Gazprom escaped international sanctions through London

The money for "Nord Stream-2" attracts with the help of British debt agents.
Gazprom took the first step towards organizing project financing for the Nord Stream-2 gas pipeline and attracted the equivalent of 90 billion rubles. at the British debt agent Glas Trust on the security of shares of Nord Stream 2 AG. The scheme with the agent should reduce risks for creditors in case sanctions are imposed, Kommersant sources believe. But experts note that while the terms of the deal with Glas Trust are unclear, banks will still consider the loan as a direct debt of Gazprom.

From the reports published on April 2, it became known that Gazprom in August 2017 transferred the British Glas Trust Corporation Ltd (providing services in the organization of lending) to pledge until 2038 the shares of the project company of the Nord Stream-2 gas pipeline - Nord Stream 2 AG. This is done "to ensure Nord Stream 2 AG's obligations under the project financing agreement". The provision amounted to 89.7 billion rubles, which corresponds to the funds that Gazprom has contributed to Nord Stream 2 AG since the company was founded in 2015. According to Kommersant, the amount that unknown lenders through Glas provided to Nord Stream 2 AG also corresponds to the amount of collateral. Gazprom did not give a comment, Glas did not respond to a request from Kommersant.

Glas Trust Corporation was founded in 2011 and belongs to the managers Mia Drennan and Brian Carne, offers services in the organization and administration of loans, debt restructuring, etc. On its website are major transactions, in particular, £ 2.4 billion for Hibu, € 750 million for a large Slovenian retailer Mercator. Glas also acts as a security trustee for the Russian microfinance SimpleFinance for Eurobonds for $ 100 million. As an agent Glas organizes a syndicate of creditors, acts as collateral manager and, possibly, administers a loan.

Kommersant's sources in the market believe that the use of the agent to structure the project financing transaction is primarily intended to ensure the creditors' anonymity and reduce their risks if the US authorities decide to apply sanctions to Nord Stream 2. Sanctions, under the CAATCA law, which entered into force on 2 August 2017, investors may be invested in more than $ 5 million in Russian export oil and gas pipelines during the year. It is unclear whether the agreement between Gazprom, Nord Stream 2 AG and Glas was signed before August 2, if not, then there are risks of sanctions for creditors.

In September 2017, Rainer Seele, the head of the Austrian OMV, which participates in Nord Stream 2 as a financial partner, admitted that it would be difficult to attract project financing to Western banks in view of possible sanctions of the United States (see "Kommersant" on September 14, 2017). Initially, it was assumed that project financing would cover 70% of the project value of € 9.5 billion, and shareholders' contribution would be 30%. In April 2017, Gazprom and its European partners Shell, Engie, Uniper, Wintershall and OMV agreed that if they fail to attract loans, they will finance the project themselves. Five Western companies will give € 950 million as a bridge loan at 6% per annum (half the cost of the gas pipeline), the rest will be paid by Gazprom. At the end of the year, € 3 billion was allocated. Nord Stream 2 AG Financial Director Paul Corcoran said in early 2018 that the receipt of bank financing could begin at the end of the year.

While the parameters of the deal with Glas are unclear, analysts will apparently continue to view these obligations of Gazprom as a direct debt to the company, and not as project financing for Nord Stream 2, notes Dmitri Marinchenko from Fitch. "Gazprom" this year will be a record investment program for 1.2 trillion rubles. and repayment of debts by $ 13.4 billion. "Companies in any case will have to borrow a lot, and, apparently, she is looking for the possibility of diversifying the sources of financing," Mr. Marinchenko believes. In his opinion, the conditions under such a project financing option are unlikely to significantly differ from the market levels for Gazprom loans.