Monday, February 4, 2008
Gazprom in the UK
The Wall Street Journal published an interesting article last week about Gazprom's efforts to expand their gas retail presence in the UK. The article addressed the potential backlash from UK energy companies and concerns over reliance on gas supplies from Russia. I get the feeling that the UK may be overreaching to Gazprom's attempts to expand their retail presence. Critics should separate the issue of over reliance on Russia for supplies of gas and foreign firms purchasing local assets. Even if Gazprom purchases a major gas supplier like Centrica they still won't have a monopoly position in the retail market. In a worst case basis Gazprom could sell gas below market rates to secure a larger share of the market. If this happened the UK could always go after the company with anti-trust or anti-competitive regulations. Instead of worrying about the retail market the UK should focus on maintaining diversification of supply (the UK currently gets about 5% of the country's gas from Russia).