Russian plans to seize control of a major part of Britain's gas supply industry hardened last night when Gazprom revealed that a bid for British Gas's parent group Centrica was "possible".
Alexander Shkuta, deputy chairman of Gazprom's export business, Gazexport, said a takeover of Centrica, which has 12 million gas customers, was being "analysed and investigated".
The statement triggered alarm in government circles, but in the City it sent shares in Centrica racing 25% at one stage before they closed 11% higher at 300p, adding nearly £1bn to its market capitalisation - it is now valued at nearly £11bn.
The Russian state-owned Gazprom has recently tarnished its image by cutting off gas supplies to the Ukraine over a pay row; it was seen by some as a move by the Kremlin to punish a former ally that had drifted towards Washington.
The Department of Trade and Industry said last night that any new ownership at Centrica would face robust scrutiny and that "security of energy supply to the UK's consumers is paramount".
On the other hand, The Independent suggests that the DTI is taking a rather different line:
"The Department of Trade and Industry and Centrica deny talks have taken place about how the Government would respond in the event that Gazprom decided to bid. The 2003 Enterprise Act allows ministers to intervene in mergers if there is an "exceptional public interest".
But a spokeswoman for the DTI said: "This would only apply if there was an issue of national security. A takeover or merger involving Centrica would be a matter for the independent competition regulators, Ofgem and the Office of Fair Trading."
I suppose that this means that DTI does not yet have a policy on what to do if Gazprom strikes. Which seems extraordinary.