Gazprom goes British

Great Britain escaped the fallout over the Gazprom-Ukraine row that affected other parts of Europe. Gazprom may now be a new neighbor. Gazprom considers bid for British Gas owner Centrica.

Russian plans to seize control of a major part of Britain's gas supply industry hardened last night when Gazprom revealed that a bid for British Gas's parent group Centrica was "possible".

Alexander Shkuta, deputy chairman of Gazprom's export business, Gazexport, said a takeover of Centrica, which has 12 million gas customers, was being "analysed and investigated".

The statement triggered alarm in government circles, but in the City it sent shares in Centrica racing 25% at one stage before they closed 11% higher at 300p, adding nearly £1bn to its market capitalisation - it is now valued at nearly £11bn.

I find the choice of words pretty interesting. The article seems to tilt a certain way when they use words like "seize" and "control." For a maverick investor, nobody would say anything if these words were used and that is probably the template they work with. But this is Gazprom a company that has shown that it might be a political company or a geopolitical company reflecting the policies of teh Kremlin. Or at the very least, it is a companywith the interests of a select few in the Kremlin at heart. This is not business business. And the possibilities suggested by the Ukraine gas crisis must be keeping some people up at night thinking about it. Maybe they'll end up with a kind of China solution--one business, two companies. One run like it has been, the other like a business. You can though hear Gazprom's execs now swearing that gas will not be used as a political tool.

The deal is only in bid stages it looks like. Gazprom will have to clear a number of hurdles before it will be allowed to buy the company. If it does go through, it ought to be real interesting though.