Britain starts Russian gas imports under 2012 deal just as tensions mount

LONDON (REUTERS) - Britain has begun this year to import gas from Russia under a formal contract for the first time, just as European calls to loosen Moscow's grip on energy supply mount because of the crisis over Ukraine.

The country's biggest utility Centrica signed a deal in 2012 with Russian state-controlled Gazprom to import 2.4 billion cubic metres of gas over a period of three years, and the supplies began flowing in January.

Russia is Europe's biggest supplier of gas, providing around a third of the continent's needs, and some of this has previously reached Britain from continental European storage sites.

The exports largely go to central and southeastern Europe rather than to Britain, which still has significant domestic reserves and gets most of its imports from Norwegian pipelines or liquefied natural gas (LNG) shipments from further afield.

With domestic production falling by around 7 per cent a year, Britain has had to find more suppliers to fill the gap.

One gas analyst said the Russian deal appears to explain unusually heavy import flows in 2014 via the BBL link from the Netherlands, one of two pipelines that connect Britain with mainland Europe.

"It is also interesting that from 2014 deliveries under the new contract with Centrica started from guess is that the reason for imports through the BBL pipeline being so high this year is this contract," the analyst said.

While this is the first direct contractual deal, it is not the first time Britain has used Russian gas to heat homes and fuel power plants.

Gazprom estimates it sends around 11 billion-12 billion cubic metres (bcm) to Britain each year, accounting for around 15 percent of total UK supplies.

These sales involve volumes that Britain sucks in from mainland European countries during times of peak demand. The majority of Russian gas imported into Britain in recent years has been sourced from storage sites in Germany, largely filled with Russian supply.

European Union leaders in Brussels on Friday discussed moving energy supplies away from Russia, saying Moscow's annexation of Crimea made them more determined to reduce dependence on Russian oil and gas.

A British government circulated to other EU governments has proposed options for cutting dependence on Russia that include asking the United States to export more gas and working with Iraq.

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