Suffolk councils to get out of £10m Russian gas contract

Gazprom Arena

Gazprom were a major sponsor of the Champions League - but have been dropped by UEFA. - Credit: PA

Councils and other public sector bodies across Suffolk are planning for a quick exit from a £10million contract to buy gas from Russian fuel supplier Gazprom.

The Russian government-controlled company is on the UK government's list of organisations to face sanctions following last week's invasion of Ukraine.

Its British arm, Gazprom Marketing and Trading Retail (London) signed a £10m contract to supply gas to Suffolk County Council-owned Vertas for three years from October 2020 to 2023.

Vertas, in turn, supplies the gas to public sector premises around the county including buildings providing services for Ipswich Borough Council and East Suffolk Council. It also supplies gas to many schools and academies in the county.

It has now given notice that it will definitely end the contract when a break-clause can be activated in October of this year - but the likelihood is it will end much sooner than that.  

Lawyers are already looking at how the contract could be broken as soon as possible - and the government is planning to bring in emergency legislation which would allow bodies to walk away from contracts with businesses facing sanctions.

Matthew Hicks is delighted to have aa 55-strong Conservative group at Endeavour House.

Matthew Hicks said he is determined to end the deal with Gazprom as quickly as possible. - Credit: Gregg Brown

Suffolk County Council leader Matthew Hicks said: “When Vladimir Putin made the immoral and utterly reprehensible decision to invade Ukraine, I instructed officers last week to review our contract with Russian-owned energy company Gazprom.

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"I can confirm that we have decided to invoke our options to break away from the contract, ending our connection with Gazprom. Working with our partners, we are actively pursuing this outcome.

“The Government is imposing economic sanctions on Russia and this is a part we can play in helping to bring to an end this act of aggression on a free and peaceful nation and its innocent people.”

Although Gazprom is not a major domestic gas retailer in the UK as it is in other parts of Europe, it does have tens of thousands of business and public sector organisations as customers in this country.

It employs 290 people at its main offices in Manchester - it became established in the UK after buying independent business supplier Pennine Natural Gas in 2006.

Governments across Europe are now targeting Russian-owned energy companies for sanctions and western energy giants including BP and Shell are walking away from deals they had with Russian firms.

Shell announced on Monday that it was walking away from deals it had with Gazprom, including a proposal to build a new gas pipeline from Russia to Germany.

Gazprom was, until last week, a major sponsor of the UEFA Champions League and this year's final had been due to take place at the Gazprom Arena in St Petersburg - but that has now been moved to Paris.