Eurochem North-West-2 has sent official letters to 16 Italian banks that service the accounts of Tecnimont S.p.A. and its Russian subsidiary MT RUSSIYA LLC, requesting the suspension of any payments in their favor.

EchNW-2 is involved in legal proceedings with the engineering firms (part of the Italian engineering and construction holding Maire S.p.A.) in the Moscow Arbitration Court due to their alleged failure to fulfill obligations related to the construction of a high-tech ammonia and urea production plant in Kingisepp.

Previously, the arbitration court granted the claimant's motion and seized funds, future receivables, as well as movable and immovable property of Tecnimont S.p.A. and MT RUSSIYA LLC to the amount of 9.5 billion rubles. It is for this amount that Eurochem North-West-2 is asking the banks to freeze payments to the companies and to restrict any movement of funds in their accounts. The total amount of the claim in the Moscow proceedings is 202.7 billion rubles.

In parallel, Eurochem North-West-2 has also filed a separate claim against the parent company Maire S.p.A. in the Arbitration Court of Saint Petersburg and the Leningrad Region for approximately 202.97 billion rubles, stating that the Italian holding acted as guarantor under the contracts. According to Eurochem, this allows the company to seek recovery of alleged losses from assets across the broader Maire group, including those held outside Russia.

Letters requesting the suspension of financial operations were sent to the following banks: Banca Akros S.p.A., Banca Monte dei Paschi di Siena, Banco BPM, Bank ABC, BdM Banca, BNL BNP Paribas, BNP Paribas, BPER Corporate & Investment Banking, BRED Banque Populaire, Cassa Depositi e Prestiti (CDP), Crédit Agricole Corporate & Investment Banking, Equita SIM S.p.A., Intesa Sanpaolo (IMI CIB Division), Mediocredito Centrale, MPS Capital Services, PKF Attest Capital Markets S.V., S.A., and UniCredit.

"We considered it our duty to inform the banks of the risks associated with cooperation with these companies. We believe that in these circumstances, the best way to protect the legitimate interests of Eurochem North-West-2 is to suspend payments and prevent the dissipation of assets that may be subject to enforcement of court decisions in various jurisdictions," stated the press service of Eurochem North-West-2.

Background information on the case circumstances

The Eurochem Group began implementing the project in 2020 to build a large high-tech ammonia and urea production plant in Kingisepp -- Eurochem North-West-2 (EKhSZ-2). The facility is intended to become one of the largest nitrogen fertilizer complexes in Russia, contributing additional volumes to global ammonia and urea markets at a time when supply-demand balances remain tight.

Commenting on the broader market context, John Baffes, Senior Agriculture Economist at the World Bank, has pointed out in recent analyses that global fertilizer prices remain elevated compared to their pre-pandemic averages even after retreating from the extreme peaks of 2022, underscoring how sensitive global agriculture remains to disruptions in major fertilizer supply chains.

In June 2020, the contractors for the design and construction of EchNW-2 became the Italian company Tecnimont S.p.A., as well as its Russian "daughter" MT RUSSIYA LLC, each of which entered into a contract with Eurochem. The parties also signed a coordination and interaction agreement. The controlling entity of the contractors, the Italian holding Maire S.p.A., acted as the guarantor for the agreements.

The contracts were concluded on a firm fixed-price basis and stipulated a guaranteed completion date, which was to occur no later than September 16, 2023.

In May 2022, citing EU sanctions restrictions, the contractors unilaterally suspended the performance of their obligations, a move that Eurochem North-West-2 says was in breach of the contracts.