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Centrica says Europe will rely on Russian gas for years to come

05 May 2015

Europe will remain dependent on Russian gas for years to come, Centrica chairman Rick Haythornthwaite told shareholders on April 27. He said suggestions that the EU could replace it from other sources were unrealistic. Centrica owns the largest UK suppliers of domestic gas, British Gas and Scottish Gas.

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European leaders have said they aim to cut reliance on imports from Russia following the escalation of the Ukraine crisis last year, with some suggesting Russia could cut off gas supplies to certain countries.

Haythornthwaite said: "Whatever we might want as Europe, we need to be very careful about being pragmatic about the realities of it... I think it's unrealistic to think that Russian gas is going to be replaced in the near-term."

Iain Conn, Centrica chief executive, added: "Russia supplies... about a third of Europe's gas. You can't switch that off easily without huge consequence. There is no way the United States can supply that volume of LNG to replace it."

If sanctions were imposed on Russian gas, companies would have to comply, he said, but it would have "a very significant impact on Europe's ability to balance its natural gas sources and uses", particularly in Eastern Europe which was "not plumbed in to many alternatives".

He said Russia had been a reliable supplier of gas throughout the Cold War and that it needed European demand. He said Russia realised gas exports to Europe were important for the country’s own future and there was as much value in this co-dependency as there was a potential threat.

At the shareholder’s meeting, Centrica also stoked fears of gas supply shortages this winter after warning that a partial shutdown of its Rough storage facility could be extended beyond six months.


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