DONG will buy 1 billion cubic metres of gas a year, via a Baltic Sea pipeline being built between Russia and Germany. State-owned DONG will also sell 600 million cubic metres of gas a year to Gazprom's UK trading arm, from 2007. It will come via the Langeland pipeline linking the UK with Norway's Ormen Lange field.
"This deal illustrates the fact that Gazprom wants a bigger piece of the UK market," said Dr Craig Lowrey, head of energy market research at the Energy Information Centre. Gazprom has recently admitted that it could consider making a takeover bid for British Gas owner Centrica, a move that the UK is becoming increasingly reliant on imports of natural gas as its fields in the North Sea become depleted. Gazprom already supplies a quarter of the European Union's gas supplies, a figure that could rise upon completion of the huge Baltic Sea pipeline it is building with German energy company EON and chemicals group BASF.