Ukraine is moving effectively to secure a rules-based international market in natural gas. Ukraine’s state-owned giant Naftogaz is enforcing the final ruling of the Arbitration Institute of the Stockholm Chamber of Commerce which was rendered on February 28. That ruling states that Russia’s Gazprom must pay $2.6 billion to Naftogaz for gas transit across Ukraine.
A court in the Netherlands approved petitions of Naftogaz for an attachment of shares of Gazprom’s Dutch subsidiaries and any debts those subsidiaries owe to Gazprom. On June 5, bailiffs began to serve notice of attachment to seven subsidiaries of Russia’s Gazprom that do business in the Netherlands. Naftogaz has a right to payment of $2.6 billion from Gazprom under the February 28 ruling of the Stockholm Arbitration court, and it is a victory for Naftogaz to secure some Gazprom assets against the total amount owed.
The CEO of Naftogaz, Andriy Kobolyev, noted that everything was being done “by the book” but that Gazprom was acting in bad faith. “Naftogaz will use all legitimate measures and tools available to us to enforce the decision and fully recover the amount awarded from Gazprom. Unfortunately, the company is not acting in good faith, in respect neither of the arbitration awards, nor with the orders of European courts in other jurisdictions,” he said, reacting to Gazprom obstructionism of the Dutch court ruling.
Russian offences against a rules-based international order in the natural gas market my have reached the level of violent confrontation in the Netherlands. In a tweet sent on June 5, Naftogaz of Ukraine wrote: “We heard reports that employees in one of Gazprom’s subsidiaries have physically assaulted the bailiff. This is appalling. We hope for conduct in a civilized manner.” Six out of seven subsidiaries of Gazprom refused to cooperate with the bailiffs and respect the ruling of the Dutch court.
In courts in Switzerland, Naftogaz is succeeding with petitions for an attachment of shares of Nord Stream AG and Nord Stream 2 AG. Nord Stream is a pipeline scheme by Russia to divert gas transit away from Ukraine and to make the European Union directly dependent on non-diversified sourcing of natural gas from the monopoly Gazprom. Bailiffs in Switzerland have created an inventory of property the two registered Nord Stream entities there, with a view to establishing interim measures to enforce the Stockholm Arbitration court ruling.
Immediately after the February 28 ruling, Gazprom property in Ukraine was seized by the courts in partial payment of the arbitration award. Switzerland followed, and now the Netherlands. Naftogaz will be going after assets of Gazprom in the United Kingdom next.
With Gazprom assets being attached in the Netherlands, Switzerland, and soon the UK, a rules-based order in the international natural gas market has been strengthened after years of predation by the Russian criminal monopoly. Naftogaz is now a giant in the European natural gas market and a respected champion. Nord Stream 2 is in deep trouble. The assets of Gazprom related to this horribly misguided scheme have been attached, and the investment of the five minority partner companies looks to have been wasted.
Naftogaz is fighting and winning for a rules-based energy market in Europe. A side benefit of upholding the integrity of the Stockholm Arbirtration court is that the criminal monopoly Gazprom is weakened and the Nord Stream 2 corruption scheme may be dead.