The trading arm of Russian gas giant Gazprom PJSC is coming under increasing pressure as customers and peers flee in response to war in Ukraine, posing a risk to energy markets from the UK to Germany and in Singapore.

Gazprom Marketing & Trading is facing liquidity problems as banks delay its transactions and peers refuse to deal with it, according to people familiar with the matter. But its failure would upend markets beyond its UK home: the firm is one of Europe’s leading gas and power traders, has units in Asia and North America and has traded more than 100 shipments of liquefied natural gas in 2020.

Little known to the general public, Gazprom Marketing & Trading achieves revenues almost equivalent to those of the commercial branch of Centrica PLC, the UK’s leading energy supplier. If it were to go bankrupt, it would bring down its UK retail arm, a supplier to the National Health Service. The threat is so acute that the government has planned to nationalize the company, known as Gazprom Energy.

A unit in Germany is also threatened. The trading arm holds billions of euros in hedges for Wingas GmbH, a sister company that is one of Germany’s biggest gas suppliers, said the people, who asked not to be identified because the information is private. The loss of these transactions would force the Kassel-based company, owned by the German arm of Gazprom, to buy energy for its customers at the currently high prices.

The Gazprom Marketing & Trading backlash is occurring even though the company has not been directly affected by Western sanctions. Last week, the UK included Gazprombank – which handles some energy transactions – on its list of prohibited entities. While European countries, including Austria and Germany, have so far opposed oil and gas sanctions, traders fear that trade unity is next.

Gazprom Marketing & Trading said it sources gas “from European wholesale markets in exactly the same way as other market players, and since the first quarter of 2021 we have not received gas in the framework of long-term contracts with Russia”. Wingas declined to comment.

European energy markets have been extremely volatile, with gas prices soaring 79% in a single day earlier this month. The chaos would worsen if the company – with revenues of £2.6bn ($3.4bn) in 2020 – fails, risking breaching agreements and forcing customers into the market to buy gas and electricity at prices several times higher than normal.

The LNG market would also feel the effects. Gazprom Marketing & Trading has a subsidiary dedicated to the trading of super-chilled fuel. In 2020, this unit had an international portfolio of supply and purchase agreements, including agreements to take shipments from the Sakhalin Energy plant in the Russian Far East and Yamal LNG in the Russian Far East. country’s arctic. He is also the sole marketer of product from a floating liquefaction plant in Cameroon.

The LNG business traded 113 cargoes in 2020. For comparison, German utility giant Uniper SE handled 225 cargoes in the same period.

Gazprom Marketing & Trading also has units in Mexico, Switzerland, France, the United States and Singapore, according to data on its website.

Europe is drawing up urgent plans to reduce its dependence on Russian oil and gas as quickly as possible, which is no small feat for a continent that has spent decades developing a heavy energy dependency. vis-à-vis Moscow. Many companies, including giants like Shell PLC and BP PLC, are also self-sanctioning by choosing not to sign new contracts for Russian supplies.

Only a few of the largest European companies still do business with Gazprom Marketing & Trading on the over-the-counter market. Banks sometimes take more than a week to process their transactions, which could scare away customers and business partners as it takes too long to complete transactions. The company, which has more than 300 employees, was even expelled from its London offices by the owner, British Land Co.

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