brit gas

Just thought this may be of interest? 'Add reserves to our portfolio', that sounds interesting also?


July 16, 2005

Centrica seeks own gas source
By Peter Klinger



BRITISH GAS is joining the rush to find gas in the North Sea after Centrica, its parent, struck a deal to drill an exploration well for the first time.
The news came as British Gas said that it was considering cutting up to 2,000 back-office jobs in Manchester, Oldham and Solihull, placing the UK’s biggest household energy supplier on a collision course with Unison, the union.



British Gas said that it planned to outsource its back-office billing operations to India after the introduction of a £430 million computerised billing system. Unison has threatened to strike should British Gas, which employs 26,000 staff in the UK, cut jobs. The union urged the company to reconsider its plans.

British Gas responded yesterday by saying that 2,000 new frontline jobs had been created this year.

The dispute came as Centrica said it had signed a farm-in agreement with Wham Energy, a small privately owned company, to take over the running of an exploration block in the North Sea. The block, about 30 miles off the East Yorkshire coast, contains the Prometheus gas prospect.

Centrica will emerge with a 40 per cent stake and fund about three quarters of the estimated £7.3 million cost of the first exploration well. Drilling is to start in September.

It will also project-manage the exploration programme and outsource the drilling operations. Its partners in the field will be Wham (20 per cent), Endeavour International Corp (22.5 per cent) and Antrim Energy (17.5 per cent).

The deal with Wham marks a shift in Centrica’s strategy. The long-term gas requirements of British Gas account for about 40 per cent of the UK market and rising gas demand and prices have forced Centrica to secure its supply sources.

Although the company owns stakes in many North Sea gasfields, and has participated in exploration wells run by other companies, the Prometheus drilling programme will be the first time that Centrica has led the exploration efforts.

The decision also illustrates Centrica’s confidence that UK gas prices will remain buoyant.Domestic gas prices are approaching record levels but most analysts expect the prices to ease by 2007.

Britain has been a net importer of gas since the end of last year, prompting companies to refocus their attention on untapped areas of the North Sea.

Sir Roy Gardner, Centrica’s chief executive, said: “This agreement [with Wham] is one of a limited number of exploration wells that Centrica expects to consider in the future, as we focus on a range of opportunities to add reserves to our portfolio.”

Centrica also announced a further move into liquefied natural gas (LNG) after taking a 20 per cent stake in the proposed Canvey LNG receiving facility in Essex. The facility, which is expected to cost up to £300 million to build, will be capable of handling 5.4 billion cubic metres of imported LNG, enough to meet 5 per cent of the UK’s yearly demand.

Centrica and its partners hope to conclude a study on the project’s viability by the end of next year.

The UK company has already struck a deal with Petronas, the Malaysian energy giant, to import £4 billion worth of LNG from October 2007.