Centrica teams up with Qatar for £650m deal

GAS giant Centrica and the world’s largest liquefied natural gas exporter Qatar Petroleum have bought natural gas and crude oil assets in South and Central Alberta and North East British Columbia in a deal worth £650m.

Centrica chief executive Sam Laidlaw said there are opportunities for cost savings in production and development due to the overlap with existing assets.

The assets, which have been bought from Suncor Energy, include potential for shale gas production.

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The deal is the first joint investment for Centrica, Britain’s biggest energy supplier and the owner of British Gas, and Qatar Petroleum since they signed a memorandum of understanding in December 2011.

Middle East oil and gas producers are increasingly interested in getting a share of the unconventional oil and gas production boom that has hit their sales to North America.

The fields in the Western Canadian Sedimentary Basin will be held in a new partnership in which Centrica will own a 60 per cent share with the remaining 40 per cent owned by Qatar Petroleum.

The Suncor assets overlap with existing Centrica assets in Canada, which should help cut development costs.

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“The acquisition provides attractive returns in a region we know well, and significantly increases the size and quality of our portfolio,” said Mr Laidlaw.

“It also presents exciting development opportunities, with the potential to improve returns further.”

The region includes proven and probable conventional reserves estimated by the partners at 978 billion cubic feet equivalent (bcfe), 90 per cent of which is gas.

The deal also includes over a million acres of undeveloped land with potential for more production through the use of horizontal drilling and multi-stage fracturing, a technique used to flush out unconventional gas.

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They expect modest production of around 250 million cubic feet equivalent per day in 2013, equal to around 15 million barrels of oil equivalent per year.

Nasser Al-Jaidah, Qatar Petroleum’s chief executive, said: “This investment in the Western Canadian Sedimentary Basin is a significant step in the development of QPI’s global upstream business.”

A North American shale gas boom late last decade has forced Qatar Petroleum to find new buyers for millions of tonnes a year of liquefied natural gas it had planned to sell to the United States.

Qatar Petroleum and its partner Exxon Mobil are seeking approval to turn their Golden Pass import terminal into an export facility.

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Many of these terminals were built when the US was the largest importer of gas. Qatar has imposed a moratorium on further gas export projects from its vast North Field in the Middle East, prompting Qatar Petroleum to look abroad for growth.

Subject to regulatory approval, the acquisition will be made by a joint venture called CQ Energy Canada Partnership owned by Centrica’s wholly owned subsidiary Direct Energy Resources Partnership and Qatar Petroleum International Energy Canada Ltd.

The deal is expected to close in the third quarter of 2013.

Centrica was criticised by union chiefs last month when it emerged that five of its bosses pocketed £16.4m in pay and bonuses at a time of soaring bills for UK households.

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The figures for last year include almost £5m for Mr Laidlaw, who saw his basic salary of £950,000 topped up with bonuses and long-term share awards from prior years totalling more than £2.6m.

The TUC slammed the director payouts as “insensitive beyond belief” after 8.5m customers were hit with a 6 per cent price increase at the end of last year.

The details emerged in Centrica’s annual report, which showed its British Gas residential arm made £606m profit – nearly £50 per household.

Centrica defended the awards, saying bonuses were based on performance and that it had invested £2.7bn to secure energy supplies for UK households.

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More than 10 per cent of shareholders voted against the company’s remuneration report last year.

This year’s annual meeting is due to be held on May 13.

The five top bosses at Centrica got a total of £16.4m in 2012, up from £15.4m a year earlier. Including non-executives, the £17.4m total director pay package was up from £16.4m a year ago.

Outgoing British Gas boss Phil Bentley saw his total remuneration leap to £3.1m in 2012 from £2.1m a year earlier