Centrica in £142m move to secure North Sea gas supplies

Scottish Gas owner Centrica has upped its stake in the Statfjord gas field in the northern North Sea, buying American giant ConocoPhillips’ share for £142 million as it continues to build its reserves.

The acquisition takes the British firm’s stake in Statfjord, which straddles UK and Norwegian waters to the east of Shetland, to 34 per cent, and increases its total reserves of oil and gas by about 9 per cent.

It said the enlarged stake was expected to generate “strong immediate earnings and cashflow”, with a net increase in production of more than 11,000 barrels of oil equivalent a day.

The field and its associated outlying reserves produce gas for the UK market, with much of it already contracted to Centrica.

The company, a producer and retailer of gas, said the deal strengthened its integrated business model as well as providing another secure source of gas for its UK customers.

Mark Hanafin, managing director of Centrica Energy, said: “Increasing our stake in Statfjord marks the latest stage in our drive to secure high-quality sources of gas, adding both earnings and long-term value.”

He said the acquisition underlined the firm’s commitment to invest in North Sea production and secure future energy supplies for the UK.

ConocoPhillips’ 15 per cent stake adds 36 million barrels of oil equivalent to Centrica’s reserves, comprising about 60 per cent liquids and 40 per cent gas. Extracting it will cost Centrica a further £200m in the long term.

Jonathan Jackson, head of equities at broker Killik & Co, re-iterated his buy recommendation on Centrica’s shares yesterday.

He said: “The acquisition further strengthens the group’s integrated business model.”

In November, Centrica moved to secure its long-term gas supplies by signing a £13 billion ten-year deal with Norway. Under the terms of the agreement, the Scandinavian country will supply Centrica with enough gas for 3.5 million homes – equivalent to 5 per cent of Britain’s total gas needs – from 2015.

At the same time, Centrica added to its North Sea reserves by buying £1bn of oil and gas assets from Norway’s energy giant Statoil, a move which boosted its production output by a quarter. The two companies also signed a memorandum of understanding to look at joint gas exploration in the UK and Norway.

With the UK currently importing about 50 per cent of its gas requirements, Centrica’s moves to secure supplies from a stable neighbouring country have been welcomed by politicians.