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    Court Seizes Gazprom Shares in TurkStream: Naftogaz


Naftogaz is putting further pressure on Gazprom to settle a $2.56bn arbitration award.

by: Joseph Murphy

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Court Seizes Gazprom Shares in TurkStream: Naftogaz

Naftogaz has had Gazprom’s shares in a Netherlands-registered subsidiary tasked with building the TurkStream gas pipeline seized, putting further pressure on the Russian company to settle an international arbitration award.

The Amsterdam District Court on October 22 approved Naftogaz’s request to have 100% of Gazprom’s shares in South Stream Transport arrested, Naftogaz said in a statement on October 25. The Ukrainian firm said it applied for the court order to compel Gazprom to pay $2.56bn in compensation for violating the pair’s long-term gas transit contract, as per a ruling by an arbitration court in Stockholm last year.

“To date, Gazprom has refused to pay this award and has used a variety of methods to try to prevent Naftogaz from enforcing the award, including by transferring assets such as the South Stream shares out of its name,” Naftogaz said.

South Stream Transport plans to commission the first of TurkStream’s two 15.75bn m3 strings later this year, having just begun filling the pipe with gas. The project will expand Gazprom’s already dominant position in the Turkish gas market, and with the launch of the second string in 2020, will allow it to pump extra gas to markets in the Balkans and central Europe.

Naftogaz has targeted other Gazprom assets in Europe with similar legal action. In July, it successfully prevented the company from collecting dividends from the operation of the Nord Stream pipeline through a London court. Gazprom and the Russian government still refuse to acknowledge the arbitration award's validity, although they have said all legal disputes between Gazprom and Naftogaz must be resolved before the pair can agree on terms for gas transit starting next year, after their current contract is due to expire.