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British Gas owner Centrica to buy Grain LNG terminal for £1.66bn British Gas-owner buys huge LNG terminal for £1.7bn
(32 minutes later)
The Grain LNG facility plays an important role in keeping the UK's gas supply stableThe Grain LNG facility plays an important role in keeping the UK's gas supply stable
National Grid has agreed to sell one of its major gas facilities, Grain LNG, for £1.66bn to a group that includes British Gas owner Centrica and Energy Capital Partners (ECP). British Gas-owner Centrica is buying one of the biggest liquefied natural gas (LNG) facilities in the UK for £1.7bn, extending the firm's control of the country's energy supplies.
The sale still needs approval from regulators and the government. If approval is received, National Grid expects the transaction to be complete by the end of the year. National Grid is selling Grain LNG to Centrica and private equity firm Energy Capital Partners to allow it to focus on its electricity and gas networks.
Grain LNG is the largest place in the UK for receiving liquefied natural gas - which is gas that's been cooled into a liquid so it's easier to transport. LNG is gas that has been cooled into a liquid, making it easier to transport - supplies came under pressure after Russia launched its full-scale assault on Ukraine in 2022 and flows of energy into Europe slowed driving up prices.
The facility, based on the Isle of Grain in Kent, plays an important role in keeping the UK's gas supply stable. Centrica already owns the Rough gas storage facility, which in the biggest in Britain.
National Grid's chief executive John Pettigrew said this deal is part of the company's plan to focus more on electricity and gas networks, after already selling its renewable energy business, NG Renewables, earlier this year. Earlier this year, Centrica's boss Chris O'Shea had warned that it might have to shut down Rough if the government did not step in to help with the redevelopment of the facility.
Mr Pettigrew said the sale "marks another successful step in delivering National Grid's previously communicated strategy to streamline our business and focus on networks." The site in East Yorkshire was closed in 2017 but then partly reopened in October 2022 following the energy crisis triggered by Russia's war with Ukraine.
National Grid is moving away from owning energy production sites and instead wants to concentrate on building and maintaining the pipes and wires that carry electricity and gas. Commenting on the £1.7bn deal for the LNG facility on the Isle of Grain, Mr O'Shea told BBC Radio 4's Today programme that it is "a key strategic asset for the UK" and important for the country's energy security.
The sale of Grain LNG would add to Centrica's infrastructure portfolio which already includes assets such as the Rough gas storage facility - the largest gas storage facility in the UK.
Owning facilities like Grain LNG gives Centrica more control over gas supplies, which could help protect against global price shocks like the ones seen after Russia's invasion of Ukraine.
Chris O'Shea, chief executive of Centrica, told BBC Radio 4's Today programme that Grain LNG "a key strategic asset for the UK" and "a key part of UK energy security."
"What we want to do is to make sure we can give our customers the energy they want, at the time they need it, at a price they can afford and having very stable import facilities to ensure we've got that energy will help to keep consumer prices in the right place," he said.
ECP, meanwhile, has experience in investing in energy-related projects that support the shift to cleaner energy.
Tyler Reeder, ECP's president and managing partner, ECP, said in a statement: "We believe Grain LNG will increasingly be relied upon as critical infrastructure to deliver dependable energy to local markets."
ECP is part of private investment firm Bridgepoint Group.
The UK government is aiming for a significant increase in green energy, particularly aiming for a clean power system by 2030.The UK government is aiming for a significant increase in green energy, particularly aiming for a clean power system by 2030.
Energy sources considered to be clean include solar and wind. Mr O'Shea said he thought gas would be part of energy transition "for decades to come but it will probably reduce as a proportion of energy generation".
He said: "We'll have more wind, more solar. I think the UK is leading the world on that and is doing very, very well but there are points we don't have enough sun, enough wind... you need to be able to turn on your electricity generation and gas is the best way we've got just now."
National Grid is moving away from owning energy production sites and instead wants to concentrate on building and maintaining the pipes and wires that carry electricity and gas.