Chilling bid talk

29 Jan 2006

Sure, there’s some industrial logic in the Russian behemoth taking over the £10bn UK gas distributor. But the timing, in the midst of a AngloRussian spy row and Russia holding Ukraine to ransom on gas, looks politically appalling.

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Gazprom's export chief Alexander Medvedev said in a newspaper interview on January 18 with the UK's Guardian that Gazprom wants to account for 20% of Britain's gas supplies within 10 years and would consider acquisitions as large as £10bn to reach that target.

Four days later, Gazprom was asked by the Independent if it was weighing a bid for Centrica. A Gazprom source replied: we say maybe.

The move is part of Gazprom's larger plans to expand into European energy distribution.

The UK currently imports less than 2% of its gas from Russia, but this is expected to rise as North Sea gas supplies dwindle. Centrica supplies more than one in two British households with gas, and accounts for almost a quarter of electricity supplies. Overall, it has a 40% share of the UK energy retail market.

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