Centrica puts sale of UK North Sea natural gas fields on hold to maintain domestic production

(Bloomberg) – Centrica Plc has put on hold the sale of its UK North Sea natural gas fields after last year’s energy crisis and record-high fuel prices highlighted the importance of maintaining domestic production.

The assets are “a key part of our portfolio,” along with the energy supplier’s stakes in Britain’s nuclear power stations, Chief Executive Officer Chris O’Shea told reporters Thursday. It’s a turnaround from 2019, when Centrica said it would exit oil and gas production for good — which it did in Norway, but not in Britain.

The change in strategy is also seen in the global market, where energy majors from Shell Plc to Chevron Corp. are sticking to their gas investments that they say are needed for the switch to a greener economy. Russia’s invasion of Ukraine, and the subsequent surge in global energy costs, forced Europe and other regions to sign new long-term gas supply deals and helped drive record profits at companies like Centrica.  

Centrica subsidiary Spirit Energy Ltd. produces some oil, but mostly gas from fields in the North Sea. Its aging Morecambe Bay gas developments are expected to run until the end of this decade compared to an original plan to stop production around the mid-2020s, Centrica said. The North Sea assets “will decline naturally over time,” to be replaced by new green-focused projects, O’Shea told industry analysts.

The UK utility’s low-carbon expansion includes investment in hydrogen, carbon capture and battery storage, according to O’Shea. The company’s plan to convert the Rough gas storage facility to contain both methane and hydrogen is yet to receive backing from the government, but Centrica is “not giving up,” he said.