Gazprom chases buyers amid mass exodus
The British arm of Kremlin-backed gas giant Gazprom is scrambling to find buyers to prevent its collapse, with customers fleeing the business following Russia’s invasion of Ukraine.
Gazprom Energy, based in Manchester, provides over 20 per cent of gas used by UK companies.
Over the past few weeks, its executives have approached rivals about buying the company, according to The Sunday Times.
Since then, key clients including fast-food giant McDonald’s, German conglomerate Siemens and waste company Biffa all confirmed to the newspaper they are in talks with Gazprom about exiting multimillion-pound contracts with the supplier.
Alongside departures in the business world, Health Secretary Sajid Javid has told NHS England it must stop using Gazprom, while councils across the country are also rushing to cut ties.
Gazprom’s chief executive Alexei Miller is a close ally of Vladimir Putin and has been sanctioned by the UK, but the company itself remains free of Western measures.
The three Russian directors of Gazprom Marketing & Trading Retail, the registered company behind the energy supply arm, have resigned.
Nevertheless, suppliers will be wary of being perceived as backing the Russian state and its war in Ukraine, heightening the prospect of a collapse.
Government fears another Bulb Energy crisis
Government officials are reportedly worried about Gazprom Energy’s future and its customers.
The energy giant’s sudden jeopardy has raised the prospect of a second de-facto nationalisation of an energy company this winter.
Its financial woes follow Bulb Energy’s fall into special administration last November.
The UK’s seventh biggest supplier, which is home to 1.7m customers, has since remained on life support – sustained by transfusions of public money estimated at £3bn.
In 2020, Gazprom Energy generated revenues of £1.3bn, down from £1.6bn in 2019, and made a small loss.
Gazprom Energy does not sell gas from its Russian parent but instead resells gas from the National Grid, which comes from multiple providers including the North Sea.
An industry source told The Sunday Times there could be interest from buyers.
In contrast to households, business energy suppliers are not limited with any cap on how much they can charge.
Earlier this month, Business Secretary Kwasi Kwarteng confirmed UK plans for further exploration of North Sea oil and gas.
Prime Minister Boris Johnson commitment was confirmed last week in a roundtable with energy leaders in Downing Street.
Meanwhile, Shell has submitted new plans to get the Jackdaw oil field online in 2025 – after a bumper payout and strong profits in its latest full year results.
Gazprom first entered the UK market in 2006 when it bought Pennine Natural Gas.
It remains operational – and employs nearly 300 people with more than 60,000 commercial customers.
Earlier today, Gazprom also revealed it continues to supply gas to Europe via Ukraine in line with requests from European consumers.
It said requests stood at 106.6m cubic metres for March 20.