A court in Russia has ordered Italian UniCredit to pay nearly $480 million over a sidelined joint venture gas project with Gazprom and Germany’s Linde for which the Italian bank was a guarantor before Western sanctions caused the project to collapse.
The project planned to build a gas processing plant in Russia through a joint venture called RusChemAlliance, which is 50% owned by Gazprom.
UniCredit served as the lending guarantor for the construction of the plant, Reuters reported on Wednesday.
Last month, a Russian court ordered the seizure of Russia-based accounts belonging to UniCredit, as well as all shares in UniCredit Leasing and Unicredit Garant, both of which are subsidiaries of UniCredit’s Russian arm, according to Reuters.
Earlier in May, the European Central Bank (ECB) sent letters to major lenders, including UniCredit, calling on them to reduce Russia’s exposure.
“Every single bank in Europe that has any kind of exposure to Russia, has likely received the letter,” Bloomberg quoted UniCredit Chief Executive Officer Andrea Orcel as saying at the time, adding that the bank’s strategy was to cut Russia exposure to zero by the end of 2025.
As of early May, Bloomberg reported that UniCredit had cut its cross-border exposure by 91%.
Moscow’s retaliation against UniCredit for the aborted gas project comes as the European Union launches new sanctions targeting Russian liquified natural gas (LNG) imports.
On Monday, EU countries adopted the 14th sanctions package against Russia, including a ban on LNG trans-shipments and ship-switching off European ports, and greenlighting the ability for Sweden and FInland to cancel existing Russia LNG contracts.
According to Reuters, those LNG trans-shipments only account for around 10% of the total Russian LNG exports, suggesting the impact may be dulled.
The EU failed to push through a package that would serve as an outright ban on Russian LNG imports, but it does ban new investment in LNG projects that are currently being constructed in Russia.
Source: Oilprice.com