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British Gas owner Centrica exits gas deals in Russia

Centrica gas An employee works on a drilling rig at a Rosneft-owned oil field outside the West Siberian city of Nizhnevartovsk, Russia, January 26, 2016. To match story RUSSIA-OIL/TAXES  REUTERS/Sergei Karpukhin
Centrica has a supply agreement with Gazprom Energy through which gas can be sourced from the open market. Photo: Sergei Karpukhin/Reuters

The owner of British Gas plans to exit its gas supply agreements with Russian companies, most notably Gazprom (GAZP.ME), “as a matter of urgency”.

“We are shocked by the events unfolding in Ukraine and the needless loss of lives,” Centrica (CNA.L) CEO said Chris O’Shea said in a statement.

The company said it is working through the details of how best to do this and will make sure it’s compliant with all relevant sanctions.

It comes after oil giants BP (BP.L) and Shell (SHEL.L) both announced plans to withdraw from Russia following the country's invasion of Ukraine.

Read more: Shell to exit Russian gas ventures

Shell will pull out of its 27.5% stake in the Sakhalin II liquefied natural gas facility, its 50% stake in the Salym Petroleum Development and the Gydan energy venture.

In the wake of Russia’s invasion of Ukraine, the oil company will also terminate its involvement in the Nord Stream 2 pipeline project, in which it holds a 10% stake worth $1bn (£749m).

The company behind Nord Stream 2 sacked all its staff after it was targeted by US sanctions. It’s now considering filing for insolvency, Reuters reports.

Nord Stream 2 AG, which is registered in Switzerland and owned by Gazprom, has completed the $11bn (£8.2bn) pipeline, but Germany halted its approval following Russia’s invasion of Ukraine.

BP is exiting its 19.75% position in Russia oil giant Rosneft it has held since 2013 following pressure from the UK government.

Read more: BP to offload stake in Rosneft and take $25bn hit

The UK-listed oil group announced on Sunday that it was offloading “with immediate effect” its voting stake in Rosneft, saying that Russia’s invasion of Ukraine represented “a fundamental change” in relations with Moscow.

Rosneft (ROSN.ME) accounts for almost half of BP’s oil and gas reserves and a third of its production. Divesting its 19.75% stake will result in charges of up to $25bn, the company said.

But Russia has imposed a ban on foreign investors offloading Russian assets in a bid to halt an exodus in the wake of the crisis.

Russian gas accounts for little of the UK’s energy mix, at just 5% of total imports last year. But across the EU, it accounts for 40% of the energy supply, rising to a full 100% in Czech Republic and Latvia.

Watch: Shell joins BP exiting Russia over invasion