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Russia's gas giant plans UK price war

Gazprom, Russian gas giant is set to wage a price war against British Gas and other major suppliers by offering UK households a cut-price alternative.

Gazprom plans to cut out the middle man and trade in Britain under its own brand name. It currently provides a quarter of the wholesale gas sold in Europe to domestic suppliers. Gazprom owns vast gas fields in Russia and controls much of Europe’s pipeline network, which pumps the gas west. Dwindling reserves of North Sea gas have forced British suppliers to buy more Russian gas. In the past, suppliers reaped the benefits from high margins on the difference between the wholesale price they paid for gas and the steep retail price they charged. But Gazprom has now seized on the idea that by supplying gas direct to households, the firm will easily beat prices charged by existing suppliers. Last year Gazprom bought a small UK energy retailer, Pennine Natural Gas, which supplies businesses. It has tripled its customer base by signing up big names such as department store Bhs, and it is also planning to target the NHS. Experts have long speculated Gazprom could try to take over Centrica, owner of British Gas.

Britain’s energy giants have been accused by the website uSwitch.com of not passing on £4.4billion ($8.7 billion) of savings to customers since prices dropped 60% since this time last year. It suggests they could cut bills by another £200 a year for every household. (express.co.uk)