Gazprom to buy Centrica

Energy and economic stability under threat

Following on from my recent posts about Russian gas supplier Gazprom and it’s leverage at the hands of Vladimir Putin, news arrives of the giant’s interest in Centrica, the owner of British Gas. Alexander Medvedev, Gazprom’s deputy chief executive, said at an economic forum in St Petersburg yesterday:

“In the near future there will be a deal to further increase the customer base on the British market. Anyone who will be in London for the Wimbledon tennis tournament will know about it.”

But the idea of a major British purchase has alarmed the government in the wake of Russia’s bullying of some of its neighbours by using gas supplies as a weapon.

Gazprom bought the British energy retailer Pennine Natural Gas last year and has been busy signing up big name firms and organisations to expand its British customer base. It is possible that the proposed acquisition to which Mr Medvedev was referring was the gas supply company NGSS, which is already part-owned by Gazprom and which operates from the same building as Pennine. Mr Medvedev added that Gazprom expected to increase its market share in Europe to at least a third by 2010 from 27%.

Having already bullied and cajoled it’s neighbouring states for acts of political insouciance, this latest news should set alarm bells ringing with shareholders and politicians alike, the possibility of British gas supplies being totally at the whim and control of the Kremlin is something we all should fear.