Kwasi launches urgent review to free UK from Russian gas reliance as price shocks loom

Ambassadors walkout over Russia justification for conflict

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The Government is looking to reduce its exposure to Russian gas and investment from Kremlin-backed energy companies in the UK. This follows the harsh sanctions imposed by Britain after Russian President Vladimir Putin began his invasion of Ukraine. UK Secretary of State for Business, Kwasi Kwarteng met the chiefs of some Britain’s biggest energy firms on Friday, which included National Grid’s John Pettigrew, Chris O’Shea of Centrica and ScottishPower head Keith Anderson, according to the Financial Times

Energy industry leaders noted that the review would look into the ties between Russia state-backed oil company Gazprom and the public and private sectors in Britain.

This review comes as the Government faces calls to reduce the amount of Russian gas imported into Britain.

The UK gets about 5 to 6 percent of its gas supply from Russia, which is significantly less than most countries in the EU, which on the whole relies on Russia for 40 percent of its total supply.

Energy industry executives have warned Gazprom’s UK based trading arm has extensive ties with both companies and public sector bodies.

Gazprom Marketing & Trading (GM&T) which is based in London, is primarily involved in trading energy products and buying and selling volumes of natural gas, including from the North Sea in the UK.

The firm also has a significant retail arm that sells energy directly to industry and UK businesses.

According to figures by Tussell, the procurement data providers, Gazprom’s UK arm has sold over £107mn worth of energy to local authorities and NHS trusts over the past six years.

So far, neither the UK, US or EU have imposed any sanctions that target Russia’s energy sector or could hamper the flow of gas from the country.

Part of the reason for this is that Russia is the world’s largest exporter of natural gas, with a major share of the exports flowing towards Europe.

If Russia were to turn off the taps on natural gas, it would could in skyrocketing prices around the world, with fears of European countries being plunged into darkness over dwindling supplies.

However, some of the world’s largest energy companies have already begun severing ties with Russia as the country continues to bombard Ukrainian cities with airstrikes.

Most recently, oil giant Shell announced that will end all joint ventures with Gazprom, worth around £2.25billion.

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This comes amidst the recent rise in gas prices triggered by the situation in Ukraine could send even more British energy firms to the wall.

Observers claimed that the conflict could cause the UK gas price to rocket to £10 per therm.
This would be more than double its peak in December which stood at just over £4.5 per therm.

All this comes after the price of gas exploded by up to 250 percent last year.

This led the price cap to increase for a typical household from £1,277 to £1,971 from April 1.

Some industry analysts have predicted that it will go up again to £2,300 from October 1.

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