Centrica makes new North Sea buy
Attempts by gas firm Centrica to reduce its exposure to volatile wholesale prices have continued with a £22m North Sea acquisition.
The British Gas owner has bought an additional 67% stake in the undeveloped York gas fields in the southern part of the North Sea, adjacent to its existing Rough gas storage facility, which it acquired in 2003.
Centrica chief executive Sam Laidlaw said the deal with energy firm Hess was in line with the company’s strategic priority to reduce exposure to movements in gas prices through the purchase of additional upstream assets.
He said it also increased the level of gas reserves available to supply British Gas customers.
Mr Laidlaw added: ``This deal underlines our commitment to invest in new energy supplies from the North Sea at a time when existing North Sea production is in decline."
The acquisition takes Centrica’s interest in the field to 90%.
After further capital investment of around £220 million, Centrica expects to recognise 107 billion cubic feet (bcf) of reserves from its enlarged stake in the field, of which 79 bcf are directly attributable to today’s deal.
Production costs on the fields are expected to be lower than the average across Centrica’s other joint venture fields due to the proximity to Rough.
The first gas flows are expected as early as 2011, with Centrica planning to export production through its Easington terminal.
British Gas last week announced a 10% reduction on standard gas tariffs from February 19, a move affecting 75% of its customers or 7.5 million homes.
It has benefited from a recent fall in wholesale prices, although household gas bills are still much more expensive than in the summer.
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