Breaking: UK prepares to nationalise Gazprom retail arm

A stand-off between Gazprom, the Russian state controlled energy firm, and a Wall Street banking giant could see the UK nationalise its local arm within days.  

According to Sky News ministers are currently drawing up plans to take control of Gazprom Marketing & Trading Retail (GM&T) should the company fail to reassure financial counterparties about the nature of an apparent change of ownership signalled by its parent company last week.

The move would be the most significant corporate move against Russia following the country’s invasion of Ukraine, and it could cost the taxpayer billions.

GM&T supplies roughly 30,000 customers, including many NHS hospitals, local authorities, large retailers and industrial users of gas. Accounting for around 20 percent of the market, the company has started to bleed customers as the war in Ukraine continues.

Placing Gazprom Energy into OFGEM’s special administration regime (SAR) would make Gazprom Energy, as the division is known, the second utility to be absorbed by UK taxpayers following last year’s insolvency of domestic supplier Bulb Energy.

Bloomberg valued Gazprom’s Energy supply contracts at around four billion pounds (4.8 billion euros) last month, the news outlet also reporting that Teneo Restructuring was being lined up as special administrator.

Analysts say that the government cannot afford for the company to go bankrupt and in the process fail to meet its contractual obligations. That they say would be catastrophic for Boris Johnson’s government as those customers would be forced to go elsewhere, which will come at a cost. Prices are currently sky high and any increase for these Gazprom Energy’s customers could be disastrous.

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.

“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.”

It is not clear that the government will need to take action as the issue may be resolved between the Citi Group and Gazprom, the problem arising following an announcement by the Gazprom Group saying that they were: “Not in a position to comment on the new ownership structure” but that it “remains operationally independent.”

Gazprom Energy said: “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.

“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.

“We are therefore steadfastly committed to mitigating any adverse impacts, working very closely at present with the UK Energy Regulator (‘Ofgem’) and other UK government agencies to manage these risks.”

It said it would comment further “in due course”.

It is understood Sky have tried to contact all the companies involved as well as OFGEM but as at the time of publication no comments had been forthcoming.

Should the UK nationalise the Gazprom retail arm, it likely to help stabilise the market and to minimise the risk of an immediate additional prices increase for the company’s customers

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