Shares in Centrica, the FTSE 100 owner of British Gas, have jumped after it joined forces with Energy Capital Partners (ECP) to snap up Europe’s largest liquefied natural gas (LNG) terminal for £1.5bn
In a statement issued to the London Stock Exchange, Centrica hailed its bumper acquisition of the National Grid’s Grain LNG, which stores and processes natural gas at its site in Kent, as helping “support the UK’s energy security for many decades to come”.
LNG is playing an increasingly important role in the UK’s energy grid as the country seeks to transition away from more carbon intensive hydrocarbons to a mix of gas, renewables and nuclear power.
Shares in the owner of British Gas rose by three per cent in early trades before falling back to just over two per cent.
The fuel, which is a type of natural gas that is cooled to a liquid to make it easier to transport and store, is predicted to meet just shy of 60 per cent of the UK’s total gas demand by 2050, up from its current share of 15 per cent. The Grain facility is expected to meet a third of the UK’s future demand.
Centrica and ECP, which is part of US buyout giant Bridgepoint, will each own a 50 per cent stake of the site, worth £200m each, after the deal, which also involved £1.1bn of project finance debt.
The acquisition is further evidence of the new direction in which Centrica boss Chris O’Shea is taking the UK’s largest listed energy provider, after it also became one of the private backers of the UK’s Sizewell C nuclear power plant.
“Centrica is acquiring a strategically important asset which offers long-term cash flow linked to inflation, so this looks like a deal which could be a win for both parties,” said AJ Bell investment director Russ Mould.
Centrica deal a sign of National Grid’s electrification push
Mould added that National Grid’s decision to offload the plant – which turned over just shy of £299m in 2024 – will provide it with the capital needed for the group’s multibillion-pound decarbonisation of the UK energy grid announced earlier this year.
It plans to splurge over £30bn by 2030 on upgrades and new infrastructure to ensure the country is able to satisfy the demands being put on the grid as the economy electrifies.
“[The deal] reflects the company’s increased focus on its electricity networks,” Mould said. “The company is investing huge sums in this area and the deal will provide a useful injection of capital.”
O’Shea said the transaction would help keep “energy flowing reliably and affordably to households and businesses across the country”.
“Our decision to commit £3bn of capital in both Sizewell C and the Isle of Grain demonstrates the attractiveness of the UK as an investment location underpinned by supportive government investment policies,” he added.