Centrica extends gas deals with Gazprom and Statoil

Millions of UK households are to receive more gas sourced from Russian state-controlled energy group Gazprom after Centrica, owner of British Gas, signed a deal to buy greater volumes from the Russian group's marketing arm.

Centrica on Wednesday said it had extended a gas supply contract with Gazprom Marketing & Trading, a UK-based subsidiary, taking the average volume of gas supplied by the Russian group to 4.16bn cubic metres (bcm) a year and the total volume delivered under a long-term deal to 29.1 bcm.

This marks a 70 per cent increase in average annual volumes from Gazprom to Britain's biggest domestic supplier, and points to growing commercial links between the two companies amid a heightened risk of tighter sanctions against Russia over the conflict in Ukraine.

Gazprom has had a formal trading relationship since at least 2012 with Centrica, which has nearly 15m UK accounts for gas and electricity.

That contract was due to run for three years from October 2014, and has been extened until 2021, with the greater volumes being supplied from this year.

The deal is different to other export contracts the Russian group has with European buyers. The gas is sourced from a global portfolio by London-based GM&T and not managed by Moscow. However, it comes amid increased scrutiny of Gazprom's role in European gas markets, with the European Commission accusing the group of illegally overcharging customers and muscling out rivals in central and eastern Europe.

Centrica also said it had increased the volume of gas it was buying from Norway's Statoil.

The UK group signed a 10-year agreement with Statoil in 2011 for the supply of 5 bcm of gas a year, to be delivered from October 2015. The new deal will increase that by a further 2.3 bcm a year, taking the total volume to be delivered to 7.3 bcm a year - or 73 bcm over 10 years.

Centrica said Britain needed about 70 bcm of natural gas each year to heat homes and businesses and to generate electricity, of which half now had to be imported. The deals with Gazprom and Statoil would meet the needs of about 9m UK households, it added.

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