UK orders review of Russian public sector energy contracts

Sections of pipeline are seen next to a disused gas tank in Manchester, Britain September 23, 2021. REUTERS/Phil Noble

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LONDON, March 28 (Reuters) – Britain on Monday told public sector bodies to review energy and other contracts they have with Russian companies and consider switching suppliers, noting that existing energy agreements could benefit the Russian state.

Alongside its allies, Britain is seeking to cripple the Russian economy through sweeping sanctions in response to its invasion of Ukraine, but has refrained from sanctioning major Russian energy companies.

“Public money should not fund (Russian President Vladimir) Putin’s war machine,” Cabinet Minister Steve Barclay said in a statement.

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“We are calling on hospitals, councils and other public sector organizations to urgently consider all the ways they can go further to sever business ties with Russia.”

This could affect Russian-linked companies that buy gas on the wholesale market and resell it.

Gazprom Marketing & Trading (GM&T), which is Russian-owned but registered in Britain, has a UK unit that operates as Gazprom Energy and supplies 21% of the country’s industrial and commercial customers, including National Health Service and other public sector bodies.

GM&T narrowly avoided insolvency in March. If it were to collapse, it could throw the European gas market into disarray and would likely require the costly intervention of a special administrator. Read more

Gazprom Energy did not immediately respond to a request for comment. GM&T did not respond to a request for comment. Gazprom Energy previously said in a statement on its website that its parent company GM&T sources gas from wholesale energy markets and does not depend on gas supplied by Russia. “We don’t have any gas contracts with Russia either,” he said.

Britain put consumer energy company Bulb into special administration last year, with the government covering its losses which are officially estimated at around £2.2billion.

The British government has announced that it will phase out imports of Russian oil by the end of the year and is working on a new energy strategy to end all dependence on Russian gas, which currently accounts for less than 4% of the British supply. Read more

The final piece of advice came in a sourcing policy guide.

“You should seek advice from an energy expert and/or a relevant public sector purchasing organization before taking steps to terminate an existing energy supply contract to ensure that an alternative source of supply is available. available and affordable,” he said.

Russian President Vladimir Putin has sent troops to Ukraine in what he calls a “special military operation” to demilitarize and “denazify” Ukraine. Ukraine and the West say Putin has launched an unprovoked war of aggression.

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Reporting by William James, editing by Kylie MacLellan, Kate Holton and Jane Merriman

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