Gazprombank demands repayment of $842mn loan from Ukraine oligarch Firtash

By bne IntelliNews December 16, 2014

Russia's Gazprombank wants Ukrainian oligarch Dmitry Firtash' gas trading firm Ostchem to repay a $842.5mn loan, due to breach of conditions relating to the loan, the bank said in a press release, without specifying what conditions had been breached.

The loan was guaranteed by four fertiliser plants owned by Firtash' holding structure Group DF, and secured by 5.67bn cubic meters of gas held by the plants in Ukraine's underground storage.  

The loan was used to purchase the gas from Russia's Gazprom, at a price of $268.5 per 1,000 cubic meters, significantly lower than the price paid by Ukraine's energy company Naftogaz for Russian gas, according to a recent investigation by Reuters.

The loan is to be repaid by December 30, otherwise Gazprombank will demand return of the gas, the bank said in its press release.

A number of Firtash's chemicals plants are currently idling, and the group may be unable to raise the funds to pay down the loan. This raises the prospect of a conflict between Russia and Ukraine over control of the gas.

Ukraine's government has prohibited chemical plants from drawing on gas used in underground storage, as the country faces both energy and hard currency shortages, thus effectively declaring all gas held in the underground storage to be an emergency reserve. Group DF lost a court case disputing the government decision. The government has also ordered the country's largest gas consumers to buy gas exclusively from state company Naftogaz.

Russian President Vladimir Putin earlier stated that Ostchem had $1.4bn in debts to Gazprombank. Ukraine's state company Naftogaz owes Gazprombank another $1.8bn. Gazprombank for its part has been placed under sanctions by the US and EU, blocking access to international capital markets.

Ukraine in the first week of December paid around $370mn to Russia's Gazprom to import 1,000 cubic meters of gas. But Ukraine's Naftogaz must still pay $1.6bn to Gazprom by the end of the year as the second tranche of arrears payments stipulated by a trilateral agreement signed on October 30 between Russia, Ukraine and the EU. Ukraine's national hard currency reserves fell to only $9bn at the end of November, and without external support are expected to fall to around $7bn by the end of 2015, providing only four weeks import cover.

Related Articles

Russia’s central bank reduces key rate in surprise decision

The Central Bank of Russia (CBR) reduced the key lending rate by 0.25 percentage points to 9.75% on March 24, despite broad market expectations of no change this month. The ruble strengthened to a ... more

Ex-Trump aide Manafort reported to be long-term Putin lobbyist

Paul Manafort, US President Donald Trump's former election campaign manager, struck a covert deal with Kremlin-affiliated Russian oligarch Oleg Deripaska in 2006 to promote the interests of President ... more

Russian central bank governor Nabiullina to be nominated for further five-year term

The governor of the Central Bank of Russia (CBR), Elvira Nabiullina, will be nominated for another five-year term, President Vladimir Putin told the country’s top banker on March 22. The nomination ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss