Firms fear Russian grip on UK energy

By Karl West
Updated: 04:09 EDT, 29 August 2008

UK energy bosses warned that Russia's belligerence poses a major threat to the security of the country's power supply.

Energy warning: Russia's stance threatens UK energy supply

Western businesses are becoming increasingly alarmed by the Kremlin's tough rhetoric, particularly after the treatment of BP's Russian joint venture plus recent threats that the country is ready for another Cold War.

UK Coal chief Jon Lloyd said Britain is acutely vulnerable given it imported 35% of its coal from Russia last year.

He said: 'Given where we are at the moment, nobody wants to be in that situation. 'The writing is on the wall that Russia wants to control energy supply to Europe. More people, including the government, are now starting to realise the value of locally produced energy.'

Mike Wagstaff, chief executive of North Sea specialist Venture Production, agreed saying: 'They (the government) need to encourage people to get more gas from the North Sea. We can see that dealing with the Russians is tough.'

Business Secretary John Hutton this week warned the Kremlin's aggression in Georgia is throwing Britain's energy security into question.

Data from the Economic Research Council shows the powerful grip Russia has over energy reserves.

Three countries - US, Russia, and China - account for over 60% of the world's proven coal deposits.

Some 56% of the world's natural gas reserves are in the hands of three countries - Russia, Iran, and Qatar.

Wagstaff warned homeowners who are already struggling with recent 30%-plus energy price hikes that the era of expensive fuel is here to stay - and that prices could go even higher.

Venture (down 4p at 796p) posted a 67% hike in first-half pretax profits to £113.2m.

It is paying a 12p interim dividend, up from zero payout a year ago. UK Coal (up 7½p at 433½p) reported a first-half pretax loss of £9.9m, compared with a £40.6m profit a year ago. There was no interim dividend.