Moody’s says new US sanctions undermine Gazprom’s solvency

MOSCOW, Aug 10 (PRIME) – The extension of the U.S. sanctions against Russia is bad for the solvency of gas producer Gazprom, rating agency Moody’s said in a report released on Thursday.

Last week, U.S. President Donald Trump signed a bill introducing additional sanctions against Russia among several other states. The bill prohibits companies to invest more than U.S. $1 million in a single payment or more than $5 million during the course of a year in construction of Russian export pipelines, as well as provision of goods, services, technologies and information support for the construction.

The agency said that the sanctions can weaken Gazprom’s bargaining position during negotiations with Ukraine on gas transit tariffs, a contract on which expires at the end of 2019, and Gazprom’s transit expenditures and volumes can grow.

Gazprom has hoped that with the launch of Nord Stream-2 and Turkish Stream will reduce the volume of gas it sends through Ukraine, but the new sanctions threaten the plans.

They can bar Gazprom from using the project financing mechanism in construction of the Nord Stream-2 pipeline, as the company has planned initially to refinance debts, including the debt of the partners with the help of longer and cheaper debt. As a result, the completion of the pipeline can be delayed, and the sanctions can also hurt Gazprom’s partners in the project.

Moody’s also sees risks of Turkish Stream launch delay due to the U.S. sanctions.

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