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UPDATE 2-Centrica, Qatar Petroleum to look at joint investment
December 5, 2011 / 9:36 AM / in 6 years

UPDATE 2-Centrica, Qatar Petroleum to look at joint investment

* Centrica, QPI to look at joint investment opportunities

* To look at new or existing projects in upstream oil and gas

* Centrica shares up 0.80 percent

By Adveith Nair

LONDON, Dec 5 (Reuters) - British utility Centrica has signed a memorandum of understanding to look at joint investment opportunities with Qatar Petroleum, two weeks after announcing a billion pound deal to buy a string of assets from Norwegian group Statoil.

Centrica said on Monday investment targets will include new or existing projects in upstream oil and gas including LNG, gas storage as well as combined-cycle gas turbine generation assets and downstream opportunities.

The news comes as the company targets growing production by 50 percent to 75 million barrels of oil equivalent annually in the next three to five years, prompting speculation more deals as big as the one with Statoil could be in the offing.

Centrica also said last month it would invest in its upstream oil and gas business to strengthen its energy hedge.

RBC analyst John Mush, who said last week additional acquisitions the size of the Statoil deal cannot be ruled out, warned that further upstream investment would increase the company’s exposure to gas prices.

“In our view this increased exposure to gas prices will increase volatility and thus reduce multiples investors are willing to pay for Centrica,” Musk had said.

Centrica shares were up 2.1 pence at 298.54 pence at 1030 GMT.

Monday’s agreement, inked at the World Petroleum Conference in Doha, follows the long-term LNG contract Centrica signed with the emirate earlier this year.

Qatar Petroleum International is the international investment arm of Qatar Petroleum, while Centrica owns Britain’s largest household energy supplier, British Gas.

“The partnership will enable us to jointly develop significant energy investments that will further boost the long-term security of the UK’s gas supply,” Centrica Chief executive Sam Laidlaw said in a statement.

“We will also explore joint opportunities to deploy capital and expertise in other markets to deliver growth and value for the group,” Laidlaw added.

Two weeks ago, Centrica boosted its oil and gas production by a quarter through buying assets from Statoil and signing a 10-year gas deal that will improve the UK’s energy security.

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