Centrica Writes-Off Investments in UK Gas Storage Projects

Centrica decided to shelve two gas storage projects in the UK, decreasing the gas storage capacity of the country. Britain will have around 15 days of gas supply in storage, compared to 99 days in Germany and 122 in France.

‘The decision was taken in light of weak economics for storage projects and the announcement by the UK Government on 4 September ruling out intervention in the market to encourage additional gas storage capacity to be built,’ reads a note released on Monday.

Centrica will not invest anymore in the gas storage project at Baird in the UK Southern North Sea, which would have become Britain’s second-biggest gas storage site. It also put its project at Caythorpe in East Yorkshire on hold indefinitely. The energy company had planned investments for more than £1.5bn.

As a consequence, Centrica will write off £240m worth of investment in the Group’s 2013 preliminary financial results, funds already spent by the company to acquire the sites and proceed with engineering works

Centrica started investing in the two projects between September 2008 and February 2009, when the British gas supply was affected by the dispute between Russia and Ukraine.

The decision reflects a shake-up in the UK’s gas market, with an increased role of LNG from Qatar.

Centrica noted it would continue to own and operate Rough, the largest gas storage facility in the UK.