Centrica to Exit Natural Gas Deals With Russian Counterparts

(Bloomberg) -- Centrica Plc plans to exit its natural gas supply agreements with Russian companies, principally Gazprom PJSC's trading unit “as a matter of urgency,” the U.K. energy supplier's chief executive officer said.

Centrica has a medium-term contract with Gazprom Marketing & Trading Ltd., the trading division of the Russian energy giant. Although the gas isn't necessarily Russian supply, the company is exploring how it can terminate this contract, according to a statement Tuesday.

The move follows announcements by Shell Plc that it will exit its Russian gas ventures and BP Plc's decision to dump its stake in state-run oil producer Rosneft PJSC. Companies are coming under increasing pressure to act as the U.K. government, along with the U.S. and other allies, is seeking to squeeze Russia's economy and convince President Vladimir Putin that his invasion of Ukraine will mean financial ruin.

“We are shocked by the events unfolding in Ukraine and the needless loss of lives,” Centrica's Chris O'Shea said in the emailed statement.

Shares in the utility dropped as much as 3.8% and were trading at 74.54 pence at 4:28 p.m. in London.

Before Russia invaded Ukraine, putting Europe's gas supplies at risk, the U.K. government was already saying that surging prices underscored the need to find alternatives to expensive fossil fuels from international suppliers.

Even though imports from Russia made up less than 4% of Britain's gas supply in 2021, prices are still tied to costs on the continent that have surged 59% this year.

The supply agreement with Gazprom is one of a number of options Centrica has. The company also buys gas directly from 26 North Sea, Irish Sea, Dutch and Norwegian gas fields and has a supply agreement with Equinor ASA.

Currently, the supply deal with Gazprom covers less than 10% of the summer 2022 requirement and none of the winter 2022 demand.

Centrica said the supply contract isn't currently impacted by current U.K. sanctions.