Page 12 - EurOil Week 48 2020

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Centrica seeks buyer

for LNG business

UK UK energy group Centrica is seeking a buyer for newcomers looking to quickly build up an estab-
its portfolio of LNG supply contracts and other lished position in the market. But a lot depends
Centrica may have to assets, the Wall Street Journal (WSJ) reported on on whether a recent rally in global gas prices con-
pay a buyer to take the November 26, citing sources. tinues into 2021, following a year-long decline to
business off its hands. According to the paper, the company wants historic lows in June.
to streamline its operations amid volatile LNG The business includes a supply contract with
prices. How much Centrica is looking to fetch US exporter Cheniere Energy Partners. It also
from a deal is unclear, although similar recent comprises a deal signed last year with Tokyo Gas
transactions suggest the company may instead on the joint purchase of 2.6mn tonnes per year
have to pay a buyer to take the LNG business off (tpy) of LNG from the Total-led Mozambique
its hands, the WSJ said. Indeed, France’s Total LNG project. Mozambique LNG is due to start
received $800mn last year for taking over the up in 2024.
supply and transportation contracts of Japan- Centrica secured its first long-term contract
based Toshiba Corp. in China earlier this year, agreeing to deliver
Centrica, which was saddled with a £135mn 0.5mn tpy of LNG to Shenergy Group, also
($169mn) statutory loss in the first half of the beginning in 2024.
year, offloaded its North American energy Centrica’s LNG division performed well in
supply, services and trading subsidiary Direct the first half of the year, helping to raise the oper-
Energy to US firm NRG Energy in July, raising ating income of the company’s marketing divi-
$3.63bn. The company has plans to divest some sion by almost fourfold to £115mn ($154mn).
of its other assets, including its nuclear business However, Centrica has its 20-year gas deal with
and its majority share in North Sea-focused pro- Cheniere, first signed in 2013, no longer has
ducer Spirit Energy. But it said during the sum- intrinsic value. Its worth depends on how large
mer it would put those disposals on hold until the difference is between gas prices in the US and
financial and commodity markets had stabilised. in the UK and Asia. A surge in gas supplies this
Centrica’s LNG business could attract year has narrowed those spreads. ™

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