Centrica strikes offshore deal

abarrelfullabarrelfull wrote on 06 Dec 2012 11:20

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12 October 1998

Centrica plc, which trades as British Gas, has acquired PowerGen's upstream gas and oil company, PowerGen North Sea Limited (PGNS), on a debt free basis for £248 million in cash and with effect from 1 July this year.

Centrica's first upstream acquisition since its demerger last year involves interests in eight producing fields and several undeveloped gas fields in the Southern North Sea (SNS) and the East Irish Sea, close to its existing Morecambe fields operation. The portfolio's assets are about 86% gas and 14% oil.

The proposed sale of PGNS was announced by PowerGen in May and was the subject of a closed tender process.

Roy Gardner, Chief Executive of Centrica plc, said such a portfolio fitted closely with the group's declared intention of securing additional upstream assets as part of its overall purchasing strategy and was a major success.

"These assets represent an extremely good fit with our current gas supply portfolio and future requirements for the competitive energy market beyond 2001," he said.

For the period to 29 March 1998, operating profit for these assets was £22 million. Forecast gas production for 1998 is more than 70 mmscf/day and 6,000 bbls per day of oil. Remaining reserves exceed 420 bcf of gas and 12 mm bbls of oil.

The East Irish Sea field interests are part of the Liverpool Bay Development and are close to Centrica's own Morecambe operation.

In the Southern North Sea, the assets include Galleon, Ravenspurn North and Audrey, from which British Gas Trading purchases gas, and Johnston.

Several fields remain undeveloped, offering supplies beyond 2001. One of them, Chiswick, could give access to European markets because of its location in the Southern North Sea close to Dutch waters. Centrica already supplies gas through the UK-Continent Interconnector.

Background information:
PowerGen North Sea Ltd has interests in the following fields:

  • An 8.9% interest in Liverpool Bay Development in the East Irish Sea close to the Morecambe fields. This consists of Douglas and Lennox (both oil), Hamilton and Hamilton North (both gas).
  • Galleon (10% equity), Ravenspurn North (12%), Johnston (5.87%) and Audrey (30.79%). These are all gas fields in the Southern North Sea (SNS) basin, which (with the exception of Johnston) are subject to long term sales contracts with British Gas Trading.
  • Several promising undeveloped gas fields, the most significant of which are Ensign, operated by Shell (19%) and Chiswick, operated by Lasmo (25%) (achieved through an appraisal well farm-in to be drilled early next year.)

47% of the gas is already contracted to Centrica and 31% remains uncontracted. The oil is currently sold under a composite agreement with the other LBD partners.

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