Gazprom moving out of London after Brexit?

Gazprom, Russia’s state-run gas group, is considering moving its trading and marketing operations out of the UK after the country leaves the EU amid fears of losing preferential access to the European market as a result of a “hard” Brexit.

The world’s largest natural gas producer is concerned that its ability to trade gas in the EU, by far its most important export market, could be curbed or made more costly as a result of remaining in London. “Running our European trading operations out of London is not advantageous any longer,” said one people with knowledge of the company’s thinking. “We have to look at the impact and our options.” Fears over a loss of EU market access and ability to conduct tariff- or barrier-free business with European countries have already spurred London-based banks and financial institutions to consider relocating parts of their operations. Politicians in London and Brussels have signalled that they could take a tough stance in negotiations over Britain’s exit from the EU, triggered by the Article 50 notification last week, raising the prospect of the UK leaving the bloc in two years’ time without a full deal including future trade relations.

Gazprom opened its trading operations in London in 1999, looking to leverage the city’s financial and commodity market experience and its EU access. The office in London has become its de facto EU headquarters. The company runs all of its European natural gas and LNG portfolio trading through the London operation, which also trades oil and oil products, power, carbon and foreign exchange for its Russian parent. The company also has a subsidiary in Manchester, Gazprom Energy, which sells gas to industrial and commercial clients in the UK. This is not thought to be affected by the review.

A departure would add to a growing list of Russian companies retreating from London, which a decade ago was the western European business city of choice for Russian executives looking to raise capital, list companies or build a secondary management team outside of the country. Russian companies have delisted from the London Stock Exchange in the past few years amid a call from the Kremlin for nationals to repatriate business assets and personal wealth amid Western sanctions imposed on the country.

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