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The Observer: The Russians buy up our Centrica? What a gas …

Frank Kane
Sunday February 5, 2006
What an awful stench there was last week of sheer xenophobic hypocrisy at the suggestion that Russian oil giant Gazprom might be interested in buying Britain's gas business Centrica. 'Robust scrutiny' was the DTI response, which is Whitehallese for 'not on your nelly', and the Russians appeared to scuttle back into their permafrost, muttering about 'misinterpretations and misunderstandings'.
There is no doubt, however, that Gazprom would like to buy the British gas business. (The Takeover Panel will soon make them say, one way or the other). The hints and nudges have been coming out of Moscow loud and clear for the past few weeks, as if the Russians were preparing the market for a bid. They have the gas in abundance; we have the customers and the infrastructure to deliver it. In the era of globalisation, putting the two together makes obvious economic and industrial sense.
And, if the Russians had made their intentions obvious before their little fall-out with Ukraine over gas prices, they would have had a good chance of getting the issues debated fair and square. But the photos of Kiev citizens shivering in Europe's worst winter for decades as Moscow turned off the taps has surely done for Gazprom's ambitions.
But how will the British government explain that to President Putin? You can forgive the Russians their surprise at being cold-shouldered, because all the signs were that Britain was an accommodating business partner. After all, the London Stock Exchange has been lifting its skirts to any Russian with a chequered past that wanted to raise some capital.
And the likes of Shell and BP have not been put off by the maverick nature of Russian business – indeed, they have spent billions trying to get their hands on the country's oil resources.
But now the Russians are being told: 'Sorry, it cannot work the other way round. We don't trust you with our gas industry.' Utter hypocrisy.
If Putin really wants to expose British double-think he should instruct Gazprom to take on some top-notch investment bankers and mount a serious cash offer for Centrica. Shareholders would bite their hands off at the right price, and then we could enjoy the sight of the British government squirming to find a reason to block the bid.
That would also leave Centrica nicely in play, with private equity groups best placed to buy it. They would have no qualms about selling it on to the Russians in a few years' time, when we've all forgotten about the Ukraine.

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