Centrica: What’s worse? Russia or a Labour government?

Written by:
A number of issues dominated Centrica’s Annual General Meeting on Monday; Russia, and the prospect of a Labour government, were the most significant.

In his address to shareholders, chairman Rick Haythornthwaite said that Europe will remain reliant on Russian gas for years to come – and that European leaders hoping that alternative sources can be found are “unrealistic”.

Since the Ukraine crisis began last year, politicians throughout the European Union have spoken of the need for European reliance on gas imports from Russia to be reduced, if not ended outright.

However, Haythornthwaite stated that leaders “need to be very careful about being pragmatic about the realities.” He believes it is “unrealistic to think that Russian gas is going to be replaced,” in the near-term at least.

In his own address, chief executive Ian Conn noted that Russian gas supplies currently account for a third of Europe’s gas overall; “you can’t switch that off easily without huge consequences. There is no way the US has the LNG volume to replace Russia’s.”

“Sanctions imposed on Russian gas companies would have a very significant impact on Europe’s ability to balance its natural gas sources and uses,” Conn added. “Russia was a reliable supplier of gas all the way throughout the Cold War. We play a very important part in Russia’s own future and there’s much value in this co-dependency.”

Shareholders also voiced concerns over the potential for a Labour government; Conn recognised that investors were “worried”. Ed Miliband’s pledge to freeze energy prices upon assuming office adversely impacted Centrica’s share price when it was announced last year; the UK’s biggest energy supplier swore that it would “proactively engage” with the next government, no matter its composition or hue – and Conn sought to comfort the assembled by reminding them that there was a “big difference” between what politicians say on the campaign trail, and “when they have the burden of having to implement policy.”

Despite these issues, Centrica shares were up by £4.70p (1.75 per cent) following the AGM; that morning, a trading update stated that the group would see its profits rise in the first quarter, due to a 10 per cent increase in gas usage in the first three month of this year.



There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week