The deal gives Monument Oil and Gas, the seller, more than its total investment in the field so far, while leaving it with a 20 per cent stake. 'It is the best of both worlds for us,' said Liz Airey, finance director. Monument could receive up to pounds 3m extra, depending on the results of an exploration programme being carried out in the next year.
PowerGen signed a contract to buy gas from the development in 1991. It will be burnt in its pounds 580m Connah's Quay gas station in North Wales, which was approved in March and will be fully operational by 1996. Ed Wallis, PowerGen chief executive, said the purchase 'completes a strategic link with our investment at Connah's Quay'.
Last month the Government gave the go-ahead for the pounds 1bn development of the three gas fields in the bay, despite opposition from those who saw it as a further threat to the coal industry.
Tim Eggar, the energy minister, said the project would create more than 2,000 jobs in Merseyside and secure a further 2,500 in fabrication yards. The gas has considerable quantities of poisonous hydrogen sulphide which, oil companies said, could be used only for electricity generation.
PowerGen's move into upstream production is part of its strategy of becoming a vertically integrated gas producer, user and distributor. It has 3,000 megawatts of gas-fired power production in operation or under construction - part of the 'dash for gas' in electricity generation - and operates Kinetica jointly with Conoco. This is the second biggest gas distributor after British Gas.Reuse content