KIEV, Ocotber 9 (RAPSI) – Ukraine’s gas monopoly Naftogaz faces the possibility of defaulting on its bonds, as its Bank of New York account has been blocked over a 15-year-old dispute in the London court, Forbes.ua reported Wednesday.

The deadline by which the holders of Naftogaz’ 5-year bonds can claim the payments is October 10. As of October 8 the payments had not reached the bond holders’ accounts.

This alleged problem could lead to a massive default on Naftogaz payments, which may require the Ukrainian Finance Ministry to bail out the company for $1.7 billion.

The Bank of New York account which covers the bond payments was blocked by a US court over a third party dispute against Naftogaz. The disputed sum in question is $21.7 million.

In 1997, Naftogaz’ former incarnation – Ukrgazprom – entered a contract with Russian Gazprom over natural gas supplies. According to the contract, the Ukrainian buyer agreed to partially cover the debt of a Gazprom subsidiary with another Russian company - Severstrudstroi. The latter, in 1998, delegated its contractual obligations to an American Merchant International Company Ltd. This debt was not covered by Naftogaz. In 2010, the British High Court of Justice froze various foreign assets of Naftogaz, including its stock in JXK company. The London court ordered $21.7 million out of $75.8 million bond payment to be frozen.