Britain prepares Gazprom supply arm takeover at £4billion cost to taxpayer

Britain prepares Gazprom supply arm takeover at £4billion cost to taxpayer

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THE UK Government is preparing to nationalise Gazprom’s British supply arm in a move which could cost taxpayers billions of pounds, sources claim.

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Ministers are reportedly drawing up plans to take over Gazprom Marketing & Trading Retail (GM&T). The move may happen as soon as this week, an industry source said.

GM&T, whose ultimate parent is the Russian state-run Gazprom, was touted in March as a prime candidate to be taken into the UK’s special administration regime (SAR).

The unit, which operates as Gazprom Energy, supplies just over a fifth of Britain’s commercial gas and serves thousands of customers, including the NHS.

It provides more than 20 percent of the gas used by British companies, although a growing number have reportedly been deserting it in recent weeks.

Last month, it was reported Gazprom Energy had been trying to find a buyer to stave off collapse as many major clients sought to exit multi-million pound contracts in response to Russia’s invasion of Ukraine.

Gazprom

Russian gas company Gazprom is parent company of Gazprom Marketing & Trading Retail (Image: Getty)

An employee works on pipework at the construction site of the Gas Interconnector Greece-Bulgaria (IGB) natural gas pipeline in Komotini, Greece

An employee works on pipework at the construction site of the Gas Interconnector Greece-Bulgaria (Image: Getty)

Placing Gazprom Energy into Ofgem’s SAR would make it the second utility to be rescued by UK taxpayers.

Domestic supplier Bulb Energy was bailed out late last year at a cost estimated by the Office for Budget Responsibility to be £1.2 billion in 2021-22 and another £1 billion in 2022-23.

Bloomberg News last month reported that the cost to the public purse of maintaining Gazprom Energy’s existing supply contracts was estimated to be about £4 billion.

One energy industry executive told Sky News it was still not certain Gazprom Energy would need to be taken into public ownership, but added that its fate rested on discussions between the company and its clearing bank Citi.

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A worker installs gas flow monitoring equipment at an underground gas storage facility operated by Gazprom PJSC in Russia.

A worker installs gas flow monitoring equipment at an underground gas storage facility in Russia (Image: Getty)

Gas pipes at the Comprehensive Gas Treatment Unit No.3 at the Gazprom PJSC Chayandinskoye oil, gas and condensate field

Gas pipes at the Comprehensive Gas Treatment Unit No.3 at the Gazprom PJSC Chayandinskoye field (Image: Getty)

Gazprom Group announced on Friday that it had ceased its participation in the British arm. It did not provide details of any new owners.

GM&T also said on Friday it remained operationally independent following an announcement earlier that Gazprom had ended its participation in Gazprom Germania GMBH and all of its assets, including GM&T.

GM&T said in a statement on its website that is was not in a position to comment on the new ownership structure.

It added: “GM&T remains operationally independent. We source our gas in the European wholesale markets in exactly the same way as other market participants, and since Q1 2021 we have not received gas under long-term contracts with Russia.

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Gas

Gas pipelines linking Russia to Europe (Image: Express)

“GM&T, given its significant role within both the energy trading and B2B energy retail sectors, fully recognises the material impact we have in regard to the UK and European financial and energy markets, and thereby the economy.”

The company said is remains “steadfastly committed” to mitigating any adverse impacts and is working very closely with UK energy regulator Ofgem and other UK government agencies to manage those risks.

A Government spokesperson said: “The UK is in no way dependent on Russian gas, which makes up less than four percent of our supply.

“Our highly diverse sources of gas supply and a diverse electricity mix ensures that households, businesses and heavy industry get the energy they need.

Workers monitor the drilling procedure at the Gazprom PJSC gas drilling rig in the Kovyktinskoye gas field

A worker monitors drilling at the Gazprom PJSC gas drilling rig in Russia (Image: Getty)

“We are aware that Gazprom Energy has a large presence in the non-domestic energy retail market.

“Businesses and organisations should exercise their own commercial judgement with regards to energy supply contracts they have in place at the moment.”

Citi has been approached for comment.

The news comes as the Government prepares to unveil its energy security strategy, expected to be published this month.

One of the issues under consideration is the future of fracking and whether a moratorium should remain in place.

Downing Street insists the situation in Ukraine means considering all options to increase the UK’s energy independence.

A No. 10 spokesman said: “Our general position on fracking has not changed. The pause on the development of shale remains in place.

“But it is of course right that we look at all of our options which will inform the energy security strategy.”

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