Gazprom UK Aims to Beat Rapid Growth

By Tom McGhie, Financial Mail on Sunday, London

Dec. 2–The British business of Russian energy giant Gazprom has boosted profits by 600 per cent in just three years to £50 million and has finalised plans for even stronger growth.

Gazprom Marketing and Trading was set up in 1999 to sell gas to UK businesses and to be the centre for the commodity trading operation of the world’s largest gas company.

By 2004, profits had hit £7 million on turnover of £200 million and for the current year it is expecting to post profits of £50 million, double those of 2006, with turnover hitting £3 billion.

The business has grown from a handful of staff in a converted house in Richmond, south-west London, to more than 150 people working in a modern office block nearby.

As well as employing dozens of highly paid traders who buy and sell billions of pounds worth of gas delivery contracts between producers and suppliers, it also has a marketing and gas sales operation in Manchester that targets business customers.

Last year it added 7,000 contracts to take its total customer base to 8,000.

Despite its dramatic growth, the company only has a two per cent share of the UK gas market, though the UK Gazprom board met last week to finalise ambitious expansion targets.

Gazprom’s export chief Alexander Medvedev, who was on a visit to Britain last week to meet UK investors, told Financial Mail that the group planned to capture ten per cent of market share within the decade.

Gazprom is confident it can do this as Russian gas increasingly flows into its own UK storage facilities through pipes partly owned by the company.

Gazprom’s 100,000-mile pipe network is the world’s largest.

Medvedev said the growth would come for the most part through organic expansion, but Gazprom would be vigilant for any takeover opportunities.

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