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Gazprom In Talks To Boost Gas Sales To UK

natgas pipeline

Russia’s state oil giant Gazprom is in talks with major operators to supply additional volumes of natural gas to the UK, Gazprom’s deputy chief executive Alexander Medvedev told Bloomberg in an interview published on Friday.

The UK aims to shut coal-fired plants by 2025, while its biggest supplier of energy to residents, Centrica, has just decided to close the country’s largest gas storage facility.

“We see an appetite from major players in the U.K. for additional volume of contracted gas,” Medvedev told Bloomberg, but did not go into details on the talks.

“Our supplies to the U.K. increased substantially in the course of the last two years,” the Russian manager said.

Gazprom has a unit operating in the UK, Gazprom UK Trading, as well as a Manchester-based industrial and commercial supply unit, Gazprom Energy. The Russian gas group is also providing gas to the UK via some of the pipelines and interconnectors between Europe and the UK.

Gazprom could stir a lot of interest from UK buyers because pipeline volumes are usually cheaper than LNG cargoes. In addition, Britain has vowed to shut all coal-fired power plants by 2025, and Centrica has just said that it “intends to make all relevant applications to permanently end Rough’s status as a storage facility.”

Related: Macquarie: OPEC Deal To Collapse In 2018

In addition, UK’s gas production from the North Sea is expected to decline, and dependence on gas imports should rise. According to the Oil and Gas Authority (OGA), UK’s gas import dependency would rise to 78 percent in 2035, compared to 48 percent dependency estimated for 2017.

Commenting on Gazprom’s pitch to sell more natural gas to the UK, Nick Campbell, an energy risk manager at Inspired Energy Plc in Preston, England, told Bloomberg:

“Russian pipeline gas would offer greater flexibility than LNG delivery with gas field production being able to flex to meet demand quicker than sending a tanker from the U.S. East Coast and/or Qatar.”

By Tsvetana Paraskova for Oilprice.com

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