Centrica signs £14bn of deals with Statoil
Centrica accelerated its push into oil and gas production yesterday as the owner of British Gas invested £1bn in the Norwegian North Sea.
The acquisition of stakes in eight oil and gas developments on the Norwegian continental shelf from Statoil will boost Centrica's production by a quarter and aid its quest to tap the vast profits on offer as wholesale prices soar.
The deal is part of a broader agreement between Centrica and Statoil which will also see the Norwegian giant supplying about £13bn worth of gas over 10 years, enough to power 3.5 million homes. The agreement – to supply a total of 50 billion cubic metres of gas over a decade starting in 2015 – extends a deal that began in 2005.
However, as competition for energy intensifies and security of supply becomes an increasingly political issue, the deal was was well received yesterday. The Prime Minister, David Cameron, "warmly welcomed" the agreement because it "will help to ensure the continued security and competitiveness of gas supplies to Britain". Angelos Anastasiou, an analyst at Investec, said: "It is only an extension of an existing deal but it is big in terms of shoring up our supply. Just having access to Norwegian gas, which could have gone somewhere else, is a big thing for UK Plc."
Mr Anastasiou added: "But for me the exciting part of the announcement is the deal in the Norwegian continental shelf. It's at a good price and it adds to its production."
Centrica is keen to step up the so-called upstream part of its business, which explores for and extracts oil and gas, as an exodus from nuclear power following the Fukushima disaster, rising global demand for energy and uncertainty in the Middle East have sent wholesale prices soaring. In the first half of the year, profits from Centrica's UK exploration and production business overtook the bottom-line contribution from its "downstream" operation – British Gas .
Centrica's new interest in the Norwegian shelf facilities will add 34,000 barrels of oil equivalent a day, or 12 million barrels a year, to the group's annual production.
Centrica ceded the bulk of its upstream assets to BG Group when the two entities were created from the demerger of British Gas Plc in 1997. However, it did retain the Morecambe Bay gas fields, the largest in the UK.
Centrica's acquisition of FTSE 250-listed Venture Production in August 2009 signalled a growing interest in exploration and production and a few months later the group set up its Centrica Energy Upstream division.
Centrica Energy Upstream is now the second biggest gas producer in the UK North Sea and also has operations in the Netherlands, Norway and Trinidad, which employ a total of 900 people. Centrica is expected to sign further deals in the exploration and production sector.
- 1 Moscow voted the world's unfriendliest city
- 2 The excuses your boss is most likely to believe when you call in sick
- 3 I'm pansexual – here are the five biggest misconceptions about my sexuality
- 4 More than 11,000 Icelanders offer to house Syrian refugees to help European crisis
The excuses your boss is most likely to believe when you call in sick
Bono's group has made more money from Facebook investment than from all his music
Three-year-old ultra-Orthodox Jewish children told 'the non-Jews' are 'evil' in worksheet produced by London school
Wikipedia rocked by 'rogue editors' blackmail scam targeting small businesses and celebrities
More than 11,000 Icelanders offer to house Syrian refugees to help European crisis
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
Senior British politicians tell David Cameron: When dead children are being washed up on beaches, it's time to act
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
If these extraordinarily powerful images of a dead Syrian child washed up on a beach don’t change Europe’s attitude to refugees, what will?
If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
iJobs Money & Business
£14000 - £16000 per annum: Recruitment Genius: This company was established in...
£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...
£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...
Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...