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The Observer: Ministers will block Gazprom move on UK

Oliver Morgan
Sunday May 20, 2007

The government has given its strongest indication yet that it would block an attempt by the Russian energy group Gazprom to take a significant stake in a UK energy company.

Whitehall officials have indicated that ministers have reserve powers that could block a takeover. Gazprom has made clear its wish to increase its presence in the UK energy market, with a significant stake in British Gas owner Centrica thought to be its preferred option.

Gazprom, which has a marketing and trading subsidiary in the UK, aims to increase its 2 per cent share of the market by targeting other customers, such as hospitals, but remains intent on taking a significant share of a business here.

However, there is unease in Whitehall about the conduct of Gazprom and Russian authorities towards foreign investors in Russia and neighbouring states, such as Ukraine and Belarus, whose supplies have been cut in rows over steep increases in the price of Russian gas.

Last year Royal Dutch Shell sold half of its stake in the Sakhalin-2 oil and gas project to Gazprom under pressure from the Kremlin. BP is facing pressure on its Russian joint venture, TNK BP.

As recently as April 2006 Prime Minister Tony Blair said UK ministers would not seek to block a bid from Gazprom.

http://business.guardian.co.uk/story/0,,2083596,00.html

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