Netherlands?

In addition to 51% in Nord Stream (this stake was seized last week in Switzerland in line with Naftogaz claims), Gazprom owns stakes in a number of JV with its European partners, the largest being 50% in WIGA Transport Beteiligungs-GmbH & Co. KG (WIGA). WIGA is a joint venture with German BASF with stakes in gas pipelines in Europe, commented Elena Anankina, an analyst at S&P. These companies are not public and it is difficult to estimate the value of the stakes, she said. Meanwhile, according to Gazprom statements, the balance sheet value of its stake in Nord Stream is RUB436.5bn (about €6bn) and that in WIGA is RUB266bn (€3.6bn),

Gazprom is aware of Naftogaz steps to enforce the Stockholm court ruling execution in the Netherlands but it promised to provide comments only after reviewing official documents carefully, once it gets them. So far the Russian gas monopolist received no official notifications from any authorities. Gazprom stressed it would fight for its rights within the applicable law.

Second case of asset arrest

Amsterdam hosts the head office of Gazprom International, a 100-percent subsidiary of Gazprom that deals with international upstream projects. Gazprom Energy is another Gazprom entity based in the Netherlands.

The Netherlands have become the second EU country to arrest Gazprom’s assets. Last week, Swiss court officers demanded the seizure of Nord Stream AG and Nord Stream 2 AG shares controlled by Gazprom.

Earlier, on 28 February, the Stockholm arbitration court met some of the claims of Naftogaz and ruled that Gazprom should pay $4.63bn for gas it failed to supply under the transit agreement. Net of Naftogaz debt for gas supplies, Gazprom is to pay $2.56bn. Gazprom appealed against this decision in the Svea court in Sweden.

Asset arrest will not hurt gas supplies

This assets seizure has no great impact on Gazprom capitalization. On 5 June (as of 14:30 Moscow time), it reduced only slightly, by 0.5% to RUB3.4 trillion. It is yet unclear in what way these court decisions could hurt Gazprom. Apparently, it will not hamper the gas pipeline construction, says Vasily Tanurkov, an analyst at ACRA. Moreover, the Stockholm court decision is already factored in Gazprom share prices, he adds.

S&P analyst Elena Anankina believes the asset seizure is not likely to affect Russian natural gas supplies to Europe. She explained Naftogaz did not ask to arrest of Gazprom’s gas itself, the most liquid asset of the Russian company in Europe (supplied via Ukraine). She is sure none of the parties wants any disruption in gas supplies in the region. At the same time, Alexander Sitnikov, a legal expert at Vegas Lex, explained Naftogaz probably has no right to initiate arrest of Russian gas owned by Gazprom subsidiaries, not Gazprom itself, since the subsidiaries are not responsible for the parent’s debts.

The Stockholm court decision takes effect immediately and Gazprom’s appeal pointing to serious defects in legal proceedings will not put on hold the ruling’s implementation unless the dependent asks for that and is granted a separate court order. Gazprom can appeal against the seizure in countries where the assets are based and it could take more than six months between the seizure and the sale of assets even without the appeal procedures. Another expert, Alexander Pakhomov from Law and Business, believes it may take a month or two to appeal against the court decision.

In any event, Gazprom has enough cash to pay to Naftogaz. As of 31 March, it had RUB951bn in its accounts, another RUB571bn in bank deposits (combined, this is $24.6bn as of 5 June), which is much more than the fine amount, according to Anankina. The company reports it has already earmarked the whole amount related to the gas dispute, i.e. $4.63bn.

EU assets worth billions

Apart from 51% of Nor Stream arrested in Switzerland last week, Gazprom owns shares in a number of JVs with European partners.  The biggest asset is a 50%share in WIGA Transport Beteiligungs-GmbH & Co. KG (WIGA) – a JV with Germany’s BASF. According to Gazprom’s IFRS financial statements the book values of Nord Stream and WIGA are 436.5 billion roubles (around €6 bn) and 266 billion roubles (€3.6 bn)