Gazprom Energy is examining a rebrand as Britain’s biggest gas supplier to business seeks to distance itself from its Russian owners after the invasion of Ukraine.
The Manchester-based business supplies more than a fifth of the gas used by British companies, making it a crucial part of the country’s energy system. It is considering a subtle rebrand to GM&T, the name of its UK parent, to increase its chance of survival.
“The top management is keen but the trouble is that it’s not a radical rebrand so it’s unclear whether it will make much difference,” said a person close to the Kremlin-owned company.
Gazprom Energy was facing imminent collapse in March as companies shied away from new contracts, prompting fears its 30,000 corporate customers’ bills would suddenly surge as they are on cheap contracts negotiated years before wholesale prices began to soar last summer.
As the business struggled to find a buyer, the government had been on standby to put it into special administration, a form of quasi-nationalization that would have allowed Gazprom Energy to continue supplying its customers.
But ministers believed that if they put the company into special administration and also agreed to honor customers’ low-cost contracts it could have cost taxpayers £ 4bn.
The alternative of allowing it to fail could have led to multiple business failures for which the government would risk being blamed.
However, the German government last month temporarily took over its parent Gazprom Germany, a trading, storage and transmission business, securing its immediate future. Berlin made the Federal Network Agency, Germany’s national energy regulator, a trustee of the company, initially until September 30.
The takeover means the future of Gazprom Energy and its customers is effectively in the hands of Berlin, as is a large proportion of the European wholesale energy market and part of the global trade in liquefied natural gas.
The Federal Network Agency said it was “essential” to ensure Gazprom Germany and its subsidiaries continued to operate “in order to maintain Germany and Europe’s energy supply”.
“It’s in Germany’s overwhelming interest that banks, service providers and business partners of Gazprom Germania GmbH and its subsidiaries can continue their business operations with these companies in the usual way and without additional restrictions and changes.”
Berlin is not allowing Gazprom Energy to take on new customers and it continues to lose key staff. At least 15 staff have recently left the business, some from its office in Manchester, where it has about 270 employees.
Gazprom Germany, which supplies wholesalers and retailers, and owns storage and pipeline capacity, is crucial to the energy market in Europe.
It has assets and subsidiaries in Germany, the UK, Switzerland, Belgium and the Czech Republic, as well as Singapore and Mexico. These include Germany’s biggest gas storage facility in Lower Saxony with 4bn cubic meters of capacity and Wingas, one of the biggest gas suppliers in Germany. It also runs a large global LNG business.
Among Berlin’s options after September is to nationalise the business and its assets. The German parliament this month amended a key energy law to allow the government to seize ownership of energy companies as a measure of last resort to secure supplies in the event of an emergency.
As with Gazprom Energy, Wingas is servicing its existing portfolio of clients, rather than allowing new business. Most of its gas portfolio was already bought in advance – or hedged – so it is receiving only “modest quantities” of gas from Gazprom, according to one person close to the company. The storage facilities are also being used for gas sourced from other suppliers.
If Wingas or Gazprom Energy collapsed, GM&T would stand to benefit by at least £ 10bn as it would also be released from its contract to deliver gas bought in advance.
Gazprom Energy declined to comment.