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The Guardian - UK
The Guardian - UK
Amelia Hill

English councils seek to end contracts with Russian-owned gas firm

Suffolk county council has said it will break away from its £10m contract.
Suffolk county council has said it will break away from its £10m contract. Photograph: Michael Juno/Alamy

Two English councils are blacklisting a key Russian-owned gas supplier in a show of solidarity with Ukraine.

Merton council in London has announced it is seeking to cancel its contract with Gazprom Energy less than a month before the company is due to begin a new one-year, £1m contract to supply gas across Merton’s buildings, including leisure centres, libraries and some schools.

The council leader, Mark Allison, said: “I have asked officers to urgently review options to bring this contract agreement to an end to show our unity and empathy with the people of Ukraine. The atrocities being carried out by Russia are horrific. Any small step we can take is a step that must be taken.”

The council has written to the government to ask for urgent changes to the laws around who councils can choose to do business with. “Under law all council contracts are commercially driven,” said Allison. “We need the ability to refuse to do business with such firms based on their moral or social suitability, not just their commercial offer.”

Suffolk county council has also said it will break away from its £10m contract with the energy supplier. Its deal with the supplier started in 2020 and is due to run until 2023 but the council leader, Matthew Hicks, said the county was “actively pursuing” ending the contract early.

Gazprom Energy, a subsidiary of Russia’s state-owned gas and oil giant, has been one of the largest suppliers of gas for UK businesses since 2010, accounting for about 20.8% of the market.

The company provides gas and electricity to NHS sites, factories, businesses and public sector customers across the UK. According to its latest annual report, it supplied gas to 178,000 sites across the country in 2020.

But as scrutiny mounts on the role of the Russian state energy giant in the UK, the owner of British Gas Centrica has also announced it is seeking to exit its deal with Gazprom “as a matter of urgency”.

Centrica signed a gas supply contract with Gazprom’s UK-based trading arm in 2012 and has twice extended it, with the current deal due to run until summer 2025. But Chris O’Shea, Centrica’s chief executive, confirmed it had now entered into discussions with Gazprom about exiting this agreement.

Shell announced it would “exit its joint ventures with Gazprom and related entities”, which are worth about $3bn and include its 27.5% stake in the Sakhalin-II liquefied natural gas facility. Last week BP said it would offload its 19.75% voting stake in the Russian state-owned oil company Rosneft.

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