Gazprom eyeing UK energy assets but denies interest in Centrica

Moscow (Platts)--3Feb2006

Russian gas giant Gazprom is looking at UK's energy assets but denied
late Thursday media reports that the company is considering buying the UK
utility Centrica.
     Russian media reports quoted Alexander Shkuta, deputy general director of
Gazprom's export arm Gazexport, as saying Thursday that Gazprom was analyzing
the possibility of buying Centrica but no decisions had been made yet.
     Gazprom issued a statement late Thursday, saying Shkuta's words were
misinterpreted.
     "His answer referred not to Centrica but to any available energy assets
in the UK. Gazprom is currently studying the possibility of expanding its
presence on the UK's energy market. All possible variants are being
considered. But the Gazexport representative did not make any statements
concerning Centrica," the company said. 
     Gazprom also referred to earlier statements by Gazexport head Alexander
Medvedev, who said that Gazprom did not contact Centrica's shareholders,
managers or consultants regarding the asset. 
     Meanwhile, analysts believe that Centrica would be the most viable option
for Gazprom to enter the UK gas market. 
     "The purchase of UK's biggest gas distribution company Centrica would be
an excellent way to enter the retail gas market. It would raise Gazprom's
margin, as gas is sold to end consumers at a higher price," Russia's Finam
investment company said Friday in a report. 
     If the decision has been made, Gazprom is unlikely to buy Centrica worth
$20- to 25-bil in cash, as the gas giant does not plan to increase borrowing
in the next few years, Finam said.
     "It is more likley that Gazprom gets Centrica's gas distribution network
in exchange for the utility's participation in Gazprom's gas production
projects," the investment company said.
     British newspaper the "Independent" said last week that Gazprom might be
considering a bid for Centrica, following remarks made by Medvedev in an
interview earlier in January on growth in the UK market.
     Medvedev said in an interview in the "Guardian" newspaper Jan 18 Gazprom
was aiming to provide 20% of Britain's gas by 2015, most likely via
acquisition of a company such as Scottish Power.

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