November 12, 2018 / 4:18 PM / a year ago

Gazprom says Swiss court blocks Nord Stream payments

MOSCOW (Reuters) - A Swiss court has issued an injunction barring the operators of the Nord Stream gas pipeline from making payments to Gazprom as part of a legal dispute between the Russian gas producer and Ukraine’s Naftogaz, Gazprom said.

FILE PHOTO: Gazprom chief Alexei Miller (L) poses with former German Chancellor Gerhard Schroeder (C) and Isabelle Kocher, Chief Executive Officer of French gas and power group Engie, in Paris, France, April 24, 2017, after western partners of gas giant Gazprom agreed on financing the 9.5-billion euro ($10.32 billion) Nord Stream 2 pipeline. REUTERS/Christian Hartmann/File Photo

All payments from Nord Stream AG and Nord Stream 2 AG to Gazprom are to be directed to the Swiss bailiffs, Gazprom said in a program for a Eurobond issue dated Nov. 9.

Gazprom intends to challenge the injunction in court, TASS news agency quoted the company’s chairman, Viktor Zubkov, as saying.

Nord Stream is a 1,224 km (760 mile) pipeline carrying gas from Russia to Europe. Another pipeline, Nord Stream 2, is under construction.

Zubkov was quoted as saying he hoped the injunction would not affect the completion of the Nord Stream 2 pipeline that would transport Russian gas to Germany.

In June 2014, Gazprom and Naftogaz lodged multi-billion-dollar claims against each other with the Stockholm arbitration court, which resolves commercial disputes.

Naftogaz says Gazprom owes it $2.56 billion after a Stockholm court found in Naftogaz’s favor following a lengthy legal battle.

Naftogaz did not immediately respond to a request for comment.

A spokesman for the Nord Stream 2 consortium declined comment on the legal proceedings but said they had no impact on the implementation of the pipeline construction project.

In the prospectus for a possible Eurobond issue that was obtained by Reuters, Gazprom also said that on May 30, the District Court of Amsterdam provisionally seized Gazprom’s shares in BSPC, the operator of the Blue Stream pipeline, and barred Gazprom’s Dutch subsidiaries from making any payments to the Russian gas producer.Blue Stream carries gas from Russia to Turkey. Gazprom did not elaborate further.

Nord Stream is a joint venture of Gazprom and Germany’s Wintershall, PEG Infrastruktur/E.ON, Gasunie of the Netherlands and France’s Engie.

Nord Stream 2 AG, which will double the existing Nord Stream 1 capacity from 55 billion cubic meters of gas a year, is owned by Gazprom, which is taking on half of the planned costs of 9.5 billion euros ($10.70 billion), with five European energy companies shouldering the remainder.

In July, Washington repeated a warning to Western firms invested in the pipeline that they were at risk of sanctions, saying Moscow was using the project to divide Europe.

($1 = 0.8875 euros)

Reporting by Oksana Kobzeva, Katya Golubkova and Vladimir Soldatkin; Additional reporting by Pavel Polityuk and Michael Shields; writing by Vladimir Soldatkin and Tom Balmforth; editing by Jason Neely, Louise Heavens and Adrian Croft

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