The British energy supply arm of Russian state-controlled Gazprom is racing to find a buyer to stave off collapse as a flood of big customers rush for the exit over the invasion of Ukraine.
Manchester-based Gazprom Energy supplies more than a fifth of the gas used by British companies, making it a crucial part of the country’s energy system.
This weekend, fast-food giant McDonald’s, German conglomerate Siemens and waste company Biffa confirmed they were in talks with Gazprom about exiting their multimillion-pound contracts.
Health secretary Sajid Javid has told NHS England that it must stop using Gazprom, while councils across the country are also scrambling to cut ties. Gazprom’s chief executive, Alexei Miller, is a close ally of Vladimir Putin and has been sanctioned, although not the company itself.
In recent days, executives at Gazprom’s British energy supply arm have approached rivals about buying the company, sources said. However, suppliers will be reluctant to be seen to be funding the Russian state and its war in Ukraine, raising the prospect of collapse.
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Government officials are understood to be concerned about the future of Gazprom and its customers as they grapple with failed domestic supplier Bulb.
If Gazprom Energy were to go under, it would most likely follow the same route as Bulb, which entered special administration in November and required a £1.7 billion taxpayer bailout.
The three Russian directors of Gazprom Marketing & Trading Retail Limited, the registered company behind the energy supply arm, have resigned.
Richard Leese, chairman of the Energy Intensive Users Group, said there was “a lot of concern” among his members about the future of Gazprom, which supplies many industrial companies. He said: “It’s akin to a run on the banks. You can draw parallels to the public queuing up outside a bank, Northern Rock-style.”
In 2020, Gazprom Energy generated revenues of £1.3 billion, down from £1.6 billion in 2019, and made a small loss.
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Gazprom entered the UK market in 2006 when it bought Pennine Natural Gas. It now employs nearly 300 people, has more than 60,000 commercial customers and owns businesses in France and the Netherlands.
Gazprom Energy does not sell gas from its Russian parent; instead it resells gas from the National Grid, which comes from multiple sources including the North Sea.
An industry source suggested there could be interest from buyers, given that business energy suppliers are not limited by any cap on how much they can charge. The firm does not supply households, whose bills are capped.
A McDonald’s spokesperson said it had informed Gazprom it was “looking to end our contractual agreement at the earliest opportunity”. Siemens is “actively talking” to Gazprom about “terms for exit”. Biffa said it was looking to exit “at the earliest opportunity”. Insurer Admiral is also understood to be in discussions.
Neither Gazprom Energy nor its parent Gazprom Germania responded to requests for comment.
