Britain has 'nothing to fear' from Gazprom

Russian energy group still looking to buy · British Chief says it should be treated like European firm Terry MacalisterMonday July 17, 2006The Guardian
Gazprom, the Russian energy group linked with a potential takeover of British Gas owner Centrica, said yesterday it was still looking at acquisitions in the UK and assured the British they had nothing to fear from its expansion.
The chief executive of Gazprom Marketing & Trading (GM&T), Vitaly Vasiliev, said in an interview with the Guardian yesterday his company should be viewed no differently from EDF of France or RWE of Germany.


His comments came after Russia's president, Vladimir Putin, had called on Tony Blair to ensure equal treatment for Russian companies in the UK, in the same way UK firms operated in his country. Earlier speculation about a takeover of Centrica had brought expressions of concern from British politicians.
"Gazprom group is looking at different opportunities, and one of the options is to make the company larger in scale [by organic growth] and another is to keep making acquisitions," said Mr Vasiliev.
He was talking ahead of tomorrow's appearance in front of a trade and industry select committee. It will want to know how Russian gas can help a looming energy shortage, and what Gazprom's ambitions are with regard to Centrica or other potential acquisitions.
"We have not made any offer or bid but there has been so much press coverage," said the boss of GM&T, the Kingston-on-Thames-based business that looks after gas trading in western Europe for the wider Gazprom group. "We understand this is quite sensitive because Centrica has so much of your market share."
Mr Putin, talking ahead of a meeting with Mr Blair, said: "The activity of British companies in our country is growing, and I hope our companies will also get the opportunity to work in Britain."
Gazprom took its first step to building a retail business in Britain last month when it bought a small Midlands-based company, Pennine Natural Gas, and is currently transferring over its 600 customers. These include William Hill betting shops, Debenhams department stores and Sunderland football club.
Mr Vasiliev said Pennine was the first retail business ever bought by Gazprom anywhere in the world. It would be used to gain an understanding of serving small customers in a liberalised market.
The Russian company also has an option to buy NGSS, a billing and metering business, that works for Pennine. Mr Vasiliev says Pennine could be expanded or other acquisitions could be made.
Gazprom's expansion in the UK should be seen as positive by British politicians and the public rather than something to fear. Britain is 7% dependent on foreign gas imports but this would grow dramatically after 2010, Mr Vasiliev said, though he pointed out countries such as Germany were 80% dependent.
"It is important that the UK understands that there is nothing dangerous about being dependent on foreign supplies. It's a matter of how you build relationships with those suppliers," he said.
Gazprom last year provided 2.7bn cubic metres of gas to the British market - representing less than 3% of overall demand. By 2010, the company believes it could be providing 10% of overall demand, representing 20% of total UK gas imports. But Mr Vasiliev said Gazprom would not source all this gas from Russia. It has already signed a long-term supply agreement with DONG of Holland and is in talks with Norwegian suppliers, specifically for UK customers.
Mr Vasiliev said one of his tasks tomorrow was to try to give British MPs a positive image of Russian companies and the Russian political system. Many believe this image has been tarnished by the recent stand-off between Gazprom and Ukraine and by last week's Rosneft flotation, which raised the issue of political interference in business.
Russian oil group Yukos will today try to block the flotation of Rosneft in the high court, arguing that its assets were stolen from Yukos, but Mr Vasiliev said his discussions with potential British customers did not suggest this had caused a problem. But he admitted: "I agree part of our role is to change the perceptions [of Russia] and this is why we are meeting with the [select] committee."Special reportsRussiaChechnyaUseful linksItar-Tass news agencyMoscow TimesRussia TodaySt Petersburg TimesCaucasian Knot