British Gas-owner Centrica is buying one of the biggest liquefied natural gas (LNG) facilities in the UK for £1.7bn, extending the firm’s control of the country’s energy supplies.
National Grid is selling Grain LNG to Centrica and private equity firm Energy Capital Partners to allow it to focus on its electricity and gas networks.
LNG is gas that has been cooled into a liquid, making it easier to transport – supplies came under pressure after Russia launched its full-scale assault on Ukraine in 2022 and flows of energy into Europe slowed driving up prices.
Centrica already owns the Rough gas storage facility, which in the biggest in Britain.
Earlier this year, Centrica’s boss Chris O’Shea had warned that it might have to shut down Rough if the government did not step in to help with the redevelopment of the facility.
The site in East Yorkshire was closed in 2017 but then partly reopened in October 2022 following the energy crisis triggered by Russia’s war with Ukraine.
Commenting on the £1.7bn deal for the LNG facility on the Isle of Grain in Kent, Mr O’Shea told BBC Radio 4’s Today programme that it is “a key strategic asset for the UK” and important for the country’s energy security.
The UK government is aiming for a significant increase in green energy, particularly aiming for a clean power system by 2030.
Mr O’Shea said he thought gas would be part of energy transition “for decades to come but it will probably reduce as a proportion of energy generation”.
He said: “We’ll have more wind, more solar. I think the UK is leading the world on that and is doing very, very well but there are points we don’t have enough sun, enough wind… you need to be able to turn on your electricity generation and gas is the best way we’ve got just now.”
National Grid is moving away from owning energy production sites and instead wants to concentrate on building and maintaining the pipes and wires that carry electricity and gas.
The deal – which needs to be approved by the government – will be paid for with £1.1bn of debt financing with Centrica investing £200m.
Centrica’s share price rose 2.9% on the announcement.