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Russia's Gazprom warns of southeast Europe gas payment default risk

London (Platts)--15 Mar 2016 953 am EDT/1353 GMT


Russia's Gazprom has said certain countries in southeast Europe may be at risk of defaulting on their payments for gas supplies.

In an upcoming Eurobond prospectus, Gazprom says Bulgaria, Greece, Macedonia and Serbia could all miss payments for gas supplies given the current state of their credit rating, Russian daily Vedomosti reported Tuesday.

"Most of Gazprom's European customers have high credit ratings, but there are some countries in southern Europe that could defer payments or not pay at all," Vedomosti cited the document as saying.

A similar prospectus for a 2013 Gazprom Eurobond prospectus did not mention a similar risk.

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The four countries mentioned in the prospectus -- which have all suffered recent credit rating downgrades -- accounted for a total of 6.83 Bcm of Russian gas supply in 2015, up from 5.95 Bcm the year before.

While the markets are only small -- representing 4.3% of Gazprom's total exports to Europe and Turkey of 158.56 Bcm in 2015 -- they are of strategic importance to Gazprom, especially Bulgaria and Greece.

Gazprom said last month it wanted to build a sub-Black Sea pipeline to Greece and Italy through unnamed third countries, one of which would have to be Bulgaria.

Russia and Bulgaria, whose relations in the energy sector have been strained for a number of years, also now seem to be rekindling their relationship, with Russia looking seriously at helping develop a Balkan gas hub in Bulgaria.

Russia has also traditionally been a close ally of Serbia, and Gazprom's oil arm is the majority shareholder in Serbian oil and gas company NIS.

Analysts played down the risk to Gazprom, saying any default would not have a material impact on its business.

"[Gazprom] is unlikely to reflect any sizeable provisions in its financials with respect to this," analysts at VTB Capital said in a note Tuesday.

--Stuart Elliott, stuart.elliott@platts.com
--Edited by Dan Lalor, daniel.lalor@platts.com

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