BP takes action to scupper gas pipeline sale
Energy companies appeal to regulator over plans by National Grid Transco, writes Clayton Hirst
Sunday 19 October 2003
National Grid Transco's hopes of raising up to £4.5bn from the part-sale of its network of regional gas pipes have been dealt a blow by BP, which has asked the regulator to block any deal.
BP, one of NGT's largest gas customers, has written to the energy regulator, Ofgem, urging it to step in. It argues that a sale would be bad for competition and make the market too complex.
NGT owns eight separate gas distribution networks, which are worth £9.4bn based on the value of their regulated assets. NGT wants to remain the largest single gas distribution operator in the UK but is contemplating selling some of its networks to fund its growth plans in North America. Analysts expect NGT to raise around £4.5bn from the sales.
However, BP has told the regulator: "Ofgem should not at the present time sanction the sale of one or more of NGT's distribution networks. We are yet to identify any area in which there will be greater simplicity for customers, shippers or suppliers. We therefore suggest that the sale of a [distribution network] could actually hinder supply competition by increasing complexity."
BP, the UK's largest quoted company, with a market value of £94bn, has asked Ofgem to spend longer investigating the proposal because a sale "would be practically irreversible".
In a further blow to NGT, Norway's largest oil and gas company, Statoil, has also written to Ofgem warning that it is "unconvinced" of any benefits from a sale of NGT's gas distribution business.
"We firmly believe that significant costs will be incurred together with increased risks from regulatory, financial and operational complexity," the company said.
At best the 20-plus letters Ofgem has received from energy companies about NGT's plans are lukewarm about the proposed sale.
Officially, NGT hasn't yet made a final decision to sell some of its gas distribution networks. However, it has hired investment banks NM Rothschild and Merrill Lynch to drum up interest. If Ofgem gives the green light, NGT is expected to seek offers and will then make a final decision on a sale.
A spokeswoman for NGT said: "There is quite a lengthy process to be gone though and the earliest date any possible sale could be fully completed by is September 2004."
The spokeswoman added that gas customers would benefit though lower prices and improved levels of service. But she added: "Safety in the gas industry is paramount and no changes will be considered that compromise the safe operation of the network."
There has already been considerable interest in NGT's networks. Clare Spottiswoode, the former gas industry regulator, is reported to be seeking financial backing for a bid for one of them. Other companies thought to be keeping a close eye on the process include United Utilities; YTL, the Malaysian owner of Wessex Water; and Scottish & Southern Energy.
- 1 Bruce Jenner's 'Interview of the year': Suicidal thoughts, rejection by family members and new wardrobe
- 2 Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
- 3 How to turn off/stop 'seen by' on Facebook: Disable it to make your chats seem less passive aggressive
- 4 'We're not heroes, just tourists': Swedish police officers on holiday stop vicious assault on New York subway
- 5 Buckingham Palace guard who attacked passers-by in 'most most violent piece of CCTV footage' police officer had seen walks free
Top 20 misconceptions people believe are true
Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
'We're not heroes, just tourists': Swedish police officers on holiday stop vicious assault on New York subway
Nepal earthquake: More than 1,100 killed across four countries and in Mount Everest avalanche
Australian student Tommy Connolly, 23, adopts his pregnant, homeless 17-year-old cousin to give her a chance at 'a better life'
The sickening truth about food banks that the Tories don't want you to know
Katie Hopkins on LBC: Listen to caller taking The Sun columnist to task over migrant comments
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
Rupert Murdoch berated Sun journalists for not doing enough to attack Ed Miliband and stop him winning the general election
iJobs Money & Business
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...
£22000 - £24000 per annum: Recruitment Genius: This is an opportunity to join ...