Unlock Editor’s Digest Lock for Free
FT editor Roula Khalaf will select your favorite stories in this weekly newsletter.
Centrica said it is in consultation with the UK government to ensure financial support to expand and redevelop the country’s largest gas storage site, claiming the move will help stabilize prices. Masu.
Chief Executive Chris O’Shea said the FTSE 100 Energy Group is seeking a “hat and floor” deal in rough fields in the North Sea. Under these arrangements, site revenues will be replenished by consumers if they fall below a certain level, but the top edge will also be capped.
When the company announced its annual results, O’Shea said British Gas owners were having “constructive conversations with the government” about potential deals on the site.
Centrica reported on Friday an adjusted operating profit of £1.6 billion for the year ending December 2024. This is down from £2.8 billion in 2023 after the business environment was “normalized” following recent volatility and high product prices.
The company’s shares rose 8% after it also announced a £500 million increase to its share buyback program. It also increased its full-year dividend for 2024 by 13% to 4.5p per share.
A rough gas storage site 2.7km below the seafloor off Yorkshire can store enough natural gas to meet the needs of the UK for 10 days. Due to insufficient returns, it was closed in 2017 and partially resumed in October 2022 after a full-scale Russian invasion of Ukraine increased global gas supply.
Centrica hopes clean fuels will rise as the UK moves away from fossil fuels, so it will expand its site and eventually redevelop its redevelopment so it can store hydrogen I want to invest pounds. O’Shea said the expansion will create thousands of highly skilled jobs.
“By storing more gas, Raf acts as national insurance, preventing prices to consumers from surged and helping to reduce reliance on increasingly unstable global markets,” he adds. I did.
The site was losing money in the second half of 2024, and Centrica said it would not make any profits this year, while O’Shea warned that “businesses that can’t make profits cannot be maintained over time.”
Centrica, which also owns stakes in the UK’s nuclear fleet, confirmed that it is still interested in investing in the Sizewell C nuclear power plant project, if the terms are correct.
Developer EDF and the UK government are looking for external investors for the project in Suffolk and are aiming to make a final investment decision in June.
“For every project, we see the risk and returns,” O’Shea said. “The higher the risk, the higher the return. The lower the risk, the lower the return.”
A government spokesperson said that while the future of a rough storage site is a commercial decision by Centrica, “we can discuss proposals regarding gas storage sites” as long as it provides taxpayers with the value of money. I stated.
