News releases
July 29, 2010 – 10:30
Centrica Interim Statement - Centrica Storage
The Rough storage facility continues to perform extremely well, with reliability of over 99% during the first half of 2010. The unusually cold winter, which led to National Grid issuing ‘Gas Balancing Alerts' on three days in a week in January, resulted in record demand for gas and subsequent high levels of withdrawal. This resulted in a record low Net Reservoir Volume (NRV) for Rough in March this year, following its highest ever NRV in November 2009.
In April we announced that we had sold all SBUs for the 2010/11 storage year at an average selling price of 39.7p (2009/10: 46.8p). The effect of the lower price will be reflected fully in the second half result. The decline in price reflects a narrowing of summer/winter spreads towards the end of the sales period, and the current 2011/12 spreads remain narrower than seen in recent years.
Gross revenue in the first half was up 19% to £148 million (2009: £124 million), reflecting an average SBU price in the period of 44.4p (2009: 41.5p) and improved optimisation performance, the majority of this expected to be recognised in the first half of the year. Operating profit* was up 33% to £97 million (2009: £73 million).
On our Caythorpe gas storage project we were expecting to be able to make a final investment decision this month. Substantially faster cycle times will allow Caythorpe to take advantage of volatility in prices, making it less dependent on summer/winter price differentials. However, very recently Ofgem have indicated that they are minded to consult on revoking the existing Third Party Access exemption associated with the facility, and as a result of the regulatory uncertainty this creates for the project we have decided not to proceed at the current time. Meanwhile, engineering studies continue on our other two gas storage projects, Baird and Bains. The Front End Engineering Design (FEED) for Baird has now been largely completed, and in combination with further subsurface works the estimated reservoir capacity has increased to around 80bcf. We have increased our stake in the Bains field through the acquisition of GdF Suez's 34% share of the facility, taking our total share to 86.8% and have commenced FEED. These are complex offshore projects which have more seasonal cycle times, and significant work is required to ensure that satisfactory returns on investment can be achieved. A decision on both projects in now expected in 2011.
For the full Centrica Interim Statement
http://www.centrica.com/files/results/interim10/2010_interim_results.pdf
Registered office and corporate headquarters:
Centrica Storage Limited, Venture House, 42-54 London Road, Staines, Middlesex, TW18 4HF
Registered in England & Wales No. 3294124
VAT registration number: GB684966762
